February 2, 2021
It’s Ground Hog Day!
A Lesson to be Learned by Companies in Distress
By: John K. Lane, CEO/Managing Director
Inglewood Associates LLC
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 Character: “That about sums it up for me.”
I am thinking that these quotes are pretty common-felt as we enter into 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. The days seem to be mostly marked by devising the menu plan for the day and by whether it is a shower/shave day or not. Trash day brings particular excitement as I am able 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.
However, the quotes above remind me of the many executives that we have seen who are leading companies that are in distress. They believe that if they faithfully show up every day and diligently perform their daily tasks, somehow the problems being faced by the company will go away.
Perhaps some large sale will show up out of the blue and fix everything. The first and second wave 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 Ground Hog Day all over again.
While Bill Murray’s character ended the endless Ground Hog Days by achieving a Zen level plain in his life, distressed business executives have to make dramatic changes to their environment and their approach.
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 difficult they may be, the distressed executive has to make the decisions to layoff long-term employees, to fire unprofitable customers, to significantly cut costs, to otherwise reinvent the business, to sell the business even at a suboptimal price, or perhaps to 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 attorney.
I was once told by a distressed executive that the best money that he ever spent was on the fees to my firm where we told him to shut his business. He said that he had an incredible sense of relief by no longer fighting the fight to save the business. However, many times business can be saved, but, once again, only by making the tough decisions.
Otherwise, 6:00 AM will arrive every day to the tune of “I’ve 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.