Ep. 192 — Jeff Sands: Cash Is Oxygen — How to Fix Any Business in 100 Days

6 min read

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Episode Summary

Tuesday morning. A quarter-million-dollar payroll due Thursday. The bank account is not going to cover it. That was my life for five and a half years at our family business, and as COVID hits in March 2020, it’s about to be a lot of owners’ lives too. Jeff Sands literally wrote the book on this: Corporate Turnaround Artistry: How to Fix Any Business in 100 Days. He’s been Turnaround Professional of the Year three times. He also grew up in a family business, ran it through a 2002 downturn, got hit by Hurricane Katrina, lost his house and the company, filed personal and corporate bankruptcy, and rebuilt himself into one of the best operators in the country. So this conversation is not theory. We got into the Cash Conversion Cycle, why the 13-week cash flow forecast is the single most important document in your business (and almost nobody runs one), why you should do a liquidation analysis on yourself before the bank does it on you, the four legs of the stool that have to hold a turnaround together, and the race car analogy that names the real game right now: brake hard, then accelerate before everybody else does. The owner who gets this gets their oxygen back. The one who doesn’t gets scraped up in the morning.

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## Top 10 Takeaways
  1. Cash is your oxygen. Everything else (margin, pricing, cost cuts) is the surgery you do once you can breathe.
  2. The 13-week cash flow forecast is the most honest document in your business. Most owners have never built one.
  3. Run a liquidation analysis on yourself before the bank does. AR at 70%, inventory minus 25%, leasehold improvements at zero.
  4. Vanity revenue dies first. A $20M rock-solid core beats a $50M unsustainable top line every single time.
  5. Find the glowing ember. The profitable core customer, the one product line that works, and protect it.
  6. The four legs of the stool: lenders lend, suppliers supply, workers work, customers consume. The owner’s job is to rebalance all four.
  7. People rally around a plan. Step forward with one, even if it hurts everybody equally, and they will carry water for you.
  8. Stay out of the bank’s crosshairs. The salesperson can’t help you. The workout banker can, if you show up as the A student.
  9. Growth consumes capital. Doubling revenue means doubling inventory, doubling AR, and funding the gap before anybody pays you.
  10. Brake hard now, then hit the gas before everybody else does. The winners and losers in this cycle are made in that second move.

Sound Bites

“Cash is your oxygen. Cash gives you time to go do the other stuff. The other stuff is fundamentally raise prices and cut costs. But that doesn’t happen quickly.” (@TBD) — Jeff Sands

“If I owe the bank a million bucks, I got a problem. If I owe the bank 10 million bucks, the bank’s got a problem.” (@TBD) — Jeff Sands

“Every company has that little ember. What I’ve gotten really good at over the last couple of years is buying failed and closed factories where it’s done. Everybody’s gone. The doors are padlocked and we go in and restart them. That’s essentially grabbing that ember.” (@TBD) — Jeff Sands

“The best of times brings out the worst of people. The worst of times brings out the best of people.” (@TBD) — Jeff Sands

“Rat-like cunning is going to be the most valuable trait in the next six months in America.” (@TBD) — Jeff Sands

“It took us three years to pull off a six-month turnaround. But we did it.” (@TBD) — Jeff Sands

About This Episode

Jeff Sands is the founder of Dorset Partners and author of Corporate Turnaround Artistry: How to Fix Any Business in 100 Days (Wiley, 2020). He has been named Turnaround Professional of the Year by the Turnaround Management Association three separate times. Before becoming a turnaround consultant, Jeff grew up in his family’s New Orleans manufacturing business, returned as an adult to help run it, navigated a 2002 downturn, lost the business (and his home) to Hurricane Katrina, filed personal and corporate bankruptcy, and rebuilt from scratch. His expertise is not academic. It is hard-won. This episode was recorded in March 2020 as COVID-19 was shutting down the economy, which made the timing of Jeff’s book (and this conversation) almost surreal.

Resources Mentioned

  • Corporate Turnaround Artistry: How to Fix Any Business in 100 Days by Jeff Sands — 336 pages, the operating manual for fixing a distressed business. Published by Wiley, February 2020. — Available on Amazon
  • Dorset Partners — Jeff’s turnaround firm. He also offers his 13-week cash flow Excel template free via email. — jeff@dorsetpartners.com
  • Ken Sangenario — Referenced for his Value Opportunity Profile, which came from his turnaround consulting work
  • Profit First by Mike Michalowicz — Referenced for cash-first thinking at the bank account level
  • Jack Stack — Referenced for the stat that half the Inc. 5000 couldn’t meet two payrolls

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