Nobody calls a strategic advisor when things are going well. The hardest, most consequential work I do happens when a business is in distress — when cash is tightening, confidence is cracking, and the people running the company are too close to the problem to see the path out of it.
I have worked through more turnaround situations than I care to count. Some were dramatic — businesses weeks from insolvency, leadership teams in open conflict, creditors at the door. Others were slower burns: companies that weren’t dying but weren’t living either, grinding through years of stagnation that everyone could feel but no one had named. Both kinds require the same foundational discipline: the ability to be brutally honest about what is actually happening before doing anything else.
Most businesses in trouble do not suffer from a single fatal flaw. They suffer from an accumulation of deferred decisions, misread signals, and cultural avoidance patterns that made sense in isolation but compounded into a crisis. Understanding this is the first step toward fixing it.
Diagnosis Before Prescription
The most common mistake I see when a business hires outside help in a turnaround situation is that everyone arrives with solutions before the diagnosis is complete. The management team has their narrative. The board has theirs. The lender has theirs. The advisor is supposed to pick the right one.
That is not how turnarounds work.
The first thing I do in any distress engagement is spend time with people who don’t usually get asked their opinion — middle management, front-line staff, long-tenured employees who have watched the business change. These are the people who often know exactly what went wrong, and exactly when. They just were not asked, or did not feel safe answering honestly.
What you find in these conversations is almost always different from what the executive team has presented. Not because leadership is being deceptive — usually they are not — but because
proximity creates blind spots. The CEO is too invested in the decisions that got the company to this point to evaluate them neutrally. A good turnaround advisor’s first job is to create the conditions for honesty.
Stabilize, Then Strategize
A turnaround has two phases, and they must happen in order. You cannot strategize your way out of a liquidity crisis. You cannot restructure for growth while the organization is in survival panic. Getting the sequencing wrong is one of the most reliable ways to fail at a business recovery.
Phase one is stabilization. This means identifying and stopping the cash bleeds, renegotiating the most pressing obligations to buy time, and communicating clearly with creditors and key stakeholders to prevent the situation from deteriorating further while you work. It also means making a clear-eyed assessment of which business units, product lines, or geographies are consuming resources without a path to contribution — and making the hard call to exit or suspend them.
None of this is pleasant. But the willingness to do uncomfortable things quickly is what separates businesses that recover from those that don’t. Every week of delay in phase one is a week of runway burned.
Phase two is the strategic rebuild. Once the acute pressure is relieved, the real question becomes: what does this business look like when it is healthy? Not what it looked like before the crisis — that version clearly had structural problems — but what it should look like going forward. Who are the real customers? What is the actual competitive advantage? Which relationships and capabilities survived the crisis intact and can form the core of a rebuilt business?
This phase requires different energy than stabilization. It requires creativity, optimism, and a genuine willingness to reimagine the business rather than simply restore it.
The Psychology of the Turnaround Team
One thing business schools rarely teach about turnarounds is the psychological dimension of leading a team through one. The people inside a distressed business are not just managing operational challenges — they are managing fear, grief, and often a profound sense of personal failure.
Strong leaders in turnaround situations understand this and address it directly. They create space for the team to process what happened without getting stuck in it. They communicate with radical transparency — not in a way that amplifies panic, but in a way that demonstrates that leadership has a clear view of reality and a credible plan to address it. And they move quickly enough that the team
can see progress, because visible momentum is the most powerful antidote to organizational demoralization.
I have seen highly capable management teams completely paralyzed in turnaround situations — not because they lacked skill, but because they were waiting for certainty before acting. In a crisis, certainty is a luxury that almost never arrives on schedule. The ability to make sound decisions with incomplete information, communicate them with confidence, and adjust when the feedback comes back — that is the skill that turns around businesses.
What Comes After
The businesses I have seen recover most durably from a turnaround share one characteristic: they treated the crisis as an education.
Every distress situation has a lesson embedded in it about the business’s real vulnerabilities — about which customer relationships were shallow, which cost structures were fragile, which dependencies were invisible until they broke. The businesses that integrate those lessons into their operating model come out of the turnaround genuinely stronger. The businesses that treat the crisis as an aberration — something to be forgotten as quickly as possible — tend to find themselves back in the same situation within a few years.
A turnaround is one of the most difficult things a business and its leadership team can go through. It is also one of the most clarifying. When you have had to strip a business back to its essentials, you learn what is actually essential. That knowledge, used well, is the foundation of something much more resilient than what existed before.
Scott Gelbard is the Founder of SGI Global Partners Inc., a boutique strategic advisory and family office services firm, and Managing Partner of Peak Ventures, an international business consulting practice. He has advised businesses across North America, Europe, and Asia for three decades of
experience, with deep expertise in business restructuring, strategic advisory, and executive leadership.