DTC in Distress- A Guide to DTC & eCommerce Turnarounds

Who Is This Guide For?

This guide is intended to give distressed DTC/eCommerce heavy businesses with $10mm to $50mm in revenue a high-level overview of turnaround management basics and resources to dive into. This does not come close to replacing advice from competent lawyers, turnaround professionals, or restructuring bankers. Restructuring is nuanced, it’s difficult to provide blanket advice that works in every situation. After reading the guide, rinse through a few of the books in the resources section, then reach out to professionals that are a good fit for your company and situation.

Although the focus is on turnaround management, with a few tweaks, the same methods apply well for profitable businesses, as well as unprofitable but fast growing companies (2x — 4x year-over-year).

Before we start, I believe a little bit about us is important. It provides context, which is critical because it gives you a lens through which to figure out how relevant the suggestions in this article are.

My cofounder, Alex Ledoux, and I at Karta Ventures bootstrapped a handful of DTC brands in our early twenties, then sold them or took passive roles. He ended up working for a turnaround focused private equity firm, where he helped turn around ice.com (now icetrends). We met on Reddit, made minority equity investments together, and he pulled me into turnarounds. Now, the bulk of our focus is on digitally-native vertical brands and eCommerce-heavy retailers with revenue between $10mm — $75mm.

We welcome complex opportunities that others are unable or unwilling to tackle. As a result, we can invest in non-control and control opportunities as well as companies that are distressed, growing quickly, or somewhere in-between.

My team and I are responsive, discrete, and avoid pointless formalities. We understand how critical speed is in both turnaround & high-growth environments, we can tell you within 24 hours if we’re a fit. If you’d like to work together or know of an opportunity that would be suitable, feel free to reach out; I promise we don’t bite.

Destruction in DTC-land

Operators, founders, and financiers alike in eCommerce have found themselves in a precarious position as they pivot from building the infrastructure required to keep up with demand in 2020 to struggling with solvency.

As operators and investors specifically focused on distressed DTC and eCommerce, we’ve never seen this much inbound deal flow.

Why?

  1. Apple’s IOS updates negatively impacted the efficacy of digital advertising; the lifeblood of customer acquisition for many eCommerce-heavy brands. Customer acquisition costs jumped overnight to a point where digital channels are sometimes no longer profitable.
  2. COVID-induced supply chain disruption means brands do not have ideal SKUs in-stock, resulting in core eCommerce KPIs deteriorating. Many have been forced to choke seasonal Q4 sales, leading to a massive cash crunch. Freight prices jumping from ~$3,000 per container to $20,000+ have not helped.
  3. Brands aggressively spent to handle COVID-spurred growth in 2020. Entering Q2 of 2021, many were the “fattest” they have ever been as they anticipated growth equal to 2020 in 2021. Growth didn’t arrive, leading to burn rates accelerating.

The good news?

If you’ve grown a company before, you are capable of executing a turnaround as both require a similar skill set.

The line between being ready for your Series A or Series B and a turnaround is razor thin. James Shein’s Reversing the Slide illustrates just how thin that line is…

  • Lack of cash means you’re time-sensitive. Focus is on generating cash to meet short-term obligations while building the foundation for successful long-term growth.
  • Hiring difficulties. People love stability, although they will deny it. This is why people working at “startups” with valuations of $1B+ and $100m+ in the bank will tell you they work at a startup and not a late-stage growth equity fueled corporation.
  • Scarcity of knowledge and high risk. No institutional knowledge as startups lack any real operating history, while distressed companies likely have largely irrelevant worthless data.
  • Lack of credibility with lenders and suppliers. It’s hard to secure credit when you’re a startup and equally difficult when you’re in breach of covenants with your primary lender, while asking for more, all while trending in the wrong direction.

See?

You’ve probably done most of this before without realizing it. While pulling off a turnaround isn’t easy, neither was building your company in the first place. The benefit you have now is plenty of experience and a lot more grey hair.

