In today's brutally competitive business world, even high-flying corporate
empires can go bankrupt overnight. For people who know how to turn a struggling
company around, opportunities abound. They're known as corporate turnaround
They call them hired guns, slash-and-burn artists, or hatchet men. Their
job is to breathe new life into dying companies, to restore sickly corporations
to health, and to jump-start the engines of businesses that have run out of
They are turnaround specialists -- a new breed of management consultant.
Their work ranges from curing a simple marketing problem to supervising the
liquidation of a company that cannot be saved. And in today's era of global
competition, unstable financial markets and fast-changing technology, these
freelance "guns for hire" are more in demand than ever before.
Intensified competition, economic changes, technological developments,
or just plain old mismanagement can quickly lead to sluggish sales, shrinking
market share, or even bankruptcy. More and more companies find themselves
forced to bring in outside help.
Chris Smith has several years of experience in the business. His long string
of successes has made him a sought-after turnaround specialist.
"I learned the hard way," he says. "I learned street smarts. Now I can
walk in to a $5-million or $10-million company and fix them when they're at
the point where next week they could be bankrupt."
Smith epitomizes the kind of energy and business smarts required of the
good turnaround specialist. As a teenager, he worked in a factory to save
up enough money to buy a house. From there he moved into buying and selling
real estate and became part owner of a collection agency. By the time he was
21, he found himself facing bankruptcy.
"I got myself in financial trouble and that's sort of where this all came
from," he says.
After working out his own financial difficulties, Smith realized he possessed
a special talent that other people in financial trouble could benefit from.
He started helping individuals -- ordinary consumers -- who had racked up
their credit cards and found themselves heavily in debt.
"I started out very small and now it's developed to businesses. If there's
a troubled company out there, I go in, identify the problems, fix them, and
suddenly there's a decent company there."
Smith also buys failing companies himself, fixes them up and then sells
them for a profit.
Charging upwards of $250 an hour, thousands of corporate turnaround specialists
like Smith are actively putting out fires across North America. Sometimes
all a consultant needs to do is advise owners and management of the steps
they need to take to ensure survival. Other times, he or she has to jettison
the old management and take complete control.
Often, being a turnaround specialist means doing the dirty work -- firing
employees, eliminating pet projects and trimming administrative fat. But most
turnaround specialists are genuinely concerned about the companies they deal
"Primarily I'm trying to keep people employed and keep businesses going,"
says Smith. "It's not that great to be laying people off, but if there's dead
weight in the company, you have to get rid of it."
You need a good grounding in management basics, a firm grasp of financial
principles, a sharp eye and, most importantly, an intuitive understanding
of what is wrong with a particular company.
"You have to have a good understanding of people and you have to be able
to identify problems very, very quickly," says Smith.
Companies don't always call Smith. Sometimes he goes to them, knowing before
they do that they're in trouble. "I can walk into a store or restaurant and,
just by looking at the shelves, I can tell if they're in trouble."
Although companies operating in any field can run into trouble, the heightened
demand for turnaround specialists over the past 10 years hinges on one simple
factor -- growth.
"Generally, they're growing too fast, and they're focusing on their sales
and not taking a close enough look at their bottom line," says Smith.
"With growth comes cash flow," he adds, "and they confuse cash flow with
profit. So there might be money coming in, but they might be operating at
a loss. Because money's coming and they're growing and everything looks great,
there's still money to pay the bills. But one little blip and they're in big
Older companies suddenly find that their traditional ways of doing business
aren't bringing in the returns they used to. Sales are plummeting and losses
are piling up.
"There are problems in every field," says Smith. "There are problems everywhere.
The number of businesses that are actually run well and are run profitably
-- I'd be amazed if it's over 30 percent. Probably 70 percent of the businesses
out there are having problems."
Smith thinks management people are in great demand. "There's a huge need
for that right now, management people that can go in and work on a start-up
or work on a growth company and know what to do, without doing it by trial
"Unless it's a major corporation or some kind of a franchise with fantastic
systems put in place," he adds, "everybody's doing it by the seat of their
pants. It might work, but a lot of times it doesn't."
Until those companies learn how to manage themselves, there will be a continuing
need for turnaround specialists. There aren't many out there, according to
But that doesn't mean just anyone with some knowledge of management principles
can hang up their shingle and call themselves a turnaround consultant. Knowledge
and experience are very important and the only way to gain that knowledge
and experience is to get out there and do it.
Smith warns that the job brings enormous pressure. "If I screw up, I screw
up big. Suddenly 20 people are out of a job or somebody has lost everything,"
he says. "But I've never screwed up."
For those with the right stuff, the life of a turnaround specialist can
be very exciting. Every day brings a new challenge.
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