Anatomy of a small company turnaround

Competitive advantages such as proprietary products, unique skills, superior processes or intellectual property are not enough to assure a sustainable future. If not in a consolidating or obsolete industry, most companies fail due to leadership deficits. Correcting these deficiencies in a small company where everyone has multiple commitments is like changing a tire on a moving vehicle.

Although more substantial, corporate culture is easier to fix since most of the players understand the metrics and disciplines found in these organizations. Management is experienced in strategic and tactical operations, skills and duties are well-defined. And, people are generally hired and promoted based upon clearly defined operating practices. Small company turnaround work is a unique challenge in that many times the business is run in a more ephemeral way.

Underperforming businesses fail to anticipate the future or the actions of competitors, lack strategic planning, are plagued by insufficient leadership and a conflicted culture. In privately held companies the culture is an expression of the leader. Decisions may be made on hunches, emotion or in answer to an immediate challenge. This type of reactive platform can lead to conflicts, instability, inconsistent customer service and other unanticipated consequences, like insolvency.

For small companies that get into trouble, an effective turnaround must embrace and balance fundamental corporate practices with the insights and self-determination found in healthy (and not so healthy) entrepreneurial environments. Engineering a small business turnaround combines process, product and people improvement skills that can only be gained through years of experience in both cultures, something not generally found in one advisor.

Whether in decline, or just in need of a good place to start operating with better control, consider the primary steps I use in developing a small company rescue plan.

1. Situation Assessment - This "discovery" process involves an in-depth appraisal of the primary internal and external activities of the organization. It begins with an examination of the offering, cultural posture, management techniques, internal and external communication activities, operational processes, business development systems, competitor analysis and customer profiles.
2. Plan Development - Upon identification and determination of how and why current methods might be burdening the organization, a robust WRITTEN plan must be developed to fix the problems and measure results.
3. Change Management - The implementation process requires building or rebuilding the underperforming operational functions, gaining buy-in and holding the team accountable. For the best outcome, consider enlisting the help and perspective of a qualified resource from outside your company. In most instances these advisors are available in a part-time leadership capacity, assuring the lowest possible cost.

Since 1999, Lauterback Consulting has been assisting companies of generally less than 50 employees to turnaround, start-up, and grow. Learn more about my work with business owners and their CPAs, attorneys and bankers. Please, call me today.