by Sumner M. Saeks
“Time is your enemy…” That’s what some well-meaning veterans in the field told me when I first started in this business. While this advice was meant to help me negotiate the unpredictable terrain I would face in the world of corporate renewal and turnaround, I quickly found that it was rather the mismanagement and poor usage of time that can become a company’s greatest liability. After years of experience and many successes later, I know that time appropriately managed and channeled can be a company’s greatest ally, in fact, it’s greatest asset… even more so than ready cash!
Most corporate renewal professionals will assert that “cash is king,” and see it as the biggest advantage a business can have. Although it’s true that without cash, any enterprise will surely fail, it’s the cash flow — the source and use of that cash over time — which must be managed properly. Again, the time factor is critical and requires a corporate renewal firm that understands how it fits into the big picture.
Recently, my company, New Growth Advisors, worked with the owner of a Chicago based metal fabricating company to create a corporate renewal plan in just one weekend. The plan, which included a headcount reduction, reallocation of a significant amount of work and salary reductions of all remaining employees, was implemented the following week. The company took a hard look at cash flow and cash collections were accelerated and payables extended. These measures quickly and efficiently brought the company above cash flow break even within two weeks. And in less than one month, the company was sold to an industry competitor, who fully paid out the bank, assumed the accounts payable and even paid the owner a significant up front payment plus an earn out.
This example illustrates the crucial role time management plays in the turnaround strategy. First, the bulk of the heavy corporate renewal planning was done off-hours. Working hours were utilized to keep the business operating until the restructuring could be implemented. Second, the corporate renewal plan was implemented immediately upon completion so no time would be spared in reaching the ultimate goal of selling, merging, or otherwise disposing of the company’s assets. Once it was operating at a better than cash flow break even, the business had the luxury of time, in fact, as much time as the owner deemed necessary to determine the disposition of his business.