It's Groundhog Day: A Lesson for Companies in Distress

By John K. Lane, CEO, Inglewood

Phil (Bill Murray's character): “What would you do if you were stuck in one place and every day was exactly the same and nothing that you did mattered?”

Drunk bar patron: “That about sums it up for me.”

Those lines feel pretty universal as we enter year two of this global pandemic. Day in, day out, most everyone seems to be trudging through, with the days and weeks and months all blending together. Around here the days are mostly marked by devising the menu plan and by whether it is a shower/shave day or not. Trash day brings particular excitement, because I get to take the trash down to the street. Well, it is at least something different.

Seriously, my family has few things to complain about. Our daughters are a bit harried with several young ones to attend to, but we all have our health and the COVID-19 tide does seem to be turning.

The distressed business trap: waiting for the problem to fix itself

The quotes above remind me of the many executives we have seen leading a company in distress. They believe that if they faithfully show up every day and diligently perform their daily tasks, somehow the problems facing the company will simply go away.

Perhaps some large sale will show up out of the blue and fix everything. The first and second waves of PPP funding will help, but unless the executives take dramatic steps to fix the core issues, the PPP cash will slowly dissipate and the company will slip back into a cashless rut. It will be Groundhog Day all over again.

While Bill Murray's character ended the endless Groundhog Days by reaching a kind of Zen level in his life, a distressed business executive has to make dramatic changes to the environment and the approach.

The easy path versus the hard path

I once told a distressed executive that showing up for work, putting out the daily fires, heading home, having a drink, and getting up to do it all over again was the easy path. I told him the hard path is to say “stop” and to make the difficult decisions required to end the madness.

As hard as they may be, the distressed executive has to make the calls: lay off long-term employees, fire unprofitable customers, significantly cut costs, otherwise reinvent the business, sell the business even at a suboptimal price, or perhaps close the doors for good. Sometimes this can only be accomplished by bringing in a trusted advisor in the form of a turnaround consultant or an attorney.

I was once told by a distressed executive that the best money he ever spent was on the fees to my firm, where we told him to shut his business. He said he felt an incredible sense of relief once he was no longer fighting the fight to save it. Many times, though, a business can be saved, but again only by making the tough decisions. That may mean an orderly sale of the business rather than holding on until value is gone.

Otherwise, 6:00 AM will arrive every day to the tune of “I Got You Babe.” Or it will at least until the decisions are taken out of the hands of the business owner by a creditor, lender, trustee, or receiver.