The best description I’ve heard of what pulling off a turnaround is like comes from Jeff Sands, the winner of several TMA awards and author of one of the best turnaround books ever written — Turnaround Corporate Artistry. I highly recommend picking it up.

“This is the intellectual riddle I love so much about turnarounds, I’m trying to restart a factory and put 500 people to work, but I’ve got the world’s worst poker hand. The balance sheet is shot, the company stalled out, the supply chain is locked up, lawsuits are everywhere, employees are vanishing, and so are customers — but I think we can put the company back on track again, with none of our own cash. The first thing we need is leverage; I get the senior secured lender to let me produce the backlog in exchange for some debt reduction to them. Then I stop everyone in their tracks with the announcement that the bank will support the restart if, and only if, the stakeholder parties support and work within the confines of our plan. With bank support, everyone now wants to talk and hear our plan. Knowing the vendors are upset and unlikely to unanimously support my $12 million credit plan, our attorney crafts a special debt treatment where participating vendors are granted an improved position in the debt stack. Vendors then self‐select whether they will keep us as a customer and recover old debts through an improved position or will they opt to lose a customer and come up short in recovery? The vendors who choose to be supportive get our devotion and are a priority repayment. Now we have a plan that makes sense, has multiple leverage points, and is likely to be supported. No doubt these restart credit plans are tough coalitions to build and hold, but you are doing virtuous work, so despite the odds, good fortune is on your side.”

3-Steps to a Successful Turnaround

Turnarounds can be broken out into a few steps or components. They’re usually defined slightly differently by organizations like the Turnaround Management Association…but we’ll roll with a suspiciously smooth sounding 3-step process to keep things simple.

  1. Assess. Figure out where the company truly sits. What do unit economics look like at different revenue levels? How much downsizing is possible without failing to pay fixed costs? What are the core competencies of the business and how do we cut back to those? DTC-heavy businesses often benefit from reduced scale in the form of CAC efficiencies.
  2. Cut the Bleed & Find a Bandaid. Negotiating runway with creditors, finding vendors supportive of your turnaround plan, reductions-in-force, cutting costs…all without hampering long-term prospects.
  3. Growth. Assuming stage 2 goes well, you have a new problem to solve; fueling growth with an ugly balance sheet! The fun never ends, does it?

The Culture Shift: Evaluate & Change Fundamental Attitudes

Before starting down the path of a turnaround, you need to figure out where your company sits. Below are a few good questions to ask yourself.

Are you breakeven?

Losing money?

Have you lost a lot of money and will you keep losing money? Do you believe your growth justifies losses? Are your actions turning what would be a balance sheet turnaround into a balance sheet and income statement turnaround?

Great entrepreneurs know that building a beautiful company quickly requires a healthy dose of delusion. When you’re hemorrhaging cash and failing to scale fast enough to justify venture valuation or have a total addressable market size that is too small…it’s time to kick things into turnaround mode.

Turnarounds are the culmination of a series of very difficult decisions being put off or made incorrectly. Your new role will be to make those difficult decisions or reverse course in short-order. Some of my all-time favorite quotes about turnaround managers come from Donald Bibeault. They aptly summarize exactly what is required of the effective turnaround manager.

“The one thing that they do have in common is the ability to attract good people with a high feeling of loyalty to subordinates, who advocate the sixty- and eighty-hour week. I don’t know how you define leadership, but without it you’ll never get a turnaround. The only remaining characteristics a turnaround person needs are toughness and competitiveness. A highly competitive man enjoys a fight, enjoys dealing with bank creditors today, trade creditors tomorrow, and subordinated debt holders the next day. He should not have a vested interest in any decision that the company’s made. A good turnaround guy can’t waste energy defending past decisions.”

