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Corporate Turnaround Specialists

In today's brutally competitive business world, even high-flying corporate empires can go bankrupt overnight. For people who know how to turn a struggling company around, opportunities abound. They're known as corporate turnaround specialists.

They call them hired guns, slash-and-burn artists, or hatchet men. Their job is to breathe new life into dying companies, to restore sickly corporations to health, and to jump-start the engines of businesses that have run out of steam.

They are turnaround specialists -- a new breed of management consultant. Their work ranges from curing a simple marketing problem to supervising the liquidation of a company that cannot be saved. And in today's era of global competition, unstable financial markets and fast-changing technology, these freelance "guns for hire" are more in demand than ever before.

Intensified competition, economic changes, technological developments, or just plain old mismanagement can quickly lead to sluggish sales, shrinking market share, or even bankruptcy. More and more companies find themselves forced to bring in outside help.

Chris Smith has several years of experience in the business. His long string of successes has made him a sought-after turnaround specialist.

"I learned the hard way," he says. "I learned street smarts. Now I can walk in to a $5-million or $10-million company and fix them when they're at the point where next week they could be bankrupt."

Smith epitomizes the kind of energy and business smarts required of the good turnaround specialist. As a teenager, he worked in a factory to save up enough money to buy a house. From there he moved into buying and selling real estate and became part owner of a collection agency. By the time he was 21, he found himself facing bankruptcy.

"I got myself in financial trouble and that's sort of where this all came from," he says.

After working out his own financial difficulties, Smith realized he possessed a special talent that other people in financial trouble could benefit from. He started helping individuals -- ordinary consumers -- who had racked up their credit cards and found themselves heavily in debt.

"I started out very small and now it's developed to businesses. If there's a troubled company out there, I go in, identify the problems, fix them, and suddenly there's a decent company there."

Smith also buys failing companies himself, fixes them up and then sells them for a profit.

Charging upwards of $250 an hour, thousands of corporate turnaround specialists like Smith are actively putting out fires across North America. Sometimes all a consultant needs to do is advise owners and management of the steps they need to take to ensure survival. Other times, he or she has to jettison the old management and take complete control.

Often, being a turnaround specialist means doing the dirty work -- firing employees, eliminating pet projects and trimming administrative fat. But most turnaround specialists are genuinely concerned about the companies they deal with.

"Primarily I'm trying to keep people employed and keep businesses going," says Smith. "It's not that great to be laying people off, but if there's dead weight in the company, you have to get rid of it."

You need a good grounding in management basics, a firm grasp of financial principles, a sharp eye and, most importantly, an intuitive understanding of what is wrong with a particular company.

"You have to have a good understanding of people and you have to be able to identify problems very, very quickly," says Smith.

Companies don't always call Smith. Sometimes he goes to them, knowing before they do that they're in trouble. "I can walk into a store or restaurant and, just by looking at the shelves, I can tell if they're in trouble."

Although companies operating in any field can run into trouble, the heightened demand for turnaround specialists over the past 10 years hinges on one simple factor -- growth.

"Generally, they're growing too fast, and they're focusing on their sales and not taking a close enough look at their bottom line," says Smith.

"With growth comes cash flow," he adds, "and they confuse cash flow with profit. So there might be money coming in, but they might be operating at a loss. Because money's coming and they're growing and everything looks great, there's still money to pay the bills. But one little blip and they're in big trouble."

Older companies suddenly find that their traditional ways of doing business aren't bringing in the returns they used to. Sales are plummeting and losses are piling up.

"There are problems in every field," says Smith. "There are problems everywhere. The number of businesses that are actually run well and are run profitably -- I'd be amazed if it's over 30 percent. Probably 70 percent of the businesses out there are having problems."

Smith thinks management people are in great demand. "There's a huge need for that right now, management people that can go in and work on a start-up or work on a growth company and know what to do, without doing it by trial and error.

"Unless it's a major corporation or some kind of a franchise with fantastic systems put in place," he adds, "everybody's doing it by the seat of their pants. It might work, but a lot of times it doesn't."

Until those companies learn how to manage themselves, there will be a continuing need for turnaround specialists. There aren't many out there, according to Smith.

But that doesn't mean just anyone with some knowledge of management principles can hang up their shingle and call themselves a turnaround consultant. Knowledge and experience are very important and the only way to gain that knowledge and experience is to get out there and do it.

Smith warns that the job brings enormous pressure. "If I screw up, I screw up big. Suddenly 20 people are out of a job or somebody has lost everything," he says. "But I've never screwed up."

For those with the right stuff, the life of a turnaround specialist can be very exciting. Every day brings a new challenge.


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