What does it take to turn companies around?

4:11 AM Suvir Sujan 1 Comments

As early stage VCs,  we are witness to the entire lifecycle of companies from birth to successful exit, distress sale or death.  In several situations, companies go through tough times along the way for various reasons, some internal (management discord/competence), some external (market doesn't exist, competition has more spending power, funding has dried up, regulatory hurdles, etc).  Some of the learnings from companies that have successfully weathered the tough times and turned themselves around are :
1. Quickly adapt Product/Service Offering  - Understand whether there is a product/fit gap, inherent structural problems with the current strategy or whether competition has a leverage over you and quickly adapt the business model and positioning. Dont fall in love with your strategy or product.
2. Assess Leadership team strength and make immediate changes - Are some of the current leaders not cut out for the job? Take the tough calls early, communicate to the rest why these calls are being taken to eliminate insecurities and confusion amongst those that are staying.
3. Dramatically cut costs and increase company runway  - Look at every cost closely. A lot of fat can acculumate in a start up. Be ruthless. Profitibility and financial health is something that can go a long way and allow for some mistakes as the company is turning around as the cash in the company can last longer.  Some of the changes do take time to frcutify. No cash, no company. Simple rule of thumb. Sometimes entrepreneurs who have had it easy in their financing forget that cash is not infinite and the good ones internalize that quickly and make the right moves fast to address this.
4. Overcommnicate the vision and mission across the company and energize the company towards a common vision.  Do not underestimate the power of communication.  A "can do" attitude at every level of the organisation can go a long long way.  This attitude starts at the top.



Abarshini said...

Thanks for sharing, I will bookmark and be back again

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