I have been a board member of in more than 20 companies through three economic crises and very involved in 19 of them. 11 of the 19 were winners in terms of creating returns to investors and management, and 8 were pretty much busts from a financial point of view. Commonalities in the outcome for all 19 can be related to the ideas about 10 things that matter. Interestingly, only 5 business failures are directly related to a bad economy.
Of the 11 companies that made something of themselves:
- 9 of them made it because they we were able to raise sufficient capital to fund them to success.
- 7 of them made it once we changed the product/service offering to allow them to operate in a protected market niche.
- 8 of them made it after we determined and executed on revised strategies.
- 4 of them were turned around with dramatically increased focus on sales and marketing.
- 3 of them created returns to investors and management once we developed realistic expectations about exit path.
- A few companies made it after we made needed changes in people, operations, and internal and external communications.
The 8 companies with poor outcomes all ran out of money and could not raise more. The inability to raise money was related primarily to one or both of the following:
- 6 of them had products or services that did not fit well in their markets.
- 5 of them were victims of market timing issues they had no control over.Sorting the Forest