A decades old consulting firm faced significant financial and operational challenges. Operating as a founder-led business, it had struggled to remain competitive in a rapidly changing market with an influx of competitors. For six years, the company operated at a negative profit margin while the founder took on an unsustainable workload—personally closing deals, serving as the thought leader, making every decision, and billing on nearly every client project.

When I first met the executives, they were at a breaking point. The founder, who wanted to create an exceptional workplace while catering to a diverse range of clients, felt overwhelmed.

The business wasn’t just struggling to grow; it was struggling to survive. The founder knew change was necessary but didn’t know where to begin.

Challenges Identified

1. Negative Profit Margin: The business had operated at a loss for six consecutive years, requiring immediate financial stabilization.

2. Founder Bottleneck: The founder’s involvement in every decision, sale, and client interaction created operational inefficiencies and slowed growth.

3. Unclear Priorities: Leadership struggled to balance competing priorities, including catering to all clients, producing thought leadership, and managing tight budgets.

5. Lack of Visibility: Decision-making relied heavily on intuition rather than clear data, leaving the leadership team reactive and unfocused.

Introducing Tradeoffs

The founder, with a heart of gold, wanted the business to excel in every way: creating an exceptional workplace for employees, catering to companies of all sizes and challenges, quoting within clients’ budgets regardless of scope, and kicking off projects immediately after signing a statement of work. They also prioritized producing abundant thought leadership content, rarely turning down requests of this kind.

But the reality was clear, we had to have honest conversations about tradeoffs. No business can thrive by saying yes to everything. The path forward required focus, prioritization, and strategic decisions to ensure long-term success.

Cost reductions: Some Easy, Some Heartbreaking

We began by tackling costs that weighed the business down. Some adjustments were straightforward, like canceling unused software subscriptions and being more mindful of travel expenses. But the harder changes came next.

In a consulting firm, personnel costs dominate the budget. It became clear that the business had too many resources and the wrong mix, which meant difficult decisions about reducing staff. These changes were emotionally exhausting but necessary to stabilize the company’s finances.

Putting On Your Own Oxygen Mask First

Another critical decision was pausing non-core investments. In this case, it meant putting a fledgling tech startup on hold—a venture that had been draining resources from the already struggling core business while seeking external funding. With the core business operating at a negative profit, it simply couldn’t sustain such investments. Pausing the startup freed up essential funds and bandwidth, allowing the team to focus on turning the core business around.

The #1 challenge for a growing founder-led business is the founder’s evolving role. In this case, he had to learn to shift from being the central hero to the strong, supportive leader.

Adjusting the True Scalability Bottleneck

The #1 challenge for any growing founder-led business is the founder’s evolving role. In this case, the founder had to learn to shift from being the central hero to a strong, supportive leader. Every decision, sale, and client interaction relied on him, creating a bottleneck that stalled progress and made scaling impossible.

Despite acknowledging this challenge, stepping back remained a struggle. The hesitation left a highly skilled team feeling undervalued and questioning why they weren’t trusted to take ownership. Wins in this area were small and hard-fought, but they marked a necessary effort toward building a more scalable and empowered organization.

Clarity for Action

Another critical foundational element was visibility into the data. The leadership team was flying blind, relying on guesswork instead of clear insights to make decisions and atrributed to the founder monitoring things closely. I worked with our team to implement forecasting and reporting systems for financials, sales, and project delivery. This included a leadership dashboard that all employees could view at anytime and the implementation of waterfall metrics, and improved billable resource allocations. To improve alignment and decision-making, we added a single weekly meeting to address risks, align priorities, and discuss key business topics. For the first time, leadership had the visibility they needed to act proactively instead of reactively..

Introducing ROIs and Hidden Costs

Another key shift was raising awareness to evaluate investments with ROI in mind and to consider less obvious costs, like opportunity costs. For example, attending conferences was seen as a valuable way to generate leads and bring back insights, but hidden costs often went unnoticed.

For billable employees, time spent preparing materials and attending conferences represented missed revenue potential, as it took away from client work. For non-billable employees, it was crucial to assess whether their time could be better spent on higher-value activities. By weighing all costs—both visible and hidden—leadership began making more informed decisions about these opportunities.

Results Achieved

• Profit Margin Growth: Profit margins increased by 28% within the first year.

• Cost Reductions: Overall costs were reduced by 44%, significantly improving the company’s cash flow.

• Empowered Leadership: Leadership gained clarity and focus, equipped with the tools to prioritize high-value opportunities and align efforts with long-term goals.

Key Takeaways

This transformation highlights the importance of strategic focus, empowerment, and clarity in rebuilding a struggling business. By making tough but necessary tradeoffs, increasing operational efficiency, and shifting leadership’s mindset, the company emerged stronger, more scalable, and better positioned for long-term success.