Risks

Turnarounds take time. The greatest risk is that a company in difficulty will run out of money before the turnaround plan has a chance to succeed. Other risks include:

• Lack of a clear strategic focus: The leadership needs a vision for the turnaround and a clear plan for how it will be executed.
  
• A turnaround can mean losing good people: The turnaround process can be very taxing on employees and on management. Contributors and managers who are superstars in the normal course of business may not do well in the stressful environment of a turnaround.
  
• Companies may not be willing to make the hard choices that are necessary: A company may cling desperately to pet projects. Letting go of them can be a very hard thing to do. Companies can also run the risk of picking the wrong projects to execute. With limited resources, this could be irreparable.
  

Opportunities

A turnaround gives management the opportunity to take a hard look at the business and make improvements that otherwise might be delayed absent the current difficulties. Other specific opportunities include:

• Implementing improvements in operations that, if maintained, will lead to significantly greater profitability in the future.
  
• Motivation to cut waste and to emerge from the turnaround with a leaner organization: In a leaner enterprise, when revenue starts to return it drops directly to the bottom line.
  
• The opportunity to have a positive bonding and development experience for management.
  
• Organizational and managerial learning: A successful turnaround makes for stronger managers and employees – there’s no finer business school than going through a turnaround.