Critical Care for
Turnaround Step 3:
Do You Really Have What it Takes to Turn Your Business Around?
Why you should read
Turnaround Step 3
doing what you've always done and not expecting to get what you've
Turnaround Step 3 is all about
We are finally
getting to the point where the turnaround program can be launched. There
is only one last step…but it is very important. And the step is all
Are you really
ready to change or, as Einstein says in the quote above, do you think
this time it will be different and you will get a superior outcome
from doing business the "same old way"?
Can you make the
tough decisions to be successful?
objective enough to pull this off?
Do you have the
energy for a turnaround?
Does your family
have the energy to support you in this project?
Can you really
be the turnaround leader for your business?
What do Turnaround Guys do Anyway?
"If you're the CEO of a struggling business, let's hope we never meet.
I'm a turnaround guy. When I arrive, you leave, and profits return.
You've probably smarter than me, undoubtedly know your industry
better, and may be a superior leader. But I've fixed more businesses.
I don't cling to unrealistic hopes or hesitate to change things. Any
fresh set of eyes, not just mine, will simply do the rational and
obvious things, getting results before those nasty creditors padlock
We outsiders, having seen it all before, free of your emotional
baggage, find the fixes and do them with comfort and confidence. The
process would nauseate you. This faltering child was yours. We
discipline and save the kid. You and I, together, might celebrate this
youth's graduation much later. But for now, stand aside!!"
author of "The Six-Month Fix-Adventures in Rescuing Failing Companies"
Sutton points out the key differences between a turnaround specialist
and the current CEO. Those differences are
the ability to see the situation with fresh eyes.
So, what makes you think you can be objective? What makes you think you
will be able to see your situation with fresh eyes? Since you have been
living with your business problems for some time now, it may be very
difficult to have these qualities.
However, that does
not mean you must go out and hire a turnaround specialist.
We will address this point in more depth when we get into the Turnaround
Team discussion. For now just realize that some outside assistance may
be necessary. Perhaps a family friend, a board member, volunteers from a
business organization such as the SBA's SCORE Program, etc. You may not
be as objective as you need to be and your eyes can't possibly be fresh
after what you have been through!!
Critical Success Factors Necessary for a Turnaround
Critical Success Factors (CSFs) are factors that
ABSOLUTELY MUST BE IN PLACE
for a successful outcome with the turnaround. The quote below gives a
great overview of the Critical Success Factors for a turnaround.
"You have to have four key elements to make the turnaround work.
You've got to have the willingness. This means that the new man who is
brought in to do the turnaround has to have absolute control. He has
to report directly to the board, but he has to have the maximum
flexibility that is given to any management. You cannot manage a
turnaround by committee. It is strictly a star business, and you have
to have a board that is willing to go along with that. The second
thing is that he has to have something to work with. There has to be
an economic reason for the business to be there. In other words, if
you are making buggy whips, you can be the most efficient buggy-whip
maker in the world; but, if there is no demand for buggies, you should
recognize that, get out of the business, and get into something else.
The third key element is the money and resources to turn around, to
become a competitive entity. And the final ingredient is the
motivation of people. You have to be able to attract and motivate top
people in the key areas in which you are making the turnaround."
Bob Brown quoted by Donald Bibeault, author of "Corporate Turnaround"
Success Factor Summary
Control. You can't manage a turnaround by committee! When the ship is
sinking, the captain does not practice leadership by consensus.
Is there a
reason for the business to even be in business? What is your
competitive advantage? Why should customers buy from you versus your
competition? Do you really have or can you quickly find a sustainable
resources to work with….and I would add time. It will be very
difficult to turn the business if you will run out of cash in 30 days
or less. In the same token, there are many strategies to finance a
turnaround using internally generated sources of cash. We will get
into those strategies later in this program when we discuss "Financing
The final CSF is
motivation of your team and employees. If they are not motivated to
make this thing work. If the majority of your people are running
scared with their resumes on the street and expending great levels
energy in trying to locate alternative employment, the turnaround will
Did you know that
most businesses fail not because they can't solve their problems but
because they won't see their problems? It may surprise you, but even the
most seasoned business owners prefer blinders to reality when their
businesses begin to slide. Nor will it be easy to convince you to act
even when the signals clearly point to future disaster. Like most owners
or senior leaders you won't, on your own initiative, accept the facts of
your situation for what they are. A troubled company first needs a
crisis, and until that crisis comes, they tolerate trouble. What may
cause you to fight reality? Ego, Optimism, and as we have already
mentioned, you simply may be too close to the problem. The ability to
detect and act quickly to solve problems is the essence of good
Moment of Truth
So the questions
on the table are these: Has your business come to its moment of truth?
Are you in such a financial crisis that you can't stall anymore? Can you
put ego and denial behind you, face the facts and get going with this
turnaround? Are the other Critical Success Factors previously discussed
in this section in place?
One Final Question…Are You
Suffering from Burnout?
The definition of Burnout
Burnout is a
of mental and/or physical exhaustion caused by excessive and prolonged
stress resulting in:
and emotional exhaustion
resistance to illness
depersonalization in interpersonal relationships
dissatisfaction and pessimism
absenteeism and work inefficiency
Guess What? Since
you are in a very stressful business situation where you are
contemplating doing a turnaround, most likely you are also approaching
Burnout…or have arrived!
The problem with
being in this condition (in addition to all of the points above) is the
fact that you will make substandard decisions. And you can't afford to
be weak in this area…not now.
Here is what I
would recommend. First go to this website on Burnout. It is one of the
best that I have found. There you can take a test called "Checking
Yourself for Burnout". It will just take a few minutes but will give
you insight into the possible condition of Burnout. In addition, there
are a number of good articles to assist with you in treating Burnout.
Finally, if you are "off the scale" in terms of this condition, please
get professional counseling assistance. If you are suffering from
Burnout and it goes untreated, you will put yourself and your business
at great levels of additional risk!