The reality of investing is clear: 50-60% of startups stagnate rather than soar. They survive, yes, but they remain stuck – racking up small wins here and there, but never really gaining traction. Investors are stuck in limbo. The money isn’t gone, but neither is a clear path to profitability and growth. And that’s the worst outcome: no failure, but no success either.
I’ve been in this situation with companies in this exact position, and the reasons for stagnation are usually the same:
- Lack of Strategy: The vision has faded, and execution is all over the place
- Lack of Traction: Innovation is stalling, and momentum is lost
- Lack of Focus: Employees are engaged but working in silos, not towards the same goal
These are the red flags of a deeper crisis. It’s the kind of situation that gets investors nervous – but it’s also manageable. The key is knowing how to turn the ship around.
Turning The Ship: A Practical Playbook For A Successful Turnaround
The first step? Get shareholder buy-in. The situation is what it is, and pretending otherwise is a fast way to sink further. Acknowledge the problem, and then agree on the path forward. At this stage, it often means setting aside the original business plan. It’s out of date. It’s not working. Sometimes that means accepting that additional funding will be required – whether from existing rounds or a fresh injection.
At an very early stage I’ll do a deep dive into the logic of the crisis: comparing the initial business plan and its KPI with reality will immediately show where the business went off-track.
Finding the root causes for this is key to understand how you can address those topics.
To gain traction, communication has to be blunt and clear. There’s no room for beating around the bush. I’ve never been one to sugarcoat bad news. I confront the team with reality – warts and all. Sure, it’s uncomfortable, but employees know when things are off, and they need to hear the truth, especially if you want to free up the energy that’s been blocked by unspoken fears and frustration.
Here’s the key: when you level with them, you invite honesty from all sides. Suddenly, the fog lifts. Teams realize that everyone’s on the same page, and that shared sense of urgency fuels a desire to move forward. Once the truth is out there, you pair it with a clear execution plan. You set a new direction – one that feels like a meaningful change, not just a pivot to “try something else.”
What all stakeholders (whether they are investors or employees) are looking for is a clear, actionable execution plan. And that’s exactly what I provide: you will see that the turnaround strategy is well thought out and achievable. What the key milestones are, how success will be measured, and what timelines are we talking about. You will learn what’s going to be done to de-risk the process and ensure that the ship is headed in the right direction.
When The New Vision Isn’t Obvious – And (Informal) Leaders Don’t Support The Turnaround Strategy
Sometimes, the new vision isn’t immediately clear. That’s fine. But you must have a roadmap to get there. Transparency is critical. Communicate the current crisis and explain why it’s vital to overcome it (now). Outline the next steps and the timeline, and assign clear responsibility for moving things forward.
Key here: Don’t delay on identifying and empowering internal leaders. These people will be your change agents, both formal and informal. Get their buy-in early, and use their influence to help shape the plan. It’s invaluable.
But if they’re not on board, you’ll have to make hard decisions. You can’t afford to let anyone drag the team down, no matter how much history they have with the company. That’s a line in the sand.
This can be very difficult and may cause a bad mood at first sight.
This is how you deal with such a situation: If leaders or employees need to be replaced or supplemented, all stakeholders will clearly hear why it’s necessary to let these people go, and how you’ll manage that without causing further disruption.
A good solution on that is (early) involvement of the directly affected (and remaining) persons – what they need and what their contribution in this situation will be.
Assessing The Skills You Need – Now
Once the strategy is in motion, it’s time for a competency audit. You need to know where your team stands. It’s critical to understand the skill sets on hand and assess what’s missing. The worst thing you can do in a turnaround is ignore gaps in critical capabilities.
If your internal team doesn’t have the skills needed to execute the strategy, and you accept that without solving this, it’s nothing but planned commercial suicide.
So detail how you plan to upskill or bring in the right talent. Describe exactly the specific competencies needed to pull off the turnaround and how quickly those skills can be injected into the business. The plan for addressing skill gaps should be as tactical as possible.
Sometimes, upskilling is the answer, bringing in external experts for short-term projects, or delivering training programs to the team. Trust me, it’s worth it. I’ve done it in situations where the internal team wasn’t ready yet, and the returns came really quickly. And the team was grateful for the external support and grew in their own competence at the same time.
Reality Check: What’s Really Happening vs. What’s Being Said
At the outset of the turnaround, it’s essential to understand what the company is actually doing versus the narrative people are telling. This is a crucial phase: talk to your customers, talk to your frontline employees, and really understand what’s working and what isn’t. What do your clients truly value? What pain points are they solving with your product or service?
You need to deeply care about product-market fit. This reality check is critical because if you aren’t solving a real problem for your customers in a way that they value, no strategy or leadership can save the business.
You need to validate customer pain points and prove that your product can generate value immediately, but even more important in the future. And yes: you need to take care that the product is not just viable but scalable.
Only after this you can project where things need to go. Once you understand your company’s core value proposition, it’s about crafting a new, inspiring north star. And yes, in these days that often means technological innovation: how can you leverage the latest advancements to create even more value?
It’s important to understand that you don’t have to develop such technologies but making sure you include them into your internal processes as well as into your offering.
From there, you can build a clear strategy – not based on hope, but on hard facts and a deep understanding of where the company is and where it could go.
Break the company down to its most profitable, scalable core. Once that’s humming, then – and only then – do you scale.
Make sure that the strategy aligns with current market trends and emerging technologies. The clearer the path to scalability, the more confident you can be in the potential return on investment.
It’s your job as a turnaround manager to prove that the company can not only survive but can thrive in the evolving market landscape.
The Emotional And Commercial Turnaround
Executing this plan gives you more than just a new strategy; it gives you momentum. It’s the emotional turnaround that sets the stage for the commercial one. As soon as you see early positive results, you’ll notice the energy shift across the company. It’s not just about the numbers – it’s about getting people to believe in the future again.
A good turnaround manager will be paying close attention to early wins – the quick wins that show the strategy is working. This will not only drive team morale but also prove that the company can pivot and execute successfully, which is critical for investor confidence.
In my experience, this emotional shift is key. A company that feels alive again is one that’s on the road to real growth. And with the right plan in place, the commercial turnaround will follow.
