Keys to a successful turnaround

May 24, 2010

As a consultant for 30 years now, I have done a lot of turnarounds. Even though they can be terrible and painful, when they go well, a successful turnaround can be incredibly gratifying. There is nothing like bringing something back from the brink of death— whether that’s an old house, an antique car, or especially a privately held design or environmental consulting firm. Here are my thoughts on what it takes to stage a successful turnaround of a firm in our business: The firm has to look, feel, and even smell different. It’s one thing to come up with a turnaround plan. But if the office looks the same, the same people are there, the meetings are at the same time, the marketing materials look the same, the name of the business is the same… Guess what? It is going to most likely produce the same results. Not what you want! You need change all around! It is hard to turn things around with the same leaders. The leaders— the real leaders (as contrasted with hired managers)— may need to change. They let you get into the mess you’re in, so what makes you think they will get you out? This is always hard to deal with, but is probably necessary if you really want change. Don’t forget what you DO that clients want! If you are architects, you better darn well have some good designers. If you are wetlands consultants, you need scientists and planners who understand how to help their clients. I just want to caution you not to lay off the wrong people or only emphasize the business disciplines as you go through the turnaround process. What you do is as or more important than the support stuff. Negativity and skepticism cannot be tolerated in anyone. Critics be damned! There are always those who act like the situation is hopeless or things will never get better and they act accordingly— not to mention the fact that they pollute the minds and spirits of all around them. You need to eradicate this cancer, and quickly. Everyone needs to make sacrifices! Those should start at the top. Costs need to be cut to reduce the break-even point. Labor is the big cost. Cut it back and make it easier to be profitable. Don’t just take it out on the little guy; and, make it possible for those whose pay has been cut to get some or all of the money back IF certain goals or performance milestones are achieved. Look at the predictive metrics. The trends tell you everything. Are new project inquiries trending up or down? If up, promote that fact to all. If down, do whatever it takes to change the situation and look for more costs to cut. A simple but critical idea for a turnaround situation! You can’t cut everything. Some things need to INCREASE. Some things like marketing expenses and perhaps even a few key hires. If the bean counters get completely out of control, you will lose the opportunity that you could have because you won’t have the marketing to find out about it and if you do, you won’t have the people who are credible enough to clients to win it. Invest in the right things that will help you bring in new clients and projects and do a great job on them when you do. Even though it is a turnaround, you should be thinking long-term because the future will be here before you know it. Yes, you have to survive the short-term to make it in the long. But that said, the sooner you can start doing the things that lead to longer-term, more enduring success, the sooner you can reap the benefits from them. Only thinking short-term is a big problem with many turnarounds. Three words to the outside world: “We’re doing great!” Even when the business is hammered, DO NOT let the outside world know. No client wants to deal with a financially troubled firm, and no great employee wants to go to work for one either. Always be positive about the company to the outside world. Originally published 5/24/2010

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Zweig Group, three times on the Inc. 500/5000 list, is the industry leader and premiere authority in AEC firm management and marketing, the go-to source for data and research, and the leading provider of customized learning and training. Zweig Group exists to help AEC firms succeed in a complicated and challenging marketplace through services that include: Mergers & Acquisitions, Strategic Planning, Valuation, Executive Search, Board of Director Services, Ownership Transition, Marketing & Branding, and Business Development Training. The firm has offices in Dallas and Fayetteville, Arkansas.