Although not demeaning the accomplishments of these people, few small and midsize companies can make such dramatic changes. These businesses can have a difficult time getting a line of credit from a bank, typically don’t have meaningful assets to sell to increase the company’s cash position, and can’t afford to lay off large numbers of people.

There is another category of books written by business consultants that focus on financial and accounting issues. Unfortunately, many of these books deal with only the half the problem an executive faces in a turnaround, and none of them provide examples of how to write business plans to raise new capital or marketing/sales plans to increase sales. They also don’t address the people management issues and the mistakes the leaders make.

I have spent my career turning around and starting small companies and have found that both offer unique and sometimes very painful challenges. To accomplish corporate turnarounds successfully you need a great deal of energy, self-confidence, resiliency, and the ability to maintain a positive mental attitude every day. Your employees, shareholders, and family look to you for leadership and stability.

Business leaders who find themselves in a turnaround situation are initially afraid and likely to question whether they have the skill to fix their company. They might even feel worthless and sorry for themselves. Unfortunately, those feelings can’t last long or they’ll affect the energy and ability that is needed to turn the ship around.

Before discussing how to recognize that your company needs to be fixed, and how to fix it while maintaining control, let’s review some information on business bankruptcies and failures published in a 1997 Small Business Administration report (available on the SBA Web site in February, 1998):

According to the Small Business Administration, business failures are up 16.6 percent from 1986 to 1996. Business bankruptcies increased by 5.3 percent during 1996, rising from 50,516 in 1995 to 53,214 in 1996.

Why did I share this information? First, to let you know that if your business is in trouble, you aren’t alone. Second, I hope those numbers will scare you into taking a positive action.

How Do You Know You’re in Trouble?
Companies usually don’t find themselves in trouble overnight. It happens over a period of a few months to a couple of years.

How do you know your company is in or is coming close to being in dire straits? Here is a simple list of symptoms: