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Get back to basics, create a vision and empower your team

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Nearly every aspiring entrepreneur dreams about starting a company from scratch.


Few dream of turning around a struggling business.

There are numerous causes of a struggling business, but the telltale sign is cash is scarce.

When businesses run out of cash, the options become very limited. No cash, no business.

But many businesses survive these crises every day, if they face the brutal facts and start to do something about it. To address a crisis in your business:

(1) Frame the problem – Quickly get to the heart of the key issues facing the business.

(2) Create a clear vision – Work with the organization to create a clear picture of where the company is heading.

(3) Empower the team that will do the work – Explicitly communicate that the team is free to do things its way. Then back that up by backing off. Avoid interfering and undermining individuals on the team. Instead, work to remove any constraints that get in their way.

This is about getting back to basics. Keep it simple, not complicated.

And look for a quick win. That will lift everyone’s spirit and put much-needed confidence in their tank as they move forward.


If a once-successful business is struggling, it’s almost always a people-related issue. Not financing, not capital – employees, management or owners.

Somewhere along the way, something broke, and now there’s a disconnect between the owner’s concept and what people did with that concept.

Or what the owner did with that concept. The problem may be entitlement, complacency, laziness or ego.

Eventually, between the reality of the marketplace and the company’s ability to act within that reality, something fractured until it was too late.


Always start with people, because it’s always about people. People make the daily decisions that influence the outcomes in your business.

The difficulty is sorting through all the agendas, defensiveness and embarrassment at all levels of the organization.

This is the time to confront the brutal facts, identify and solve problems and work as a team that can debate the issues – and walk away committed to what is agreed upon.


Sacred cows can be a big challenge when confronting a crisis.

As the business owner, your job is to make it safe that everything is up for discussion.

That doesn’t mean everything will change, but at the very least, there can be some discussion around issues that normally are off limits. And that includes any shiny pennies, or new ideas, that you have been chasing that are simply distracting the business from executing on its core business.


Roll up your sleeves and participate in the company.

Be open. Talk to people. Show them you care.

Walk the 4C (four corners).

The idea is to be visible in your facility, listening to people, especially front-line people, who may have insights that could affect the turnaround.


Don’t immediately clean house. Sometimes, some employees need to go, but not everyone.

It’s extremely important to maintain the talent that originally created the concept or brand; it is the company.

Give your people the opportunity to not only save their jobs but to regain their pride in their company and their work.


Once you have a plan to move forward, put some focus on the back end and make sure operations is capable of delivering.

Focus on a key metric that, as it improves, so does the business. In many cases, this is gross profit margin.

Once you get your arms around overhead and have nonessential spending under control, incremental improvements in gross profit margin will dramatically reduce your break-even point and get your business back on solid ground.

Back to keeping it simple – you improve gross profit margin by increasing price and/or decreasing cost of goods sold, generally consisting of materials and direct labor.


Almost always, the biggest effect is direct labor. Find ways to measure this, compare to the project budget and discuss with the team daily so everyone knows the score and how to win.

The disconnect between the owner’s concept and what people did with that concept always manifests itself in one or two places: on the front end with the brand and sales, or on the back end in sourcing and operations.

Maybe the brand has lost its core attraction or equity. Or maybe operations can’t support the brand.


Brand starts, but back end delivers. No brand is better than its delivery.

Owners get excited when they land big accounts, but if your back end can’t feed those accounts, it can kill you.

Rapid expansion is attractive, but operationally, expansion can be a nightmare – especially because of the cash required to finance a major expansion.


Either way, when did that disconnect occur, and what was the reason? Get to the core of the problem, the first step, and focus there.

If your business is underperforming, chances are you’re going to have to fix it with the people already in the trenches.

What are you going to do with the team you have?

Tom Garrity is managing partner of Compass Point Consulting LLC in Hanover Township, Northampton County. He is a certified coach with Gazelles International and a certified exit planning adviser with the Exit Planning Institute. Compass Point provides growth and business transition consulting to small- and medium-sized businesses. He can be reached at 610-336-0514 or tgarrity@compasspt.com.

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