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The Real Question in a Turnaround

By Sumner Saeks

“I don’t need some so called turnaround consultant to tell me how to fix my business,” said the distressed business owner. “Sure we have been losing money every month this year, but all these people do is fire my employees. Shipments are going to be late, quality will suffer. My people have real skill, product knowledge and customer contact and relationships … should that all be tossed out the door?”
Are turnaround consultants simply hatchet men, like “Chainsaw” Al Dunlap of Sunbeam in the mid-1990s?
While it is important to cut costs, to “right-size” the business as the euphemism states, the real skill and expertise the Turnaround Consultant brings to the management of a struggling company is based on a more important question than just cost and cost control. All businesses must earn the right to exist. No business arises without a single all important element: customers. All businesses must have customers to survive, but to thrive all businesses need to find ways to better and more profitably serve these customers. So what is the important question? It is: how does our business serve our current customers more profitably? Hopefully even the most distressed business still has some customer relationships. If not it is just a matter of time until that business will close. The wise business owner is asked by her turnaround consultant,” How can your business serve your current customers and make more money doing so?”
This broadens the areas being considered for change from simply cutting costs, like employees, benefits, occupancy costs and other costs, to can we raise prices, improve quality, deliver more goods and services and increase the satisfaction of our current customers so that our business can earn more money. This question allows an entrepreneurial owner to engage in a revitalization process rather than fight it at every turn, like a mother hen protecting her chicks. This is a question of righting the ship by changing course rather than, at least in the owners mind, potentially sinking a ship that is already listing.
Does “turnaround” simply mean slash and burn? It need not be that way. The practice of turnaround is to aid businesses which had successfully served customers revitalize and renew to do so again.
By the way, this question should even be a driving question in the management for successful businesses. We all should be seeking ways to serve our current customers more profitably.

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