5 Tips for Turnarounds That Unleash Your Company's Unmet Potential The best way to move forward is to tackle your biggest weaknesses by devising a strategy that addresses those challenges head-on.

Every year, thousands of promising companies across the globe find themselves at a turning point. It could be that revenue targets aren't being reached, the business model is no longer viable or long-term sustainability is called into question. Management might get tough calls from investors, face increasing momentum from competitors or realize their products are no longer meeting the changing needs of consumers. Whatever challenges they face, it's clear that something needs to change. While it's easy to panic, this turning point doesn't have to end in failure. Businesses can turn themselves around.

Whether the company has existed for decades or is just starting out, the next steps you take as a leader are crucial. The research you conduct, the strategy you devise and the decisions you make next could determine whether and how, the company gets back on track.

1. Do your research.

This may seem obvious, but the most important first step you can take is to carefully and thoughtfully assess your business. Take time to sift through the data: look at the financials and review the numbers to evaluate where the company stands. Go a step further and talk to industry experts, partners and consumers. Check out your competition to see what they're doing successfully and what they could improve and draw lessons from companies that you admire in other industries. Takeaways from them can be just as valuable as the ones you gather from competitors within your industry. Finally, consult with your staff and board to get a handle on what's working and what's not. This process can reveal a brand's unmet potential that's waiting to be unlocked.

Related: Five Steps to a Successful Business Turnaround

When I first left Clorox to become CEO of natural skincare company, Yes To, I knew I had come across a winning brand that wasn't fulfilling its promise. By conducting the appropriate due diligence, repositioning the company and finding our target audience, we took an unprofitable business and catapulted it to the number two ranking in the natural personal care category. In fact, we quadrupled its business revenue in just five years and increased the valuation of the company by five times. The work wasn't easy, but by doing the right research, but we were to lay the groundwork for long-term success.

2. Create a plan.

Don't be discouraged if your research points to the need for significant changes. Owning up to your company's shortcomings is essential for a successful turnaround. The best way to move forward is to tackle your biggest weaknesses by devising a strategy that addresses those challenges head-on.

Consider the team an integral part of the turnaround plan and be transparent about where the company stands and where it's headed. Once your team and your investors are aligned with the overall strategy, they will feel empowered to own the plan and play an integral role in its execution.

Don't be afraid to make tough decisions, though. While your staff may have great ideas, it's essential to stay focused, consider your resources and only move forward with the ones that fit within your overall strategy. If an idea is proposed that could steer the plan off track, don't hesitate to say no.

3. Focus on innovation.

In order to set your company apart from the competition and stay up-to-date on the latest consumer trends and habits, innovation is essential. Companies that pivot and adapt to fit the needs of consumers, deliver their products more efficiently and effectively and get ahead of major trends will always win out in the end.

Related: 6 Things to Expect From McDonald's Secret Turnaround Plan

Consider innovation in everything you do, not just product creation. By cultivating an entrepreneurial culture that welcomes new ideas and calculated risks, regardless of the size or history of your business, employees will be encouraged to innovate at every level of the company.

4. Build the right team to execute effectively.

Once your strategy is developed and finalized, make sure you have the right talent in place to bring it to life. That is central to a successful turnaround. Without the right team to execute it aggressively and effectively, a great strategy is meaningless.

Rely on that team to translate the plan from paper to action. It'll require focus and determination, but the right strategy executed in the right way will make a difference. After all, it doesn't make sense to develop a thoughtful strategy if you aren't diligent about implementing it.

5. Recognize achievements, celebrate progress.

Most importantly, be a cheerleader. By being transparent about how the business is performing and celebrating successes, no matter how big or small, you're sending an important message that you're moving in the right direction. Confidence will grow and your team will feel more motivated and invested knowing that their hard work is paying off. Great leaders are great communicators: the team should know and be acknowledged when progress is being made.

Related: Turn Around Your Business in 5 Steps

In my first months as CEO of H2O+ Beauty, we celebrated the first artwork that was developed for our new packaging, the first month we hit our profit goal, the first new product that came off the line. Creating an environment where hard work is acknowledged and team members are valued will pay dividends.

Turnarounds are as much an art as they are a science, and it takes both courage and tenacity to make them successful. What's important is to believe in yourself and your team. Have the confidence that you took the right steps to identify challenges and create a smart strategy. With the right team in place, you'll be able to dive in and stage a comeback.