–How to save your struggling company: A simple system.

The debt hawks are to economics as the creationists are to biology.

Recently, I received a note reading, “I was fascinated to see that you are in the turnaround business. I have been buying distressed companies for many years. I was wondering if you have written any articles or books on managing companies.

Yes, I spent most of my business life resurrecting troubled companies, and though the effort is difficult in execution, the process itself is quite simple:

Step 1. Search for the one niche your company can dominate. It’s important to be the dominant leader in your area.

Example: I built a struggling, legal-supplies company, selling all sorts of desk objects and various other supplies lawyers use, into America’s largest used law book seller.
Example: I built a struggling software company, that created software on demand, into America’s largest business simulation software company.

In every case, I minimized or completely eliminated the ancillary businesses that did not match our focused objective. Convincing my associates to get rid of their beloved ancillary businesses may have been my most difficult task. They always believed these businesses added income, while in fact, these side businesses stole time and money from our focus.

It is important that the niche be narrow enough for you to dominate. For instance if used law books had not been a niche we could dominate, I would have narrowed further, perhaps to used books from only one publisher or only books for certain states. Niche focus is the key to success, but it requires discipline. Most business people cannot handle it, emotionally. It’s the “big fish in a small pond” idea.

Step 2. Mass market to your target audience. This included direct mail, Email (aka spam), telephone marketing, Google and Yahoo advertising, some magazine advertising. I do not recommend trade shows, direct personal sales or any other sort of marketing that requires travel (too time consuming and expensive). Every day, I was able to contact several thousand people via mass marketing at minimal cost, while the best a traveling person might do is reach a few people at high cost.

Here again, niche marketing may be needed. For instance, market only to one state or one region of the country. It is important to become the leader. There are many benefits that accrue to leadership, so being #1 in Illinois provides better opportunity for growth than does being #10 in America.

And that’s it. The system is deceptively easy, but requires great discipline. Every day, temptation in the form of side businesses or personal marketing will tempt you, destroying your focus. You will be reluctant to get rid of those products and services that seem to “fill out your line,” but really take time and money away from your focus.

In short, focus, focus, focus. Focus on a narrow product or service niche you can dominate. Focus on a narrow customer description you can reach with mass marketing. Your goal: To become the biggest in a defined area at one thing.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity. Those who say the stimulus “didn’t work” remind of the guy whose house is on fire. A neighbor runs with a garden hose and starts spraying, but the fire continues. The neighbor wants to call the fire department, which would bring the big hoses, but the guy says, “Don’t call. As you can see, water doesn’t put out fires.”

5 thoughts on “–How to save your struggling company: A simple system.

  1. Sound advice. Rodger.

    Coincidentally, a couple of decades ago I wrote a book with a cousin of mine and sometime partner, who is an engineer, MBA, and had run several companies by then. Although it was aimed at start-ups rather than turn-arounds, the advice was essentially the same.

    A mistake that many small start-ups make lies in trying to enter a new untested market instead of occupying a niche in an existing market that no one else has noticed or exploited. Developing a new market or introducing a new product without an established venue is often too capital intensive for small start-ups, and it is best left for those with access to venture capital they can tap.

    Carving out a niche in a tested market is the way to go, either with a product twist like specialization or a different way of selling into the market, such as are now available inexpensively via the Internet. (My wife loves to do eBay and is doing this small scale all the time ā€” and having great fun.)

    In our manual, we called the one point of focus “the singleton.” All the focus has to be on that, and that alone.

    Also, focus on marketing cost is right on. Entrepreneurs tend to focus on product features, not on making the sale, based on “Build a better mousetrap” and all that. Instead, we recommended beginning one’s business plan with the transaction and working back. We called this “transactional analysis,” a take-off on a pop psychology technique of that time.

    Accounting-wise, the cost of selling is as important as cost of production, or more so. Having the greatest product in the world is no use if you can’t actually sell it to consumers or other firms. To be competitive, both production and distribution have to be honed to a sharp edge, which requires “guerrilla marketing.” Now, technology presents opportunities that were unavailable heretofore, or out of reach cost-wise.

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  2. Tom, to my mind, starting a company from scratch is so much more difficult than rescuing a troubled company. Thinking of the idea, researching the idea, forming the organization, creating the systems, etc. all are more difficult, costly and time consuming than simply selecting from choices, which essentially what a turnaround expert does.

    It’s fairly easy to find dying companies (especially these days!), and then its just a process of paring out all the chaff, and focusing on the wheat. The focus goal already exists: To be the biggest [whatever] in the [wherever].

    Rodger Malcolm Mitchell

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  3. That’s true, Rodger, but daunting for many people. A lot of entreprenuers would think that starting their own business is a lot simpler (not necessarily easier) than trying to fix someone else’s mistakes.

    The book that my cousin and I wrote was a lead in to our consulting business at the time. We also held a free introductory seminar to critique budding ideas. We regarded tis as much as public service as a potential generator of consulting work, and it was gratifying to see some people follow their dream and become successful.

    One was literally a “starving artist” with a family who started a stained glass business after the seminar. Down the road about a decade, my cousin stepped in to pilot it for awhile when success threatened to sink the entrepreneur. By that time, he needed to find venture capital to expand and an experienced CEO and CFO to run the operation, or else sell out. A deal was worked out, and the company is still going strong after 25 years.

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  4. RMM,

    Do you still respond to old posts? I’ve scrolled all the way down to the bottom of your page and been slowly making my way up, picking out the posts that look the most interesting by title.

    (btw, this is a great website! a true treasure trove of valuable information.)

    You said you’ve spent most of your business life resurrecting troubled companies. Did you primarily purchase troubled companies, resurrect them, and then sell them for profit?

    Or, were you primarily hired by companies to consult them on how to resurrect their companies?

    It sounds like a facinating career. Is there anywhere to learn about the life of Rodger Malcolm Mitchell?

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    1. J Kra,

      Sometimes I invested and became a partner. On the most recent occasion, I agreed to accept a % of the gross. (Never take a % of profits.)

      My life is ordinary: Married, MBA, children, grandchildren, home in the suburbs. Not ready for a movie.

      Rodger Malcolm Mitchell

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