“There is a tremendous difference between turnarounds and custodial management. You have to have the star system in a turnaround. That requires the big egotist, the guy who is willing to take the big risk. He needs a superabundance of confidence. He can take somebody else’s mess and do the alchemy that’s necessary. To do that he has to be insensitive to people. After the turnaround is achieved, the Star is gone, because he can’t live with the board on a day-to-day, custodial basis. He’s too controversial, argues too much, wants too much, demands too much — he’s a pain in the butt. Good custodial managers are good “vanilla” managers. They stay in there; they do what has to be done. They run the business like it’s supposed to be run; they watch the margins, supervise the marketing, take care. Custodial guys are clearly a different breed. If they make a major mistake or if they don’t recognize the trends in the business, things will get rotten at the core, and then they will eventually lose the business to the Star again. The Star will be back.”

This above shows how an experienced turnaround manager leverages operational, financial, and legal skill sets to create years of runway for a company in a situation where a “vanilla” operator would burn in 60 days.

Hopefully that paints the picture. If it didn’t, good news, I have bullet points. As a turnaround executive you are:

  • Decisive and action-oriented. Time value of money is high when you are bleeding 7-figures a month; better to risk being wrong to move quickly. You act on directional data, do not sit around waiting for perfect solutions.
  • Creative — change your name to Scrappy Doo! Don’t be the person that says, “..but we need cash to do that!” There’s a 95%+ chance you just need to get creative with cash flow management. Thinking cash will solve your problems is a weak excuse and likely why you’re in a turnaround scenario.
  • Able to inspire a strong sense of urgency. There is no time for Christmas parties and elaborate offsites. Make this clear to the team on day one.
  • Integrity. Employees, suppliers, creditors and just about everyone has trust issues with you given your company is barely solvent as-is. Be honest, follow through, and show commitment.

Building the Right Toolset

Would you be terrified if your surgeon walked in with a popsicle stick and hot glue? Currently, that is you. Let’s get you a nice scalpel?

Lenders have no interest in owning your company. The exception is of course loan-to-own/turnaround firms but you’re not running into one unless your company is EBITDA negative and doing ~$100m+ a year.

Management teams are surprised to learn that creditors are usually both flexible and reasonable. This is because sophisticated creditors know the best odds of recovery involve working with you to create breathing room to execute a successful turnaround, especially given the asset-light nature of eCommerce.

Keep in mind, from a creditor’s perspective, you appear grossly incompetent. Their workout team is accustomed to working with executives and founders in denial that blame outside factors and take little action; do not get lumped in with this group! Outside factors may have impacted your business but you should recognize it’s not an excuse for inaction.

In the vast majority of situations, communicating the below buys you adequate breathing room.

  • The company is cognizant of the situation and its number one priority is repaying creditors by executing a turnaround.
  • Take home pay is being cut. Creditors want to see alignment; you suffer when they suffer.
  • Steps have been taken and there is a turnaround plan going forward. Summarize mistakes made and how they have been addressed.
  • The fundamental issues are understood by the team. Don’t be afraid to ask for help if you think they can help.

Note, if providing financials, annotate well and push for backwards adjustments where improvements have been made. Running at the same volume with 1/3rd the staff because of operational improvements? Make sure you get credit for it.

Don’t be afraid to push back if creditor requests are unreasonable, make it clear why you are uncomfortable or unable to comply with their request. Pushing back with cause will help make it clear you know what you’re doing, are realistic, and have integrity.

You may stumble into an unreasonable or even malicious creditor; they are almost always inexperienced.

  • Point out which creditors are supporting your turnaround plan. Make it clear, as a result, they will be prioritized (note, speak to a lawyer before using that messaging).
  • Spell out liquidation value versus what your turnaround will do for creditor recovery. The difference is massive and anyone with room temperature IQ or warmer will realize their best bet is to work with you. Companies in DTC/eCommerce do not have anywhere near enough liquidation value sufficient to repay their creditors in most cases.
  • Explain the cost of litigation. Walk through how litigation takes management time (and valuable cash) away from executing the turnaround. Ultimately, given how US bankruptcy law functions, there is a good chance that they are impairing their own recovery without realizing it.
  • Provide a reminder of bankruptcy potential. Mention your bankruptcy attorney and how you are ready to file if need be. Filing results in an automatic stay and likely a legally enforceable lower return for your creditors. Obviously this is a lose/lose and you want to avoid this.

