AS THE RECESSION drags on, businesses continue to fail at a jaw-dropping clip. The GMs and Chryslers may grab headlines, but smaller and mid-sized companies are also shuttering their doors. Sadly, many might have avoided that fate, says Renee Fellman MBA '85.
"There are a lot of companies going out of business," says Fellman, "that might have been saved or sold at prices more favorable to the shareholders."
Fellman should know. She is a turnaround expert—hired by companies struggling to stay afloat.
Recently a large employee-owned manufacturing company turned to her for help. The company was delivering half its orders late. The angry and frustrated sales staff complained that they couldn't sell the company's products if they didn't have confidence that the jobs would be done on time.
By streamlining and creating accountability—tracking how long it took everyone, including the sales staff, to complete a job—Fellman turned the company around. It delivered 98 percent of its orders on time while banking more profit.
"The day I left," says Fellman, "I had my management team in my office teary eyed. We'd been through the war together and survived."
Fellman, who is headquartered in Portland, takes clients that allow her full decision-making authority. Typically she's on board six to 12 months. She has no interest, she says, in staying once the immediate challenge is met.
In the past 18 months, Fellman has seen an enormous spike in the need for her services—oftentimes at companies that haven't yet faced up to the music. Many construction-related businesses are reporting a 50 percent decline in revenue, and consumer retail spending is dropping off the cliff. "People are just caught totally by surprise," says Fellman. "Things happen so fast."
That's why she developed a list of steps companies should take to prevent the worst.
Renee's Rules™ for the Recession
- Don't sell to customers who won't pay.
- Prepare worst-case cash projections for the coming six months; if necessary, take action now to prevent a meltdown.
- Solicit ideas from employees and advisers; implement those that will have the greatest impact in the shortest time.
- Implement changes to company processes that will lower costs and improve customer service.
- The sooner, the better.
"Many companies can be saved through operational improvements," she says. "But sooner is better in avoiding bankruptcy or closure . . . the most important rule of all."
By Melissa Steineger