Talented and successful entrepreneurs make a business grow. They create new products, markets and customers, increase market share, revenues and operating profits, encourage their employees to new accomplishments, and take pride in their accomplishments. Then, as is inevitable, circumstances change as we are now experiencing. All these entrepreneurial skills are of limited use when all the business indicators are going down--when the accumulation and preservation of cash becomes paramount. Cash entrepreneurialism becomes the operative skill-set.
Many entrepreneurially-managed companies fail as the CEO cannot completely change his skin from leopard spots to tiger stripes, to change from being a wide receiver to a defensive lineman. Shedding a manufacturing facility that took energy, effort, and years of work to create; reducing salaries or laying off employees that previously took so much time to recruit; selling off slow-moving inventories of the newest pet product at below cost: these actions are excruciating to the classic entrepreneur whose whole soul was invested in the creation process.
Seasoned and skilled managers work both simultaneously, managing cash, optimizing expenses, tuning up balance sheet items, and carefully allocating capital while they are simultaneously targeting growth performance factors. The typical entrepreneur, however, doesn't typically have this complete skill set, and is so vested in each prior achievement that this rapid transformation is extremely difficult or even impossible.
There are only two solutions. The board or owners can do a replacement, either permanent or temporary, to a CEO who is capable of intense cash accumulation and preservation and whom has no personal or emotional involvement in the prior achievements of the company. His job is to save most of the company so it can live and grow another day. To make this work, the entrepreneurial CEO has to get completely out of the way, out of any line of decision making authority. Given the typical power of the original CEO vs. the board and his role in company history, this replacement process is difficult to achieve.
Much better, the CEO can fire himself (in his own mind), hypnotize himself into a new mental state, re-enter with a new mission to "save the company", putting his full energy and effort into the very tough decisions he will have to make.
Halfway measures won't work; begrudgingly, reluctantly and slowly taking tough actions will seal failure; bankruptcy or creditor workout will be the result.
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