In the wave of tech startups trying to capture market share by slashing prices and playing the “winner takes all” game, we seem to have forgotten the true essence of entrepreneurship. Today, a venture that is non-tech or that is not “revolutionary” is not considered entrepreneurial. However, entrepreneurship is not trying to get a bigger share of the pie but expanding the pie for everyone to enjoy. It lies in creating value for all stakeholders – business owners, investors, employees, suppliers and customers. Developing cutting-edge technology is only one of many means of creating this value. Another one of these means, often-overlooked, is what we call Turnaround Entrepreneurship.
What is it about?
Turnaround entrepreneurs acquire businesses that have been making losses for several years and are doomed to being closed down. They identify the core issues preventing these businesses from being profitable and put in place operational and strategic levers to bring them back to solid profits. Think of them as surgeons for businesses in ICUs.
How does it create value?
Companies shut down owing to human error are generally not replaced by something better. This leads to the extinction of a unique product or service. Turnaround entrepreneurs prevent this by preserving, in fact expanding, the value for all stakeholders. Investors and Employees benefit as the company regains direction and gets a second shot at life. Suppliers win as they retain their client and thus revenue. Customers are happy as they continue to receive uninterrupted service from their chosen provider. The previous owners are at ease as they were able to get rid of a business that they weren’t able to manage. In conclusion, the society benefits as we avoid burying a business that can still create value.
It is the need of the hour because…
Shutting down a business has more than just economic consequences. Of course, it reduces GDP by the contribution of the company in it and renders all of the company’s employees jobless. But more importantly, by shutting down a business that could still create value, we destroy a unique know-how and thus lose a part of ourselves; for it is not by chance that “société” means both “society” and “company” in French. Thus, a good company disappearing resembles, in a way, a species going extinct owing to human action. It reduces diversity and the ecosystem as a whole loses.
Case in point
Sinterpack is a Spanish firm providing end-of-line packaging automation solutions. As a non-core subsidiary of a large multinational, it wasn’t getting the attention that it deserved and was on the verge of shutting down. However, identifying the underlying value in the otherwise loss making company, Keravalon acquired Sinterpack in 2015. Thereafter, by putting in place 3 concrete operational levers,
- Cost optimization
- Horizontal expansion (selling to new geographies)
- Expanding the customer base (selling to clients in new industries)
the company was brought to profits within a year. Today, Sinterpack is at the edge of the 4.0 technology and delivers excellent service to enterprises worldwide.
All things considered,
Technological advancements are necessary, now more than ever, for us to survive and evolve as a race. Solutions to pressing issues, such as climate change, depletion of oil reserves and waste management, are extremely hard to find without cutting edge technology and thus tech entrepreneurs. However, we mustn’t forget that there is more to entrepreneurship than tech. We mustn’t forget the entrepreneurs who help create the world that technology seeks to improve.