A strong understanding of the law gives you the ability to negotiate with creditors, which creates time and money that the company can use to execute a turnaround.

Bankruptcy code in the US is strangely well-written, tried & true, and gives companies a great chance to rebuild, in turn saving jobs and creating value for society. If you haven’t committed fraud or done anything illegal, it’s very likely that a good solution for right-sizing your balance sheet to take pressure off the company.

Unfortunately, it’s likely that those you are working with, including your favorite lawyer — unless specialized in restructuring — have no understanding of what is possible.

I have sat on boards with smart people ranging from venture capitalists to experienced vanilla private equity heads and seen them give incorrect advice to distressed companies. We’ve even seen incorrect information from attorneys because they were unfamiliar with relevant tools. This isn’t to say anybody is stupid, it’s to point out that turnarounds require specialized skill sets just like early stage equity investing does. Sizing is critical; tools and techniques suitable for a distressed company producing $250mm in revenue are very different from a company with $20mm in revenue.

I highly recommend running a full process by interviewing 3–5 law firms or turnaround professionals before making a decision. To gain baseline knowledge, I recommend picking up the Turnaround Management Association’s relevant guides and reading through Jeff Sands’ Corporate Turnaround Artistry. Neither will turn you into an attorney, but they should help prevent a mishire.

A quick case-study demonstrating how an understanding of the law can help, and why finding the right professionals is critical, is the relatively new Subchapter V restructuring process. Subchapter V helps smaller businesses with less than $7.5M in debt reorganize with plenty of benefits that a normal Chapter 11 filing does not include.

  • Significantly less expensive than Chapter 11. Typically, anywhere from $50,000 — $200,000, likely on the lower end.
  • New value rule is eliminated. This means that equity is not required to inject additional capital to retain ownership.
  • A few nerdier benefits. Absolute priority is gone, only the debtor can file a plan and no disclosure statement is required.

Of course, out-of-court restructuring is always preferred if you have reasonable creditors, as it means you can allocate legal fees into tangibly improving the business and ultimately making everyone whole faster.

There are plenty of other legal tools available, but this is a free guide you found on the internet. Good counsel will be able to walk you through options and come up with creative solutions that give you time and room to execute a turnaround.

You probably have a set up where you receive regularly updated financials. Maybe you have an in-house finance team or outsourced accounting solution?

To be blunt, 3-statement financials are nearly worthless when running a high-growth or distressed business with the worst offender being of the cash-basis variety.

Luckily, you have a new best friend: the 13w cash flow model. You’ll probably spend ~20–60 hours setting it up, and then 2–10 hours a week keeping it up to date depending on your team, Excel skills, and financial literacy/basic accounting skills.

For some reason they aren’t mentioned or used much outside of turnarounds. I have no clue why. They are the perfect fit for fast growing startups and distressed businesses alike, as a granular model allows you to reinvest in your company at a much faster rate. Thus, faster growth is possible with less dilution.

Once you learn how to utilize a 13w model, you’ll never want to look at 3-statement financials again. You’ll wonder what you’ve been doing, and if you have a finance person on your team who hasn’t created one for your company. You’ll wonder why you’re paying them — uh-oh!

A well-built 13w model shows you exactly how cash flows throughout your company and when certain expenses hit. These can be built in a variety of ways, and there’s no correct way to do it or one-size fits all approaches. When we are looking at potential investments or our internal portfolio companies, we like to do it in a way that models out our primary eCommerce KPIs like AoV so we can see what changes in channel allocation do to our bottom line, which then flows into budgeting.

With a religiously updated 13w model, you can get granular enough with payment timing to create ~$3M — $6M in cash within a company doing $10M — $12M in topline revenue. Of course this depends on several factors like LTV, sales channels, etcetera. You can push that much harder, but we won’t cover that here.

