Your business is heading toward the rocks. Quick, do you close your eyes and pray, or do you bring in an expert to help you change course? You bring in an expert, of course.

When the stakes are high, this is done all the time. The “bar pilot” is a perfect example. In the world of commercial shipping, when an oil tanker, container ship or cruise ship has to maneuver through a treacherous waterway, such as a river mouth or a congested harbor, an expert mariner called a bar pilot is brought on board by helicopter or high-powered boat.

Bar pilots are deeply knowledgeable about tides, currents, depths and obstacles, and they are experienced in operating in all conditions within that waterway. They know the internal and external players – including tug captains and shore linesmen – who unite to make the journey a success. Similarly, when companies specializing in labels, flexible packaging and label equipment need help piloting a change in business conditions, they bring in the equivalent of an industry bar pilot, someone like Micheal Lane.

As a turnaround expert, Lane has led companies to success at both global and privately-held levels.

What are the scenarios that prompt the need for a turnaround expert?
There are many situations, Lane says, where a company may be in a danger zone. The obvious signal is when the bank or creditors are on your doorstep. Other signs are the loss of major customers or consistently losing bids. There may be critical issues of cash flow, staffing or capitalization. There could be internal problems with ownership or company structure. Often, the company is struggling to stay afloat at the break-even mark.

Like the bar pilot, a turnaround expert needs discipline, precision, focus and skill to enter this kind of crisis situation, plot his bearings and chart a plan.

How does one become a turnaround expert?
In Lane’s case, it started in the salt industry 40 years ago. He watched global salt purveyors jockey for position, acquire competitors and build empires. He applied respected business principles to sales and marketing processes to create predictable results.

At Cargill Incorporated, as vice president and director of sales and marketing, he created repeatable systems for profit making so he could transfer knowledge to those he managed. He led the strategic positioning for Cargill’s $350 million acquisition of Akzo Nobel’s US and South American salt business. From there, he ran a brand strategy consulting practice, where he proved that well-aligned messaging and employee morale are foundational in successful business turnarounds.

He then moved into executive management at a mid-range privately-held label, flexible packaging and labeling equipment corporation in the midwest. When he took over as CEO, he systematically executed a successful turnaround over a multi-year period.

Between assignments at the moment, Lane has been speaking to industry groups about how businesses can stay afloat during a turnaround.

The first steps
The first step in the turnaround process is to deal with the feelings of powerlessness and blame. In a crisis, owners and managers may know something is wrong but can’t pinpoint true causes. They may blame the economy or competitors. It’s important, therefore, to take control of the situation by doing concrete analysis and reporting.

Start by listing all of the forces that are acting on the business from the outside. Examples include the rise of buying groups, changes in food labeling requirements, improvements in processes such as shrink sleeves, or new technology that changes traditional production practices.

Next, internal forces should be identified. All aspects of the internal workings of the company should be scrutinized. If there have been changes in company structure or major workflow processes, note those.

Understanding inside and outside forces will help owners be less reactive and more strategic.

Navigating a turnaround
If the bank appoints someone to intervene, there will be a triage process to allocate resources and address the biggest concerns first. These choices might affect relationships with suppliers and customers, so they may not be the choices an owner would make.

However, if failure is not imminent, there is a series of logical steps that can be launched by the turnaround expert, the company’s management team or a team of advisers.

1. Schedule a business meeting with the bank(s) and creditors. Check contracts and paperwork to ensure that liquidity and covenant requirements are met. Ask for a designated liaison at the bank and communicate regularly with that person. Be proactive and manage deadlines. Make sure documentation and financial reports are current and available during meetings. Understand options and outcomes and which ones are preferred.
The importance of these meetings are paramount, as they will set the stage for refinancing and access to capital once the company is on an upward trajectory.

2. Create a list of customers you have lost. Analyze your customer base and look for patterns in why customers are lost. Note internal and external causes. Document how losses affect consumables, existing inventory and ordering power. Look at where unused inventory can be reallocated. Calculate the immediate and future financial impact of these losses. Make a plan for preserving cash flow and minimizing excess inventory.

3. Map the company structure. Analyze the current organizational chart. Examine reporting structures and chains of command. Work toward building a leaner organization with reporting channels built around optimization rather than title or department. Highlight recent changes to the company structure. Look for ways to make better use of employees and managers. Flag areas that need attention.

4. Meet with the production team. Schedule a series of in-depth meetings with employees directly responsible for production. Consider including individuals from customer service, prepress, pressroom, bindery, mailing and shipping. These employees often see issues that they cannot control or that are not in their reporting chain. Look at scheduling, equipment usage, repair logs and more. Get a true picture of available capacity and what can be done to optimize it with little to no additional capital. Establish a conduit for employee feedback and problem solving.

5. Evaluate current pricing. Evaluate the pricing philosophy and discuss methods for dynamic pricing. List all job costs, with and without overhead. Create repeatability in the estimating process to maximize profit and minimize errors. Identify opportunities for incremental pricing to fill excess capacity.

6. Align sales around vertical markets. Train sales managers to dig deeper into customer markets. Show sales professionals how to be better resources for their customers. Hold strategy discussions on how to network within vertical segments and leverage relationships to open new markets.

7. Install CRM software. Research customer relationship management (CRM) software. Get management on board so there will be top-down accountability for prompt installation and training. Set goals and deadlines to review and correct data from departmental silos. Communicate best practices in data handling as new habits are established.

8. Research and develop a brand platform. Identify and extract the firm’s brand essence from the company’s history. Use that essence to develop a brand promise that the entire staff can understand and communicate.

9. Develop a comprehensive strategic plan.  Start with the big picture and narrow your conclusions as you get data and feedback. Document total market structure, market totals and an estimate of the company’s market share. Note the key market drivers, as well as the top five competitors and their share estimate. Systematize the data so trends can be identified. Sort data to spotlight opportunities that might have been overlooked.

10. Implement the plan. Involve and empower employees at all levels when implementing the strategic plan. Be specific about categories, breakdowns, deadlines and assignments. Define what success will look like for each individual and department.

How can owners keep their companies off the rocks?
When you’re headed for the rocks, it may be a relief to just settle in one place. In a crisis, staying afloat can seem like success. However, turnaround experts will tell you that staying in one place is very different than moving ahead. Breaking even or “almost breaking even” is not sustainable. Owners need a measurable plan for achieving incremental growth and profit.

Lane recommends the “Vision/Traction Organizer,” a worksheet found in the book Traction by Gino Wickman. This worksheet helps the leadership team crystalize the strategic plan down into a few pages, highlight priorities and assess results.

Management teams should continue to address new issues within the company, observe market forces, review the strategic plan and adjust it thoughtfully. Recruiting new employees should support improvements in company culture, as well as operational objectives.

Charting the course
Finally, it’s important to remember that a turnaround is not a one-time event. It’s a systematic process that includes strategies for strengthening and leveraging resources a company already has. It accounts for and influences external factors wherever possible to build new opportunities.

A turnaround takes the entire company into consideration so that no department or process exists in a vacuum. At any point, owners should consider bringing in the appropriate experts to provide deep, objective insight and advice.

Bringing in a professional turnaround expert to take a company through the steps listed above is much like the bar pilot who drops onto the ship during a tricky navigation. The maneuver can be done on one’s own, but the odds of success are amplified with an expert pilot at the helm.



Rock LaManna, President and CEO of LaManna Alliance, helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. He can be reached at [email protected].