01 · Recognize
Turnaround
How do we stabilize and rebuild a struggling business?
You are in this case when
- Cash, runway or survival is in the prompt.
- Several things are wrong at once and the client needs an order.
02 · Structure
Which drivers matter?
- 01
Stabilize
Cash firstRunway, liquidity, critical service and near-term obligations.
- 02
Diagnose
Structural or temporarySegments, unit economics and root causes; viable versus losing.
- 03
Rebuild
Sequence the fixesPrioritize cash and viable profit; fund and milestone the plan.
Cash runway ≈ available cash ÷ average monthly net cash burn
03 · Solve
Work the scratch sheet.
Illustrative practice scenarioA business has $6m of cash and burns $750,000 a month. Segment A earns $20m of revenue and $4m of contribution; segment B earns $10m and loses $1m at contribution. Fixed costs are $6m a year.
- Cash runway$6,000,000 ÷ $750,000 = 8 months
- Operating result today$4m − $1m − $6m = −$3m a year
- Exit segment B$4m − $6m = −$2m
- Cut $1.5m of fixed cost−$2m + $1.5m = −$0.5m, inside eight months of runway
Eight months is the clock. Exiting the losing segment and one fixed-cost cut close most of the gap; the rest is a cash plan, not a strategy deck.
Work backward from an answer
If the answer is “exit segment B”, segment A must carry the fixed costs that remain. So check what fixed cost leaves with B before celebrating the loss that leaves with it.
04 · Recommend
Make the call in three buckets.
Exit segment B and cut $1.5m of fixed cost inside the eight-month runway.
The loss falls from $3m to $0.5m a year, and both moves are inside management’s control.
Build a 13-week cash plan and name the owner of each cut. Risk: shared fixed costs stay after B leaves.
“I would stabilize cash first, then distinguish viable segments from structural losses.”
Watch for: Accounting profit and cash are different. Inventory and receivables absorb cash even while the income statement improves.
Special sauce
Bring a real company into the room.
Would you prefer a higher-yield loan portfolio if it requires substantially more equity? Compare profit per unit of required capital under base and stressed losses.
Read the story →operations · Semiconductor manufacturingTSMCIf demand shifts toward a newer node, can spare older-node capacity meet it? Ask which equipment and processes can transfer before recommending an expansion.
Read the story →Three terms to use
- Cash runway
- Months of operation the cash on hand can fund at the current burn.
- Operating leverage
- How much profit moves when sales move, driven by fixed costs.
- Segment contribution
- A segment’s revenue minus its own variable and direct costs.
Original Harper practice examples; every figure is illustrative. Adapt the questions to the client’s objective, timing and constraints.