In effect, you’ll be able to time expenses perfectly to free up as much cash as possible and model changes in your business to see how factors affect each other.

Want a template? Andrew at eCommerce Fuel put together a simple 13W model tailored to eCommerce here.

There are a few other resources floating around like Wall Street Prep’s guide, but I have not personally used it.

Using a plug and play management system like Traction/EOS, Scaling Up or OKRs can create the foundation for a very strong company quickly. Below are quick benefits of “installing” an operating system in your company:

  • Clarifies vision and sets tone and cadence of culture, which gets everyone rowing in the same direction.
  • Resolves common issues within dysfunctional companies like ineffective meetings, the wrong people, etc.
  • If you do not have formal management training, an established operating system will fill in the gaps you are missing.
  • Will quickly show you exactly who is delivering results and who needs to go.

I prefer Traction for companies with low revenue per head and Scaling Up for companies with higher revenue per head. The reason is simple, Traction is simpler and faster to deploy. When you’re dealing with a people-heavy company, keeping things simple is important.

Consensus is that any of the above is better than nothing. For what it’s worth, there do seem to be far more resources floating around for EOS and Scaling Up than OKRs, which makes implementation easier as you can distribute simplified books out to your core team instead of coming up with an internal curriculum.

Leaning Out — Stop Hemorrhaging Cash

The perfect turnaround is an art form requiring balance of operational, financial, and strategic skills to cut hard enough to stabilize a company while setting up for rapid growth.

Your first step is a tourniquet. Keep in mind what may be obvious to an experienced turnaround professional is likely very different from what is obvious to you. My recommendation is to make whatever cuts are obvious to you immediately. Go through every expense, line by line and do so on a weekly basis. Spend time thinking through each expense. A good example of a saving opportunity recently at one of our portfolio companies was finding a local company that would take away recyclables at no cost versus paying for disposal. Annualized, this resulted in nearly 6 figures of savings per year.

Keep in mind, equity and debt providers alike will usually be willing to roll any improvements you make to your bottom line backwards and forwards. For example, if you swap from UPS to FedEx and save ~10% on your shipping expenses, obviously that saving will carry forward without any detriment to the business but your creditors may be willing to give you the same adjustment going backwards when looking at your financials. Therefore, a dollar saved is a lot more than a dollar.

Regarding cuts, both myself and my business partner have yet to cut too deep. After speaking with dozens of other turnaround focused firms, operators, and consultants…I have not found anyone who has said they cut too deep. Steer towards too much over too little!

Booting up hard controls over spend is mandatory. Force “small” numbers like $500 to require your explicit approval. It’s important that the number is small, as it shows your team you genuinely value each dollar that flows out of the company.

Without exception, people are simultaneously your biggest problem and asset. In a turnaround, they fall into two camps.

  1. The hardworking loyal folk that love the company and will exhaust their efforts for company wide success. They can be capable or incapable of scaling, but these are the core people who will help you turn the company around.
  2. Bad apples that don’t do much, and need to go ASAP. You probably think they do more than they do despite any quantitative measures proving it.

Trying to delineate the two is difficult, especially if you’re the one that hired them. Understand that time is critical, if you do not create change, the company will bleed out and nobody will have a job.

Our methodology is simple, proven and largely lifted from EOS. We’ve used many times to cut payroll by up to 65% with a ~10% drop in output.

