There was a frantic call one morning. The man on the other side reminded me that we met in one of the marketing and innovation conferences he attended where I, together with some colleagues from Mansmith and Fielders, Inc. spoke. He then pleaded I should make time to meet him the same day – – his wife was about to leave him and the future of his kids was in danger because his business was about to collapse. I was his immediate hope!
Mentoring SME businessmen from different industries on how to turnaround their failing enterprise is one of the things I have been doing as an advocacy. It has given me two opposite poles of emotions – a lot of joy seeing some businesses improve, but sadness realizing that some business owners are sometimes the main problem. So I thought of sharing some observations about business turnaround. In fact, I have discovered a pattern why businesses failed or are failing. It can be attributed to one or more of the four major factors: Product-Market, People, Peso and Prayers. Brandmen and marketers can also learn from this sharing.
The first problem is having the wrong product – market combination. In fact, it is not uncommon I get my client dumbfounded when I ask my first question “What is the unmet need you are trying to satisfy in your market?” Many lack relevance so consumers cannot understand why they need to buy the product or service. A lot of owners would tell me about their differentiation but uniqueness without brand relevance is of dubious value to the consumers. Other times, the right product may have a negative brand association, or have a limited market, such as retail shops in the wrong side of town.
The second problem is having wrong people. In fact, it is not uncommon to discover egocentric, swivel chair business owners creating pricing strategy without knowing about offerings from competition or substitutes. They resort to supply-side thinking, relying on what they feel will work, without validating their intent with their target market. Other times, they spend too much time away from their business, preferring to seek self-worth via having a sense of prestige being officers in socio-civic or professional organizations instead of getting a sense of achievement in business, missing opportunities and unable to direct or redirect their company’s moves with their absence. The worst of people issue is about integrity, when business owners start to mix business with personal, be it in expense or in pleasure.
The third problem is peso or financial. Some business owners mismanage by over expansion, resulting to high overheads. Others exceed expense budget from the beginning, sometimes with unnecessary investment. When sales become low, they are unable to pay their creditors, or sometimes, their inability also comes from lack of business acumen, unable to trace overpricing, carried away by sweet talks of suppliers boosting their self-image. The problem of this type is when no full disclosure is given to stockholders, creating a spiral of more problems subsequently.
The fourth problem is known as prayers or to be more precise, the lack of it because it deals with unexplainable variables. The religious people usually refer to attaining success in God’s time, not man’s time. The reason is that the product-market may be acceptable, the key person appears to have competencies and finances are adequate but things do not seem to be working out. It appears the intent may be a ‘purification’ process that would enable the business owner to learn certain traits like humility, forcing them to confront personal issues and change their attitude and behavior for the better.
Denial and pride are two of the biggest enemies in turnaround. Unless the business or brand owners admit they have made the wrong decision, unless they realize that further procrastination or not being transparent will worsen the situation, unless they understand that they need to ask for help to undo errors, there is no motivation to change mindset, move on, be transparent and be a value creator, or at least be value neutral.
The longer the business owner is out of touch, the more things need to be adjusted, in fact, and some may no longer be fixable anymore. In the short term, a quick fix is temporarily needed to put out the fire, in the longer term; the business may need to change some products, policies and procedures, along with its practices.
(Thanks to BusinessWorld for publishing this article. Thanks to ANC Shoptalk for the interview. For entrepreneurial and turnaround seminars, please log on to www.day8.org. Companies losing money can ask for scholarship to attend Day 8’s various 3-hour courses)