Consultant: Avoid these seven business sins
By Furniture Today Staff -- Furniture Today, June 22, 2009
Greensboro, N.C. — Turnaround consultant Peter Tourtellot says furniture executives expecting to survive in a turbulent economy should avoid what he calls the "seven sins" of business behavior.
"This difficult environment demands an unprecedented level of operational excellence," said Tourtellot, who is managing director of Anderson Bauman Tourtellot Vos, a global turnaround management company based here. "It behooves all companies to search out where their internal weaknesses are and to correct them."
Based on his 20 years of work with distressed companies, here is his list of the top troublemakers:
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Dependence on a few large customers. "Doing business with the big guys is tempting," Tourtellot said. "But when their business gets cold, the dependent company usually catches pneumonia. It is almost impossible to recover when your business is so concentrated with just a few customers and they go away."
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Seat-of-the-pants management. Experience is valuable but it is unwise to rely on it entirely, he said. A business needs timely and objective measures of performance, including information to look at every day, such as sales, expenditures and Web site hits. Also, regularly listen to customers. "There should be no surprises at the end of the month."
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Relying on a new product to shore up the business. "Hope is not a strategy, and introducing a new color or style is not a realistic recovery tactic," said Tourtellot. "New products can't mask inefficiencies that sap the vitality and potential of a company."
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Denial. In tough times, too many executives adopt a bunker mentality and close themselves off from information they don't want to hear. "Denial of underperformance and the need for uncomfortable change is a leading cause of business failure," he said.
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Poor lender relationships. When the going gets tough, many executives avoid talking candidly with their bankers. "Nothing alienates a lender more," Tourtellot said. He added that most lenders will find ways to work with executives who are transparent and are willing to institute needed changes.
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Venturing into the unknown. "Management errs when it doesn't stick with what it knows, and moves into product or service areas that appear to have a low barrier of entry," he said. "In truth, venturing into new areas usually requires more knowledge and operational finesse than executives realize. And deviating from the niche can cause confusion and skittishness among customers."
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Inflexible or nonexistent business plans. "A strong business plan serves as a critical insurance policy in difficult times," Tourtellot said. He emphasized that good business plans are changeable scripts, and serve as the basis for vigorous debates on how to solve problems and continuously improve. "A flexible and frequently consulted plan is the mechanism in ensuring all stakeholders are on the same page."
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