Nearly every aspiring entrepreneur dreams about starting a company from scratch. Few dream of turning around a struggling business.
Like a friend of mine. He's wanted to own a business for years. I don't blame him. He's a brilliant operations guy. But there's a problem. "I don't know what kind of business to start," he invariably says.
That's why he's decided to buy a once thriving, now struggling business. Compared to a start-up the advantages are obvious: An established infrastructure, a certain level of market awareness, and at least some cash flow.
Plus the one thing every start-up envies: Existing customers.
Still, turning around a struggling business is far from easy. I asked Niels Juul, a partner at the brand recovery firm Nofatego, how he typically approaches a turnaround.
Juul and his firm just finished a three-year turnaround and restructuring of Cecchi Gori Pictures, the film production company behind Oscar-winning movies like Life is Beautiful and Il Postino. (Named as temporary CEO, Juul was brought in to recover lost assets and restructure operations after years of mismanagement and fraud.)
Here's what Juul says about how to turn around a struggling business:
Think like a firefighter.
We feel often like firefighters; when we kick in the door we don't know what's going on inside.
Usually the flames are bigger than we were told, and we walk in and don't know if the house will collapse before we put out the fire. That's because we're often called when it's almost too late.
You may get the opportunity to buy a struggling company when it's almost too late, too.
Why? Raising the white flag is tough. Most people don't want to admit they need help—much less that they're failing.
Everyone holds out hope, even to the end, so always assume the business is in worse shape than you were led to believe.
Ignore the business plan.