Main Message

Managing in Bad Times

Always start with the worst-case view of the future...

Never attempt a turnaround with a team of people you do not know.
A turnaround is an intense, highly emotional experience. It tests everyone's ability. Thus, it is imperative that you have a strong sense of the loyalty of the people who are working with you. It is important that you can trust what they say. Otherwise, it may be too late to take corrective action once you find out what is actually happening.
Get reliable information
Knowledge is king in good times and bad. Accurate information in a turnaround situation is critical. You may have to hire a consultant to help get it. Often what has to be done becomes obvious once you have the information; it's just a matter of having the courage to do it.
Understand that the software business is a very simple business
While the software business may be complex from a technical point of view, it is actually a very simple business.

(TOTAL $ REVENUE) / NUMBER OF EMPLOYEES = $ REVENUE / EMPLOYEE
(TOTAL $ COSTS) / NUMBER OF EMPLOYEES = $ COST / EMPLOYEE

Revenue per employee is supposed to be more than cost per employee. It's that simple.
Cash, Cash, Cash
Without cash, your company is bankrupt. It may be profitable on paper, but if you can't pay your bills, you are at the mercy of your creditors. Generate cash by every measure possible, including stretching accounts payable, collecting accounts receivable or factoring accounts receivable and implementing imaginative marketing programs.
When you cut back, make sure you cut enough.
The single biggest mistake most companies make is that they can never bring themselves to cut back deeply enough. What will surprise you is that your company will be more effective and efficient with the smaller organization than it was with the larger one.
Make a list of what is critical to survival and what's just "nice to have".
There are some activities that are critical to survival and others that are not. Eliminate all things that are not directly related to generating revenue or delivery of the product. Everyone will try to convince you that their activity is critical, but most are just "nice to have."
Don't push products out the door.
There is a great temptation to release a product prematurely, but trying to generate much needed revenue by pushing products out the door before their time will only compound your problems and damage the company's long-term viability. Avoid this approach at all cost. It always comes back to haunt you.
Develop a new product strategy. Communicate it.
After meeting with customers and prospects, develop a new strategy, based on the strengths of your product line, that addresses the perceived needs of customers and prospects. Prepare a presentation, and then go on the road and present it in a seminar format to as many key executives as possible. Don't duck the tough questions. Make sure you have developed good answers that are supportable in fact. People will appreciate your efforts, and many will stay with you during difficult times. One of the reasons is that most of your customers have been through difficult times, too.
Focus on customers and prospects.
In difficult times, try not to pay attention to the negative stories published about your company. In fact, the best advice is: Don't read them. When the sun goes down, it is amazing how quickly people forget those stories or, for that matter, have never read them in the first place.

Concentrate on customers and prospects and on responding to their interests. They are the ones who are paying and will continue to pay the bills. Realizing this will make your job easier.
Don't leave any skeletons in the closet.
Everyone appreciates being treated honestly and fairly, particularly in difficult times. They are more understanding of your problems than you may realize. Consequently, don't take advantage of them in the turnaround process. Regardless of the outcome, you will be glad that you didn't.

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