It’s tough to feel optimistic when your business is failing. But, InterimExecs RED Team executive Yoav Cohen knows how to save a failing business. “You almost always have a way out if you act quickly and decisively,” he says.
We asked Cohen to look at the most common reasons businesses fail, break down turnaround strategies for a company in crisis, and share his step-by-step action plan for struggling businesses.
According to stats from the U.S. Bureau of Labor Statistics, only about one-quarter of business startups will still be operating after 15 years. But why do some businesses fail but others continue to grow and thrive?
Over the last 15+ years, our interim executives have been instrumental in leading business success at companies across countries and industries. Their experience shows that there are some common reasons why businesses fail:
It’s not what business owners want to hear, but poor management is one of the most common reasons for business failure. Cleve Adams, who built a SaaS cyber security software company from pre-revenue to a $1B IPO in three years, notes that the best business ideas won’t work unless you have a quality team laying the groundwork.
Many private equity funds hear the words “interim executive” and think the only application is an Interim CEO or CFO for turnaround or short-term fill-in of a portfolio company. But PE funds seeking a great return look to interims for their unique abilities to build and transform companies.
An Interim CEO brought on to lead a recently acquired private equity portfolio company, for example, may match the hold period of the fund. That could mean several years of working to build, grow, and ultimately exit the company, hitting big returns for everyone involved.
Here are six major use cases for an Interim CEO, Interim CFO, or other interim executive in PE-backed portfolio companies:
Most funds hope to spread their wings and work beyond industries where they’ve already had success. In looking at new industries where acquisitions may cost less and produce higher returns, a little more diligence is often needed. The further afield a fund goes, the more they need expert leadership removed from prior operating teams.
We recently matched a $5B+ fund with an Interim CEO expert in e-commerce and consumer goods to help determine if a potential acquisition made sense. While the fund had deep experience in the manufacturing space, understanding the current challenges and opportunities to expand go-to-market strategy was essential. Once the deal closed, the executive transitioned into an ongoing advisor role to ensure the acquisition would be a success.
As businesses grow and scale, they often face the challenge of keeping up with operational demands while maintaining strategic leadership. This is where fractional executives come in. Offering high-level expertise on a part-time or temporary basis, fractional executives provide companies with the experienced leadership they need to drive growth, streamline operations, and manage change—without the commitment or expense of full-time hires. Part-time or fractional executives provide C-suite leadership, mentorship, and the operational upgrades needed to help a company break through the ceiling to growth.
In this webinar, InterimExecs CEO Robert Jordan takes a deep dive into the question of when choosing a part-time or fractional executive is the best choice for a company.
Nearly all (98%) US companies that responded to PwC’s 11th Global Family Business Survey say they have some form of governance policy in place. But, just what “governance policy” means varies widely. It could be anything from a shareholders agreement (75%) to conflict resolution mechanisms (22%).
In addition, the survey found that 78% of respondents say that protecting the business as the most important family asset is their top goal for the next five years and 72% want to ensure the business stays in the family. Despite that, in 2021, only 34% said they had a robust, documented, and communicated succession plan in place.
Perhaps it shouldn’t be all that surprising that so many family-owned businesses lack a formal plan. Creating a succession plan requires having difficult discussions around emotionally fraught family dynamics:
Despite widely quoted statistics that say that only 30 percent of family businesses successfully transition to the second generation and only 13 percent survive through the third generation, a Harvard Business Review report says that is not true.
When you were growing your business, filled with an overriding sense of potential, did you also start thinking about your exit plan?
Likely not. And with good reason. Entrepreneurs, business owners, and boards of directors are enthusiastic about their potential for success. They aren’t thinking about that moment when they are ready to retire. Or move on to a different business challenge. Or want to while away the days on a desert isle, sipping margaritas and reflecting upon their many successes.
But that day has come for you, which is why you’re in need of an exit strategy for your business.
We’re here to help.
Our six-part Business Exit Guide for Business Owners is the place to start your journey to the next chapter of your life and business.
Here’s what we will cover:
Interim executives, by definition, come into difficult situations, assess them quickly, and create a plan for success. That means they have a front-row seat to the most common business mistakes companies make in the areas of leadership, operations, human capital, strategy, business finances, and change initiatives.
Focusing on these fundamental business needs is a good starting point for any struggling business.
AHIMA, a nonprofit whose mission is to ensure that health information is accurate, complete, and available to patients and providers, had a big idea: To expand by buying a for-profit business.
The acquisition target, HCPro, was an industry leader in integrated information, education, training, and consulting products and services in healthcare compliance and revenue cycle management.
The combination, AHIMA CEO Amy Mosser believed, would broaden the reach of both organizations.
But, first came the challenge of the acquisition process – performing due diligence, planning for the integration, and setting a course for the future.
To do that, she needed help in three key areas: financial due diligence, workforce integration planning, and content licensing.
As the Greek philosopher Heraclitus is famously quoted as saying: “Change is the only constant in life.” And this year will bring a torrent of change!
As we have deployed InterimExecs RED Team members and talked with interim executives, company owners, and private equity investors, we have seen five common themes emerge:
So you’re looking for an exit strategy and the sale of your business seems like the best approach. But how do you get the most for the business you have built? Start right now preparing your company for a sale.
The good news for sellers: It’s a seller’s market. There are not enough assets in the world for the amount of investment banking cash that is sloshing around in the markets, as InterimExecs CEO Robert Jordan said in this recent webinar:
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First-year Change Agent members have access to the Interim Institute’s 4 hour audio program on the Fundamentals of Interim Management, and a one-hour strategy session to help jumpstart their interim career.
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