Entrepreneur Lessons: Turning Around the Struggling Company
as seen through the eyes of Don Simkovich
It's not easy to tell when a company is in trouble.
Faulty data isn't as easy to notice as people who are hunched behind their computers writing code or typing up documents.
A sales rep who's booking appointments with prospective clients keeps the atmosphere buzzing with excitement and can distract from the problems encountered in production.
I spoke with Bruce Acacio, the CEO of Infinite Corporation, who's performed turnarounds at dozens of companies and let him know my hunch why start-ups and established businesses struggle:
"Is the main reason a lack of data tracking, inefficient production, financial mismanagement, or the inability to keep up with the pace of change in an industry?"
"It's all those," he said. "One problem may overshadow another.
"Honest, hardworking people may not know what kind of trouble they're in until it's too late. Bad processes and spending money they can't afford sinks them further into debt and they can't invest further in research and development.
"They find themselves behind the tech curve to fix the problem."
Infinite Corporation is in the business of working with companies to migrate data to cloud-based systems and the temptation is to make incremental changes. Bruce's company has been involved in more than 100,000 migrations which is more than IBM.
He says enterprises need to look at the total scope of what they're trying to accomplish.
"Systems are developed over a long period of time from a company that was once successful.
"Management doesn't update and look at things from a global view. They'll see little pieces of something but never come back and see the whole process."
Ask a simple question to unravel a complex problem."Why are you doing that?"
"That's the question I've always asked. There are multiple pieces that need cleaning up and the team didn't look at its own software and processes.
"Instead of an integrated accounting system, their mechanisms for tracking cash are separate.
"They might be in a 4th year of decline, but weren't sure they were declining. The top line's growing but profit margin's way off and they're struggling to pay bills and they're not sure why."
Profit margins may be high yet the company is slow to collect from clients and the assumption, says Bruce, is vendors don't need to get paid and the company loses control of cash flow.
What are the common reasons for success in the turnaround?
It's like triage in the emergency room. The patient's doing badly so what's the most critical issue first? Where are they in cash cycle? Stem the bleeding and bring them back into alignment.
Reduce the burn and work to exist long enough to fix what is broken.
Find out what's not selling and why.
Is a product being marketed badly, is it a tech problem or a sales problem?
The patient has to live through turnaround and you have to deliver a quality product to customer to keep more cash coming in the door.
What tips do you have for a struggling entrepreneur, business owner of any size company and industry?
They may be juggling too much. Too many people get off their core and they keep adding more stuff. The concentration of what they do really well is the better option.
You see people getting more and more frantic and they think the answer to is juggle more.
Concentrate on your core if things are difficult. Software is a particularly dangerous mine field and it's easy to add pieces incrementally.
You end up with mess of stuff that is so disparate that it's no longer functional
The manufacturing process for health care products is consistent and precise so adding another layer of confusion is not the way to go. Sometimes you need to stop and ask, why am I plugging in all these pieces that don't talk to each other?
What could you see or implement that others could not and why?
I've dealt with so many different companies over the years and got to know their Information Technology structures ranging from manufacturing, distribution, banking, and IT products to consumer lines.
I saw both the efficiencies and inefficiencies. You see mistakes where things somehow get hung up in one area over and over again and if you were always dealing in one particular sector you wouldn't see it.
What does a Small to Medium Enterprise owner / manager need to know about storing and using information?
Changes are vast. Storage is cheap and it's easy to maintain.
The problem is we can keep everything, but what do we do with it? We know there's value in information but why do we keep it and what do we do with it?
Are you seeing "typical" mistakes that companies make when either not upgrading systems or purchasing systems?
They wait too long and they see it as a cost they'd rather not spend. They get caught up doing what they did 10 years ago versus what they need to do today.
Advisors may be invested in old processes and they'll encourage entrepreneurs and senior managers to do little to nothing when they need to change things
Fiefdoms develop with little systems running in little groups instead of a holistic approach would make better sense.
At Infinite Systems, we don't break down a complex problem and do a piece at a time.
We look at the whole thing and bring everything over and execute it and get it working on the right platform to work properly.
Companies want to say we want to do this one thing and we say, 'no, you don't because you'll have to do it a million times.'