What is one approach to unlock value in underperforming businesses?

Unlocking value in underperforming businesses often involves taking decisive actions that address the core issues contributing to inefficiency and poor performance. One effective strategy is to close underperforming outlets and sell associated real estate, which can have several benefits.

When a business has several locations or operations, some of which do not generate sufficient revenue to cover costs, maintaining those outlets can drain resources, including management attention and financial capital. By closing these locations, a company can reduce overhead expenses, streamline operations, and focus more effectively on its profitable areas. Additionally, selling the real estate associated with these underperforming outlets can provide a significant influx of cash that can be reinvested into higher-performing segments of the business or used to pay down debt.

This approach typically aligns with a turnaround strategy that seeks not only to cut losses but also to enhance overall profitability by reallocating resources more efficiently. It can also improve the morale and performance of the remaining workforce by focusing efforts on viable business units.

In contrast, other options like improving marketing strategies or increasing advertising budgets may not address the root causes of underperformance effectively, particularly if the issues stem from operational inefficiencies or a poor location. Hiring additional staff could further complicate the situation if the existing staff is already