Driven by Robert Herjavec

Author:Robert Herjavec
Language: eng
Format: azw3, epub
Publisher: HarperCollins Publishers
Published: 2010-09-21T00:00:00+00:00

When drastic action is needed, the big solutions may appear obvious—cut expenses, grow margins, reduce staff and inventory, and so on. All well and good. But executing them awkwardly or ineffectively may backfire, creating an entirely new range of legal, financial and image problems that, instead of saving the corporation, could doom it.

Saving an ailing company, as I discovered, requires a scalpel as much as a hatchet, especially when applied to the steps shown below.

Ten Steps Forward

1. Stop the bleeding. A physician encountering a hemorrhaging patient doesn’t take time to ask about the individual’s diet or whether he or she is a smoker. The overriding concern is to stem the flow of blood, which, if unchecked, will unquestionably prove fatal. When faced with a company in difficulties, the first thing to check is cash flow—is more money leaving the company than entering it? If so, this demands your primary attention. Everything else can wait.

2. Forget “quick fix” solutions. Your firm’s condition probably did not occur overnight, so don’t expect to cure things in the same time frame. Urgency is necessary, but so is a long-term strategy to prevent a recurrence and get the company back on solid footing. The best plan: separate short-term actions (immediate cost reductions) from long-term needs (new products or services) and manage them in parallel.

3. Do not delegate. This is not the time for macromanagement, but for micromanagement on your part. Saving the company is your responsibility, and all actions should be made with your direct authority. This may not be the “normal” way of running your company, but the situation should not be considered normal. Don’t count on your current management team to solve things on their own; if they had been effective, you wouldn’t be facing the crisis in the first place.

4. Make a clear distinction between turnaround expenses and operating expenses. You cannot track the effectiveness of your turnaround program unless you can measure the cost accurately. For example, salaries and severance pay for laid-off personnel should be plotted separately from the cost of keeping the company afloat.

5. Don’t try to hide the urgency; proclaim it. You have two incentives to follow this advice. First, you can create a positive team atmosphere—not panic—by creating the attitude that “We’re all in this together” and helping everyone stay on message. Second, if layoffs are necessary, there may be legal requirements to alert personnel to the possibility.

6. Manage up if necessary. Shareholders, financiers and parentcompany executives need to be apprised of the situation in a factual manner.

7. Identify and nurture your most profitable products or services. They may surprise you. For example, your most profitable sections may not represent your core business; in any case, they do represent your best source of badly needed income and deserve attention.

8. Find the niche where you can be number one. This means narrowing your focus over and over again if necessary. Becoming the dominant player in your market is the best way to create stability.

9. Know the biggest source of savings on employee salaries.

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