I have a good friend who recently engaged in negotiations to help put a severely under-performing (read failing) resort hotel back on track.  They reviewed his credentials, were confident he could solve their problems, and were excited to see him come.  Then came the part we all love — the negotiation of price.  Of course my friend should have told them what his daily rate was right up front, but he waited for them to tell him what they were willing to pay.  Needless to say, it was ridiculously low.  It amounted to about 2 – 3 hours of the hotel’s revenues for two to three weeks of his time (more if you consider the work he would do off-site.)

I ask you this:  if you had gotten your business into a near-fatal financial situation, what would you pay to get it straightened out?  One day’s revenues?  Three days?  A week?  A month?  Only you can decide that, I suppose, but here’s the way I see it.  The new manager of the hotel (yes, of course they got rid of the old manager for nearly taking the property under,) didn’t have any “cash” to work with.  She was hoping my friend would be willing to atone for the sins of the previous manager.  He wasn’t, as you would imagine.)  So here she sits with no cash, a property that’s failing, and nobody to help set it right.  She’s never worked the accounting and finance side of the business, so she doesn’t even realize how dire the situation is.

What should she do?

My experience is, the businesses that need the help the most can least afford to pay for the help they so desperately need.  At the end of the day, if you don’t get your business turned around it’s going to go under and take all the employees and management with it.  Certainly you don’t want that.  On the other hand, if you bring in the right consultant things could quickly be back on track, making it easy to pay for what our new manager deemed to be “exorbitant fees.”

My good friend, in the story above, was willing to help this manager put her business back on track for what amounts to a little more than half a day’s revenues.  Does that sound like a big number to you?  There’s no question he has exactly what this manager needs, and that he would have turned the property around in a few short weeks.   As of today, this property still doesn’t have a consultant, and it continues to dwindle and languish under the new manager’s leadership (and will continue to, until she gets some help.)  

The difference between what that manager wanted to pay a consultant and what my friend was willing to work for was three measly hours of the hotel’s revenue.  She saved that three hours at a time when she “didn’t have the money to spend.”  But by doing so has almost certainly doomed the business.  The old cliche would tell you she’s stepping over the dollars to pick up the pennies.  But then again, I guess we have to go back to the original question. . .   What’s the value of a turnaround?  I hope if your business is in trouble, you won’t let it go down the drain for a mere three hours revenue.