Turnaround Professionals Decide and Implement Strategy for Troubled Companies
Creditors, Lawyers, Board Members, Oh My!
Maybe your company has cash-flow issues you need to address. Or maybe you’re facing a full-blown financial crisis. You may not want to admit it, but when the warning signs are clear that financial turmoil is on the horizon, you have to face them. The worst move you can make is to do nothing.
Interim Executives for Turnaround Management
Bringing in a turnaround CEO is one of the smartest steps a business on the brink of financial crisis can make. Your current executive team was hired for the skills and knowledge they have, which are probably impressive. But in the hiring process, you weren’t looking for someone with the skills specific to handling a crisis.
Most organizations will face financial problems at some point. They’re a common cause of business failure—but they don’t have to be. If you make the right choices in the critical moment when issues first surface, you can help engineer a successful corporate turnaround.
To save the company you must change the style of leadership to affect change. Clear thinking must prevail and a specific set of skills must be applied.
John Collard, Turnaround Professional
Interim turnaround experts bring the skill sets distressed companies demand. By definition decisive and objective, interim executives bring the experience and a fresh set of eyes to the problems a company faces, steering your troubled company away from the brink. And interim CEOs that specialize in turnaround management are equipped with the unique set of skills required to identify the root problems and implement the most effective solutions. That includes:
- The ability to take informed, decisive actions on a short timeline
- The skills to do a full analysis of the way your company works now, in order to understand why you’re losing money
- A knack for listening to employees at all levels in the company and commanding respect throughout
Successful turnarounds demand skills specific to troubled scenarios, including the ability to get results with minimum resources, manage problematic cash flow, and negotiate with on-alert workout bankers, investors and creditors. Turnaround professionals bring competence in managerial, financial and legal aspects of saving a company.
A company is unlikely to find those specific talents under its own roof. Someone that’s worked directly with companies facing financial crisis brings knowledge to the table that a CEO focused on business-as-usual goals like growth and retention won’t have.
Turnaround professionals generally are either interim managers or consultants. Both serve up strategy, but an interim executive could replace the CEO or other senior manager and make decisions to implement change.
“Consultants advise management, possibly the same management that got the company into trouble in the first place. Whether a consultant is effective depends upon management’s willingness to listen and implement the specialist’s recommendations,” Collard said. “An interim turnaround executive, on the other hand, serves as captain.”
And as an added benefit, bringing on an interim turnaround CEO is a move that inspires trust in lenders and investors—people whose good opinion will directly influence your ability to weather the current storm. If they see that the people in charge of the turnaround are the same ones that were leading the company when financial conditions worsened, they’re more likely to see further investment as a risk. Knowing an executive has taken charge that has experience guiding companies from the brink of financial ruin is a good way to regain confidence.
Amid the crisis decision-making, experienced turnaround professionals know that they need to keep business moving, focusing in particular on the company’s production and sales. Is revenue coming from existing customers or new business? How else can revenue be extracted from production?
It is critical to remember that “the good managers may have deserted the ship long ago,” Collard said. An experienced turnaround expert will know how to exploit the talents of remaining employees and make them step up, he said.
Further, good turnaround professionals can be expected to develop a permanent management team to preserve value within the company. A turnaround team of outsiders, in contrast, take that value with them when they leave, Collard said.
They may have been doing a good job when they started in a particular position, but they quickly get over their head when something goes wrong.
Ready to learn more about InterimExecs turnaround services? Contact us by web or +1 (847) 849-2800 for a confidential discussion.
Business Turnaround Strategies an Interim CEO or CFO Can Lead
Your company is unique, and any interim executive will recognize the importance of crafting a custom plan addressing your particular needs. To do that, experienced interim CEOs and CFOs generally follow a multi-step process.
1. Develop a turnaround plan with an operational roadmap.
To know how best to move forward, a turnaround expert needs a clear understanding of where you are now. A good interim CEO or CFO will therefore start with an operational roadmap to assess the business and create an action plan moving forward.
You’ve already identified that you’re having cash flow issues, that’s the obvious problem. But recognizing the reason behind the problem is rarely straightforward. The interim executives on the RED Team – InterimExecs elite team of executives and turnaround managers – have seen a range of issues that could lead a company to failure including:
- A bad product-market fit
- Cultural issues leading to low employee morale and high turnover
- Sub-par customer service that hinders repeat customers or causes cancellations
- Issues with the way the current leadership runs things
- Workflow processes that aren’t efficient or effective
- Particular product lines that aren’t profitable
- Staying the same, as the industry around the company evolves
To learn what specific issues are contributing to your financial crisis, an interim CEO or turnaround CFO will go on a fact-finding mission and make a thorough assessment of your current situation.
2. Determining the best moves to resolve financial problems.
Once they’ve identified the root of the problem, a turnaround CEO or CFO can start working out the best path to solving it. In a financial crisis, the first priority is to improve cash flow. If there’s a part of the business hemorrhaging cash, they’ll start there.
