Eight tips for resuscitating a dying business

Maurice Korir

Maurice Korir likes to fix problems and has developed a reputation for turning around companies. He has worked at Mobil Oil, Airtel, Ogilvy PR and Uchumi Supermarkets.

He is currently the CEO of Fountain Enterprise Programme (FEP) Holdings, a role he took a 50 per cent pay cut to fill.

Under his guidance, the company recorded an 87 per cent reduction in consolidated loss before tax for the financial year ending December 2016, moving from Sh866 million in 2015 to Sh108 million in 2016. He speaks to JACQUELINE MAHUGU on what it takes to do what he does.

Admit that you have a problem

This sounds easy, but many people are never honest about the situation that they are in. Admit there is a problem, own it and resolve it.

Communicate honestly with all stakeholders about the situation and the challenges. Explain the magnitude of the challenge and what you are doing about it i.e. staff, clients, auditor, investors, the banks and suppliers.

Build a crisis team

The business turnaround team should consist of a mix of internal, external, existing and new employees.

It is difficult to have the change leader coming from within. Even if you run your business alone, you will probably need some help from outside.

You can even for a favour from a knowledgeable friend. Most of the time, the change agents have to be external, but don't leave it only to the new people. Turnaround is a team effort. It is very important to signal that a change is happening and that change must be visible.

Blend the teams that you have as you work. Look around and see who is good and keep them, but on the other hand there are people who might resist the change and it will be very expensive to keep them, so you have to let them go.

Take stock

Examine the hurdles and the proposed solutions in detail. Talk to leadership and management and all staff depending on size of the organisation. Don't ignore the shop floor staff –the people on the ground who actually do the work, like technicians.

This may create room for baseless speculations which may suppress staff morale. Review the books of accounts, market, get to know all the problems and solutions and collate the information. A lot of the solutions lie with the staff.

This will help you find out the problem(s) but also find the good things about the entity.

Differentiate problems from symptoms

The problems are usually few but have many symptoms. Do not mistake the symptoms with the problems.

1. Poor Internal controls and weak MIS (Management Information Systems).If you look at troubled companies in Kenya, this is the number one problem. It leads to theft and fraud.

If you look at the recently failed banks; Chase Bank, Imperial, Dubai Bank, the lacking controls were the problem. Same case as Mumias and Uchumi.

2. Operational Weaknesses. Wrong resourcing includes the caliber of staff, poor leadership and poor execution.

These two problems are relatively easy to deal with.

3. Agility problems. This is the 'hard to change' structure of the company. For example an airline with the wrong planes, too much real estate, an old railway, too many branches etc. A company must adapt to survive.

The more you are stuck with baggage, the harder and more costly it will be for the company to survive.

4. Market Problems: A stronger competitor, poor reputation, weak brand, changing customer needs, poor market confidence, disappointed stakeholders or investors, lack of markets etc.

Have a plan and keep adapting

The plan should have three phases which may overlap:

• Stop loss: Cut haemorrhage and reduce net cash losses. Deal with internal control and operational weaknesses. Whatever you do should reduce the losses, because if they remain or increase that would mean closure of the company.

A company should not attempt growth at all at this point, something many find hard to comprehend. Turning around the fortunes of an organisation isn't exciting! It means laying off people, shutting down non profitable lines. Stakeholders will panic. Aim for reduced operating losses, and cash break even.

Buy time. Even your friends will be waiting for the company to fail. In turnaround, closure can be a few days, weeks or months away. Do whatever it takes to extend the company's breath. Negotiate with creditors, banks, staff, and investors -all the stakeholders really.

This is a delicate bridge. You probably need a begging bowl and it will be humbling. Knock on doors, banks etc. Raise capital. Get some funding in bridge loans, short term loans, shareholder loans and extended repayments.

• Rebuild: If you make progress in cutting losses, you will start rebuilding confidence. Rebuild stakeholder trust, because stakeholder confidence is your lifeline.

Start innovating on the products, engage the market, get partners and change your business model. Aim to grow revenues and generate operating cash flow.

Keep an effective line of execution

First prioritise control and operational issues, then stay alive and finally focus on rebuilding. Stay focused. Do the job and steer off politics. Keep change continuous and make progress evident, starting with the easy things first. Keep changing teams and structures.

Build and break teams when they accomplish tasks. Also, don't apologise. It's not an elective office.

Faith and confidence

Give your all and have faith in God. You have to be confident you can do the job. Take an assignment you are passionate about and not for the money. If you focus on the job, the income will follow. Have faith in the assignment.

Character beats strategy

Turnaround is a character job, not a strategy job. Turnaround is very stressful. You need a burning desire to succeed. You also need grace to accept rejection, because you and the company will be rejected.

 Stakeholders will turn their backs on you and criticise, so you need to cultivate resilience in dealing with critics. Understand that turnaround is an intervention. Avoid individual heroism. Give credit. While you may represent change, most of the job is done by others –the team.

Quit if you can't make the change. Not every company can be turned around or you may be the wrong person for the job. It may be too late. You are a doctor who must cut limbs to save the company and give it a chance to rebuild.