Business Turnaround

The dream of many college MBAs is to go into a corporation and turn it around.

The story of how Lee Iaccoca, after being a Ford division head, went into Chrysler and pulled it out of bankruptcy is a great story.  There is an exact technology on how to turn a company around. Like any technical subject or engineering project, doing the correct action gets the correct result every time.

If you know the exact technology of how to turn business around you must first find out “What problem is the business having?”  After you have discovered that; you find out “Why does the problem exist?” “What is the source of the problem?” When you find the basic cause of a problem, it usually can be corrected with a step-by-step plan of attack. There is an interesting thing about turning businesses around. It is that it is almost impossible to do when you are too close to the problem and the people involved. When you are close to the staff you are emotionally involved with them. This makes ordering the necessary changes difficult. Therefore the problem continues despite all of your best efforts to solve it.

The reason it keeps continuing is because “The problem is never what you think it is.”

If it were, there would no longer be a problem. It would have been solved. This is because, if you know the correct source of any problem, you know what to correct. You usually have the ability and knowledge to do that. So the thing to remember is, “if you think you know the source of a continuing problem, you’re wrong, because the problem still exists.”


When purchasing a company with the intention of turning it around, there is an important issue. What problem is the seller having that he cannot solve? There is almost always some problem the owner cannot solve. It may be an employee problem, a profitability issue, or the competition cutting his throat. The job of a buyer or his financial consultant is to find out why a seller wants to sell? Why does the seller want out, this year, rather than 5 years ago or next year? When you find out his motivation, you can then determine what you must fix in order to turn the business around. You can then figure out if the problem is fixable by you or if you are just buying the seller’s problems.

Many companies’ only problem is that they do not do enough promotion and marketing.

Successful business turnaround is sometimes as easy as increasing the out flow of promotion and marketing to 14% of the gross income.

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