When A Turnaround Fails: What Went Wrong At Borders

Troubled bookseller Borders UK made true many a prediction today by entering administration. There is little doubt now that the Borders name will follow The Pier, Woolworth's and Adams (to name but three) on to the list of household names that will have disappeared from the UK during this recession.

But as with The Pier and Woolworth's (I admit I know little of Adams) Borders was a business in trouble long before the bitter winds of recession blew hard.

Sold by former US parent in 2007 and sold on again this year Borders has long been in turnaround territory although to the eyes of this turnaround veteran there have been few signs of a turnaround strategy in execution.

Having long been a patron of Borders Bristol it has been clear to me for some time that rather than focusing in on their core trade the team at the helm of Borders were making the cardinal turnaround error of being distracted.

Many a turnaround has failed by trying to grow turnover by diversification when the order of the day should have been a tight focus, slimming down, cost cutting, cash flow management, and diligent inventory control.

My reading of the situation at Borders is that crucial turnaround errors have been made. The stores are cluttered with non core peripheral products (things that are not books) that will have been tying up precious cash, churning margins down and either tying up key personnel who should have been concentrating on the books market or even worse driving overhead growth.

Many reports will blame loss of trade to internet retailers and supermarkets. Don't believe the hype. Like The Pier and Woollies before them Borders was killed from the inside not from without.

As I have said before, you can't grow your way out of a hole. The rule is shrink to survive and manage for cash, cash, cash and cash.

The Windows Free Business Experiment

At the start of this year my businesses partner @martynshiner & I started an experiment to see if we could run Severn Delta using free open source software.

In place of Microsoft outlook we have been using Roundcube Webmail. Instead of Word, Excel and Powerpoint we have used Open Office. Our servers are likewise Microsoft Free-zones.

To be really bonkers we have both been using 9 inch Eee pcs running Eeebuntu! As you can see above.

We of course run the day to day business of the company with our own ERP software built with open source tools and our in house IT crew of 2. This runs in a browser. FireFox usually although I am using Chrome.

After eleven months the only glitch is my forecast model which still resides in a spreadsheet (I know I know - we are working on it!). This has a tendency to crash Open Office, but this is the weedy processor in the Eeepc falling down so a hardware issue. Otherwise it's no looking back. We are overdue an overhaul of our desktop hardware and so will be rolling Microsoft Free desktops across the company replacing our remaining XP running hardware.

The conclusion on the Eee pc is that it is great for traveling as ludicrously light but just a little too light on processing power. Martyn is already playing with an old Toshiba laptop with Karmic Koala...

I sent this blog post from my Android running HTC Hero. Maybe not as achingly trendy as an iPhone but it is Open so we can write apps to hook up with our ERP if we want.

And as for Windows7...