  • GWC (Get It, Want It, Capacity to Do It). This is a tool lifted straight out of EOS/Traction on Demand. If you haven’t read it, we highly suggest you do. It is our go-to management system for any company we jump into. We rank everyone via the GWC tool, and retain accordingly. If you have solid values and vision that you created, you can layer in alignment there.
  • Re-interview everyone. During the interview we collect critical information about how the company can improve, who they feel is performing well, who is not, and more. Amazingly, excellent and problematic folks are almost always universally identified by everyone. This has held true across companies with as few as 20 employees to 150+!
  • Measure results via scorecards. Again, lifted out of EOS. If it isn’t tracked, it won’t improve. We highly recommend creating scorecards via the EOS methodology and adjusting staff as indicated. You can create scorecards very quickly in most cases, and once you have 1–2 weeks of data, it’s often enough to make a decision about the top and bottom quartile. You’ll notice the top quartile will ask excellent follow up questions and start attacking operational problems illustrated by the KPIs they have responsibility for. Bottom quartile will make excuses.
  • Determine who cares. The reality is, if they don’t care, they shouldn’t be there. Ask salaried staff to put in 60–70 hour weeks during the turnaround. Turnarounds are difficult and require hard effort on everyone’s part. Make it clear to the team you are cutting your salary to the bare minimum (seriously, do this), and lead by example.
  • Ensure everyone is delivering based on their price point. Use Indeed, Glassdoor, or similar tools to figure out if their current compensation is market. In turnarounds, we’ve consistently found that staff are severely overpaid. Many functions can be offshored with proper training or shifted to a lower cost solution. If your paid channel manager doesn’t know how to use UTMs or your “finance person” doesn’t know what a 13w model is…they shouldn’t be there.
  • Ask fundamental questions. Does the math make sense? Can the person realistically pay for their seat? Are you a DTC brand paying someone to post organic social content despite organic reach being nowhere near large enough to justify that role? Do the same funds have much higher odds of generating positive cash flow if invested elsewhere?

Of course, there are plenty of other places where we see mistakes!

  • Attribution. We have seen large DTC brands using dashboards prior to IOS. In a post-IOS world, being dashboard heavy doesn’t work for the vast majority of brands. There are a few options like RockerBox that can help you navigate murky waters. At the very least, your team should be able to utilize UTM-level data to make their media buying decisions. Ensure they are familiar with attribution methods like holdout tests that do not require many resources to run!
  • Supply chain & COGS. When was the last time you shopped for suppliers. Did you run a real process? Are terms offered competitive? Is quality as strong as it could be, or is it hurting lifetime value? The best part about COGS wins is that you can adjust EBITDA backwards based on improvements here.
  • Does every SKU have a good reason to exist? You’d be surprised by how many SKUs you can get away with cutting, even if you think you’re a long-tail eCommerce retailer. I watched the founder of a $500m+ co guide a company we were both invested in through SKU rationalization — they were able to push the same revenue with a fraction of the SKUs! Much like price increases, you can be more aggressive than you think here in most cases. If jumping into a fresh turnaround, my recommendation would be to start cutting without any testing. Watch the data — but don’t sit around “testing” anything too extensively.
  • Agencies and consultants — rationalize them! Operators love agencies and consultants because they don’t require as much hands-on management. Not only do they hurt your valuation, they cost a lot of money and rarely pay for their own seat, especially if your business does over ~$10m — $12m a year in DTC. Eliminate them quickly and make these hires in-house if required. Showing you have strong in-house systems and processes established is critical when you sell your company.
  • Pricing. When was the last time you tested pricing? How does the business look with less volume and higher gross margins? Does it become substantially easier to run? Don’t underestimate how much easier it is to run a business profitably with better margin.
  • Offsites. Good lord, do not spend $550,000 on an offsite when you are bleeding cash. Will the team be disappointed? Yes. Will they be glad the company made payroll? Absolutely.

Financing — Strategy

You’ll need capital that is comfortable with an ugly balance sheet to stay solvent or to fuel growth once you’re back on-track. Regardless, partnering with the right firm is critical because they can reduce the amount of capital required, and therefore less potential dilution to you. Conservatively, an industry specialized turnaround investor can outperform a non-specialized vanilla equity by a factor of 4x — 12x.

Unfortunately, if you’re doing less than $75mm — $100mm in topline revenue, there isn’t much investor appetite for ecommerce/DTC specific turnaround.

Industrials? SaaS? Absolutely.

