Dr. Earl R. Smith II

Before I contemplate any major changes, I first determine the chances of the business’s survival, identify appropriate strategies, and develop a preliminary action plan. The first stage of my engagements is spent fact-finding and diagnosing the scope and severity of the company’s ills. I develop answers to tough questions like:

o Is it in imminent danger of failure?
o Can the company survive a turnaround effort?
o Is it merely in a declining business position?
o Are the difficulties the result or market forces or bad management?

My objective during this stage is to come to my own conclusions about the best way forward for the company and to be able to provide those conclusions to the board of directors and senior management team. I tend to accomplish this in short, sharp steps rather than an extended analysis. I look for factors essential for viability such as one or more viable core businesses, the availability of adequate bridge financing and sufficient organizational resources.

Once the question of viability has been answered, I conduct a more detailed assessment of strengths and weaknesses in over a wide range of areas including core value propositions, competitive positions, technologies, product development, finances, marketing, operations, organizational structure, and personnel. In most engagements, I find myself dealing with various constituencies and vested interest groups. The most vocal are often angry creditors who may have been kept in the dark about the company’s financial status. In many cases, I bring in specialists in debt management to deal with them. Employees are often confused and frightened. They spend more time worrying about their own job security than fixing the business. Customers, vendors, and suppliers are also often wary about the future of the company.

Once I have identified the major problems, I develop a strategic plan with specific goals and detailed functional actions. I then present the plan to all key parties in the company, including the board of directors, the management team, and employees. In some situations, I also present the plan to key parties outside the company such as bankers, major creditors, and vendors. In order to proceed, I will need buy-in from all of them. Once these presentations are finished and the responses received, I analyze the situation and prospects for success. These discussions are always direct and open. One of the principal deliverables for me is to begin to reestablish where possible an atmosphere of trust and mutual respect.

Not all of my engagements go beyond this first stage. If I conclude that I cannot be of help, the engagement ends. The company receives the results of my investigation and a set of recommendations for a way forward – then we part company.

If I see a way to turnaround the situation, I present a detailed proposal for a full engagement and the entire turnaround process. Once it has been accepted, the hard work begins.