But interim CEOs and CFOs that specialize in turnaround management know that sometimes what looks like the most obvious problem is more of a symptom than the real cause. So, while they will consider how to address the immediate symptoms, they’ll ultimately give more priority to understanding the causes below the surface and how to fix them.
3. Creating a turnaround strategy based on analysis.
They’ll then take the analysis in steps one and two and use it to inform a business turnaround strategy to move the company forward. The strategy will include a clear list of action steps that address both short-term and long-term issues the company is dealing with.
And it will include a consideration of any likely pushback within the company—both from those in positions at high levels, and those doing the work on the ground. People tend to be resistant to change, so any successful change strategy has to address the human element. Experienced turnaround strategists know that buy in is key, and incorporate it into the plan from day one.
4. Leading the execution of that turnaround strategy.
With a course of action developed, interim executives will stick around to aid in implementation and monitoring of the steps they’ve recommended. They won’t drop suggestions and leave. They know the execution stage is just as important as the planning one, and that plenty can go wrong in implementation if no one’s guiding the process.
Interim executives stay involved at least until the business is stabilized. They’ll keep an eye on proceedings, and continue to analyze and measure results as they go.
5. Coordinate a handover.
Interim executives don’t manage a turnaround in the hopes of landing the CEO or CFO position indefinitely. They prefer to come in, tackle the situation they’re best at, and move on to help the next company that needs their services. That means their final role in the job is often to help find their replacement and get them up to speed and ready to take over. Or, if the executive team from before the crisis will be staying on, they coordinate a plan to hand the reins back, while leaving the company in a good position to maintain success in the future.
An interim executive will do their best to make sure they’re leaving the company in good hands, with a plan to move forward that won’t repeat past issues.
Imagine asking your auditor to file on time when 14 days before the filing deadline the Board fires the CEO for malfeasance. The level of trust was enormous, but the Interim CFO pulled it off.
-Board Member, Public software company
Read the Case Study >
Next Steps for a Business in Financial Crisis — Or One Hoping to Avoid One
Whether your business is in the early stages of recognizing there’s a problem, or you’re already facing creditors and the threat of bankruptcy or liquidation, the most important thing to do is admit you need help. It can seem easy to do nothing but wait and hope for the best, but inaction and denial are a sure-fire path to failure.
For concerned stakeholders, the entry of a highly-qualified turnaround expert can create calm amid the financial furor and guide a company back toward profitability. If you’ve accepted that you need outside help to work through the coming financial crisis, don’t delay. You can get the ball rolling on a turnaround strategy that makes sense and gets results by starting a conversation with InterimExecs Rapid Executive Deployment Program. We’ll get moving fast to match you with the right executive from our RED Team to support you through the crisis and help your business make it through to the other side.
Looking for a Top Turnaround Management Firm? Call in the RED Team
InterimExecs has spent over a decade hand picking top executives from around the globe to join the RED Team. 75% of executives are based in the United States and another 25% internationally with a high concentration in European countries like the United Kingdom, Germany, and the Netherlands. While RED Team executives are specialized in growth and/or turnaround, many have faced a wide array of challenging situations:
- 79% have fixes a failing organization
- 79% have reorganized a company of division
- 30% discovered fraud in an organization
- 25% were brought in to take a company through bankruptcy or liquidation
What is a turnaround expert?
Executives who specialize in turnaround management have dedicated their careers to helping fix declining companies. This may include fixing financial decline by cutting costs, repositioning in the marketplace, streamlining processes, restructuring debt, or even taking companies through bankruptcy. Most turnaround experts have backgrounds fixing declining divisions of a larger organization before they decided to take on more turnaround assignments helping one organization after another through crisis.
Do you have a turnaround specialist in my industry?
The RED Team spans industries and company types. You will see a range of specializations from manufacturing and distribution to technology, hospitals and healthcare, business services, and nonprofits.
How long does it take to bring on a RED Team turnaround professional?
Our process kicks off with a call to learn more about the challenges your company is facing and how a turnaround CEO or other executive can best support the management team, board, customers, and more. After our free evaluation, we can connect you with an executive in as little as 48 hours so you can assess chemistry and fit.
How are contracts structured with a turnaround CEO or CFO?
If a company chooses to move forward with an executive or team, we will draw up a contract through our placement arm, Rapid Deployment. With interim executives, there is no employee/employer relationship created, and contracts are easy to scale up or scale back as needed with a 30-day cancellation clause. Our motto is happy executives, happy clients, so we are checking in along the way to make sure everything is moving forward as planned.
How long does it take to turnaround a company?
Every company’s situation is unique. In most cases, an interim executive expert in turnarounds begins an assignment with an operational roadmap which can take anywhere from a week to a month. Once a clear turnaround plan is in place, an interim CEO or CFO will move into implementation mode to turn the company around which can range anywhere from 3 months to 2 years, with most assignments averaging between 9 months to 1 year.
Ready to learn more? Contact us by web or +1 (847) 849-2800 for a confidential discussion to see how the RED Team can help.