If your company is distressed because of temporary issues that are truly out of your control, but was previously experiencing strong growth and has a large TAM, you should be able to approach venture firms. They won’t be too picky around valuation provided it’s clear the business was disrupted due to macro events and not incompetence. However, most DTC is not a good fit for venture because exits are too small and the mechanics unsuitable. If you think venture is viable, approach firms with an appetite that have tackled DTC in the past. You can do this using a tool like CrunchBase.

The likely provider of capital is a private equity firm focused on distressed situations. They’ll generally be interested in businesses that, at a minimum, can be carved down to $2m — $3m in EBITDA. In DTC, that means topline revenue of ~$20m — $40m. Be careful with who you approach. If there’s a case for them to simply work with your upside down creditors and crush equity on the cap table, and they might do it as distressed investors are notoriously sharp elbowed. If you want someone specialized in DTC/eCommerce… There aren’t many firms focused on distressed DTC outside of us and a few upstream private equity firms like CSC Generation.

On the credit end of things, most programmatic and revenue-based lenders like ClearBanc and Wayflyer are generally comfortable with ugly balance sheets provided you’re trending in the right direction. Both are viable if you’re doing between ~$5m — $15m. Above that, you’ll have to find specialized lenders that will likely want collateral in the form of inventory or mission-critical business assets.

The best source of capital will be working with vendors to fuel your turnaround. Better net terms can make a huge difference in how fast a bounceback can be. If you’re stuck with a limited pool of vendors, triage sourcing in order to find vendors able to offer generous terms quickly.

Resources

As mentioned in the introduction, this is just a jumping point. I have ordered the books in tactical usefulness to a manager running a turnaround. One note, you won’t find many books that offer exceptionally useful tactical advice because of the litigious nature of turnaround.

  1. Corporate Turnaround Artistry by Jeff Sands. An excellent overview of what it takes to turn a business around. This is where I would recommend starting your reading as Jeff’s book provides an excellent learning foundation loaded with tactical advice that can be implemented immediately.
  2. Turnaround Management Association’s textbooks. They offer two nice primers. One covers management and strategic basics, the other is focused on the law. They were not as tactical as I had hoped, but still worth the read.
  3. Traction: Get a Grip on Your Business. This book goes over EOS, and how to implement it. We default most of our businesses to EOS as it’s incredibly simple and powerful. While it isn’t turnaround focused, implementing EOS fixes the majority of issues in any business.
  4. Scaling Up by Verne Harnish. A classic, EOS is actually a simplified version of this management system. If running a company with high revenue per head, we like to utilize Scaling Up. Again, not turnaround focused but implementing Verne’s management methodology will put most companies on the right track.
  5. Corporate Turnaround by Donald Bibeault. A classic that many turnaround folks consider foundational. In my opinion, you can probably skip this if you’re reading Sand’s book as it is a more comprehensive and up to date piece that accomplishes the same thing.
  6. Reversing the Slide by James Shein. James is an accomplished executive and this book provides good tidbits of information. Not as tactical as Jeff’s book, but still a good read. There’s a nice overview of legal basics in here as well.
  7. The Executive Guide to Corporate Bankruptcy by Elliot Fuhr. Excellent summary of bankruptcy. Quick to digest and to the point.
  8. TopGrading by Bradford Smart. Not turnaround focused but will help you fix your hiring process. The book is not well written and about 4x too long. The method definitely works, but a summary might be better to read.
  9. The Great CEO Within by Matt Mochary. Classic in tech circles, but the advice is relevant for DTC founders. It’s a very tactical and short read. Not turnaround focused, but goes over the foundations of excellent management. Keep in mind, a lot of the management advice is geared towards SaaS, which has very high revenue per head when compared to a DNVB or eCommerce retailer.

Have any suggestions? I would appreciate comments or questions! We intend on adding to this guide over time.

If your company is distressed or you know of a potential good fit, we’d love to speak.

Drop us an email at hello@kartaventures.com

Reach out on LinkedIn: https://www.linkedin.com/in/mehtab-bhogal/

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We invest in & buy digitally-enabled direct-to-consumer brands and eCommerce companies.

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