Four times in my business career I have answered a telephone and someone else on the other end asked if I could help them turn their business around.
I accepted the challenge each time, and have a success rate of 75%. Three of those businesses were turned around successfully; one was not. Each business was at death’s door by the time the call was made to me. Each person in charge of those businesses waited until the last minute of the last hour before deciding that it was time to “do or die”, that it was finally the right time to accept the wrenching changes that would be necessary to give their respective business a fighting chance at survival.
I don’t wish to belabor the obvious here, but it sure would have been easier to bring back the commercial concerns in question if there had been earlier recognition of problems at those businesses, as well as an earlier willingness to act to fix the problems. Believe me, I would have been happy to come on the scene earlier, be given a set of more manageable problems concerning the health of the business, and, spared the client the experience of living inside the pressure cooker of uncertainty regarding the survival of the company, even if it meant far less billable hours.
But, that’s not how it usually works. Business owners are human beings, and human beings tend to develop inertia and be resistant to change. Business tails off, but it’s not off by a lot, and then it gets a little worse, but, you know, things are still okay, and then things are just okay for quite awhile, until they’re not.
I’m reminded of the passage in Hemingway’s The Sun Also Rises, in which one character asks another, “How did you go bankrupt”?
“Two ways”, the other man says. “Gradually, and then suddenly”.
Yes, that’s how it usually happens. Businesses almost never explode and fail, a la the CFO running off to Bolivia with the company’s working capital, or an ugly public relations fiasco, or the CEO and founder perishing in a plane crash. Nope, most companies that die simply wither away slowly.
Will this happen to your business?
It’s possible; many businesses fold, and disappear under the waves of commerce every year. But, if you’re paying attention to the basics, your chances of sticking around get much, much better.
The basics include, but are not limited to:
- Paying attention to what your competitors are doing – not only does this give you a way to match/exceed their offerings, there might be something they have that you want to emulate.
- Paying attention to market trends – even if you’re not first with the product your customers desire most, a fast second will usually save the day (and sometimes rule the day).
- Being cognizant of overall economic trends – if all you sell is trucks that get 10 mpg and gasoline climbs up to $5 a gallon, there is trouble on the horizon.
- Making it as easy as possible for customers to buy what you’re selling – Example 1: Client had the national distribution rights to a product (machinery) that the target market definitely wants and needs, but the acquisition cost was high and many customers could not afford the one-time expense. The solution was to find a small-ticket lessor that would offer lease financing to prospective buyers on a private-label basis (leasing branded with the client’s name). The client not only moved more product at higher margins, they also made fee income from the leases generated through the arrangement. Example 2: Client that does custom web development wanted to sell website templates of their own design to customers that want a different look than most sites, but do not have the budget for custom work. Unfortunately, many of these prospective customers have little or no technological expertise. The solution was to offer different packages with different degrees of required customer involvement at different price points. There was no “take it or leave it” attitude in terms of the product being offered; in fact, our client offered enough different levels of “do it yourself” packages so that it the average prospect found it highly likely that they would find a package that suited their skill/desire level.
- Conducting regular business strategy sessions – If you’re a very small company, this may seem almost laughable to you, but replacing those conversations you have after hours with your three employees over take-out food with a scheduled strategy session led by someone with experience in business strategy can usually produce better results. And, if you’re a large company, and you’re doing okay in the market, and nothing (product, competitors, size of market, etc.) has changed in five years, there probably doesn’t seem to be a pressing need for business strategy at corporate headquarters, but again, it can prove to be quite valuable to put a day aside and sit in a room with your peers and talk about just where you want the business to go in the next couple of years.
- Always thinking about a strategic alliance – it’s a cold, brutal business environment out there, and having another ally when facing off against your competitors always helps.
- Reviewing your marketing assets on a regular basis – there may be value in data or relationships you already have. I had a client that acquired a much larger, poorly-run competitor in order to get their retail locations and their commercial contracts, and ignored the list of 45,000+ consumer customers that came with the acquisition for over two years, despite the fact that it was a higher margin business that that the client was then trying to build up in a separate business unit. I was told, “They’re not our customers. There are some very unhappy campers in that portfolio”. Meanwhile, good money was being spent to send out direct mail pieces to new prospects.
- Constantly improving your business processes – reducing costs, reducing cycle times, increasing profits and increasing customer satisfaction are all very good things that should be done on an ongoing basis, not just when a crisis is looming.
- Having business financing always available – don’t wait until the moment it starts raining to get an umbrella, have one ready. Establish lines of credit before an emergency situation, not as a result of – the terms will be better, and access to the funding is immediate.
Now, all of this may seem pretty basic to all of you. It is. And, as I noted above, this isn’t even a complete list, there are more basic things businesses should do in order to not need a turnaround specialist in the future. But I think you would be surprised at how many businesses, large and small, ignore the basic blocking and tackling that they should be doing on a daily basis. Lethargy creeps in; the living organism that is the business is fat and happy, and habit takes over in terms of day-to-day activities.
Let this serve as your alarm clock if your business is one of the sleepy ones, and your senior managers are conducting their duties in a soporific trance. I’m happy to come over to your place and help you with a turnaround, but really, I think you would be happier if you didn’t need a turnaround in the first place.
Brendan Moore is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in marketing, sales, front-end operations, and strategy. Cedar Point Consulting can be found at https://cedarpointconsulting.comm.