Discrimination. Medicare fraud. Embezzlement.
Those were just a few of the charges leveled at the executive hand-picked to run a health care laboratory.
The manager — who was subsequently sent to prison — had been hired years earlier by the aging owner to run the daily operations. By the time the deeds were discovered, however, the damage was done.
Years of financial loss, high employee turnover and “tons of money” for attorneys led to a situation in which the elderly owner was on the brink of filing for bankruptcy. That’s when Donna Nowak was called in.
“As a turnaround manager, you have to be prepared to make the tough decisions,” explains Nowak, a certified turnaround professional and founder of the Northern Ohio Turnaround Management Association.
Nowak took control of the medical lab as interim president and restored profitability by “settling lawsuits out-of-court, restructuring and building a strong team, revising pricing and launching a new marketing program.”
For nearly two decades, Nowak has used her talents to help sinking businesses patch the leaks, save the crew and get it sailing again.
“Human nature says we try to fix our problems ourselves and that’s true in business,” she says.
That is where business owners can get into trouble. Even the ones who recognize their company is spiraling out of control believe they can reroute the business. Sometimes, by the time a turnaround professional is called in, the business is too far gone to be saved.
“A turnaround specialist serves as a business doctor, analyzing symptoms, diagnosing ills and recommending corrective treatment,” says Nowak.
Here is how she does it.
Phase one
It’s the business owner that calls in a turnaround professional, but someone else may be the impetus, she says.
Often a banker or board member pushes the beleaguered CEO or president to take action.
“Quite often, the owner or manager of a troubled business is reluctant to make the necessary changes or is unable to function effectively in a highly stressful situation,” Nowak says. “He or she has probably never faced this kind of situation before and is apt to make mistakes.”
Nowak thrives on the challenge and is often able to see where entrepreneurs have blind spots.
Often employers don’t realize that some of the answers might be in their own companies. Whether it’s arrogance or ignorance, business owners often ignore their own employees in the search for solutions. Or it may be something other than ignorance.
“A lot of entrepreneurs are paranoid,” Nowak says. “They don’t trust their employees enough to seek their advice.”
When Nowak takes on a job, her first step is the interview, and that means everybody — management and employees, satisfied clients and dissatisfied ones.
“What I’m looking for in that discussion with employees is themes,” Nowak says.
If a number of employees express a common concern, that may be a place to start. Usually, by the end of the first day, and almost always by the end of the second, Nowak can pinpoint the issues that need to be addressed.
She also examines the financial data, P&Ls, the balance sheet, any information that can shed light on the issue.
And, when she dives into a project, it consumes all her attention.
“I do feel like it’s mine,” Nowak says. “Therefore I take very seriously the crisis and the stress. I’m challenged when I’m told it can’t be done. My personality is to migrate to the underdog.
“I just like a mess. I just want to clean it up.”
Phase two
The second step is to develop a strategy and tactical plan, Nowak says. She begins negotiations with creditors.
When she takes on a job, Nowak becomes the acting president. She prefers that position to that of simply a consultant. The manager must feel comfortable with her in the lead role. If it’s a situation in which management is looking for a consultant, Nowak often passes on other turnaround specialists’ names.
On average, it takes a minimum of six to nine months to get a company back on track. Nowak focuses on companies with $10 million and less in revenue.
It can be difficult for business owners to see the long term, but Nowak reassures them, “It’s an ugly baby right now, but we can do some plastic surgery here.”
The biggest problem she has to overcome?
“They have to recognize that they don’t have all the answers,” she says. How to reach: Donna Nowak, (216) 321-9181
Daniel G. Jacobs ([email protected]) is senior editor of SBN.
