Get your COMPANY OPERATIONAL EFFICIENCY TROUBLESHOOTING DIAGNOSTICS REPORT
Before You File for Business Bankruptcy
Restructure Your Debts or Turnaround Your Failing Company
Learn how to fix the problems of your failing company and get rid of your business worries
Worrying about where to get the money to pay your company’s bills, taxes, and employees
Considering business bankruptcy filing
Meeting soon with your banker because you are in default, you can’t make the loan payments or must stop foreclosure.
Searching the web for business turnaround, bankruptcy, receivership and insolvency information to help your company, but you can’t find anything helpful which will have a immediate impact to resolve matters.
Here are some common worries associated with a failing company:
- You can’t pay the employees on time. What can you do about it?
- Is bankruptcy the right answer? Will this save your company or kill it?
- Should you pay your taxes? What happens when the government or some other taxing authority padlocks your door?
- Can you make your loan payment? Should you ask your banker for help? Will you screw up talking to your banker causing the bank to foreclose?
- You’ve made personal guarantees. What happens when the business fails? Will you be working the rest of life to pay these debts? Could they take your house?
- A family member is dragging the business down. What do you do? Can you fire the family member without causing a major rift in the family? Or keep the family member and pray he or she stops screwing up?
And it’s a vicious cycle. Because your worries are stopping you, your business declines further. And this causes even more worry and less action.
Because you’re not an expert in business crisis management, you’re certain to make dumb, but honest mistakes right now.
Let’s see how easy you can make a mistake. Do you know what to do when…
- The sheriff seizes your equipment for the leasing company?
- The bank calls your loan?
- You can’t make the rent payment?
- The government padlocks your door?
- You’re out of cash and your big customer’s check is lost in the mail?
- A creditor is asking you to make good on your personal guarantee?
The list could be much longer. You can imagine all the problems for which you don’t have an answer. And when you decide wrong, you could be shutting your doors shortly and paying your creditors out of your own pocket.
Remember when you were in school. Leading a failing business is like having a pop quiz the day after you were sick. It’s not your fault you missed yesterday’s lesson, but now you must have the right answers or you’ll fail
Why businesses fail are usually due to mismanagement.
The following is a summary of many internal and external factors controlled by management.
- Autocratic management evidenced by a reluctance to delegate authority or train new management and staff. The result is overextended management and unclear lines of authority.
- Ineffective communications between the owners, management, staff
- Neglect of human resources evidenced by excessive turnover rates, which cause low morale, decreased productivity, dysfunctional staff and management deterioration.
- Ineffective compensation and incentive programs.
- Company goals not understood or achieved.
- Deteriorating business If new clients and prospects are not routinely established may be evidence that the company strategies are outdated and management is out of touch with the marketplace.
- Inadequate analysis of markets and strategies.
- Lack of timely and accurate financial information.
- History of failed expansion plans which drain a business cash assets, time and morale and create reluctance to embark on future growth expansion plans. Expansion efforts often fail due to lack of cash, management expertise or through market analysis.
- Uncontrolled or mismanaged growth. When business functions fail to support each other and the business fails to support growth. Many businesses focus solely on one aspect of the business (sales growth, operations, or supporting infrastructure) and neglect the other aspects.
Warning Signs: How Do You Diagnose Trouble?
Signs relating to a company's (project's) financial performance include:
- Decrease in profit
- Decrease in sales
- Continued failure to meet bank loan covenants
- Decrease in available cash
Signs connected with a company's operational performances include:
- Lack of both short and long-term planning and forecasting
- Quality control problems - increased returned goods and customer complaints
- Late or slow delivery
- Increase in fixed costs relative to revenues
- Management and employee turnover
- General employee dissatisfaction and performance
- Employee layoffs
- Declining revenues per employee
- Trade credit difficulties and restrictions
- Failure to take purchase and other cash discounts
- Delay returning telephone calls
- Delay in submitting financial statements to banks, lenders, and suppliers
- Board of Directors or Partners resigning
- Failure of Board of Directors or Partners to diligently exercise its oversight function
- Return of the "retired" founder to a visible management position
- Failure to adapt to new technologies
Signs associated with poor utilization of assets include:
- Worsening cash position - reduced working capital
- Decrease in quick asset ratio
- Increase in the debt to equity ratio
- Dwindling capital base
- Declining asset turnover rate
- Declining accounts receivable turnover rate
- Deteriorating account receivable aging
- Declining inventory turnover rate
- Deteriorating account payable aging
- Creeping loan balances
- Changing accounting principles
- Financing the purchase of fixed assets out of working capital
- Overpaying for assets or business units
- Acquisitions of or expansion into non-core related businesses or into businesses which cut into or compete with the core business
These signs are symptoms, not the problem. The signs are simply the evidence that a problem exists, and it is the problem rather than the symptom that must be identified and remedied.
Thus, before calling a turnaround specialist, management should ask itself some hard questions:
- Can a turnaround be realistically achieved?
- Is management aware that a true turnaround can take months or even years to accomplish?
- What can be reasonable and realistically expected from the turnaround specialist?
- Have business issues been isolated from personal issues? Or, is the primary goal of hiring the turnaround specialist to protect the owner from personal guarantees and preserve personally owned assets?
- Is management willing to admit that the business problems are, in all likelihood, the result of mismanagement?
- Is management willing to become, if necessary, the student rather that the teacher or the follower rather than the leader?
- If asked to give up the controls of the business is management willing to do so?
- Is management willing to face its own shortcomings and to face facts that may reflect on its ability?
- Since the turnaround specialist is often a temporary fix, is management willing to change?
- Can management learn to function in a highly controlled environment, subject to being monitored by outsiders?
- Is management willing to accept the business' failure since some are simply unavoidable and not savable?
- Is management willing to agree to a turnaround specialist's engagement if the only realistic expectation is to maximize liquidation value even if the ultimate result in the failure of the business?
- Is management willing to sell control and become both a minority shareholder and an employee of a new board of directors if necessary to attract the capital to preserve the company?
- Is management, in the case of smaller businesses particularly, willing to face the stigma of bankruptcy?
How I Operate as Your Turnaround Specialist
I offer a new set of eyes, skills and understanding of troubled situations to independently evaluate the company's circumstances together with your professional advisor. And very quickly determine a series of questions that existing management and your professional advisor may never have asked before:
- What is the purpose of this business?
- Should it be saved?
- If so, why?
- Are those reasons valid?
I gather information, evaluate it for accuracy, and analyze it quickly so that those initial questions can be addressed openly and honestly. That process generally focuses upon the following issues:
- Is the business viable?
- Is there a core business, which can be saved, be the source for the emerging business?
- Are there sufficient sources of cash to fuel the company through recovery?
- Does existing management of your business have the capability of leading the business?
The process of recovery undertaken by the turnaround specialist involves several stages:
- Fact-finding. We must learn as much as possible as quickly as possible so that we can assess the present circumstances of the company.
- Analysis of the facts. We prepare an assessment of the current state of the company.
- Preparation of a business plan outlining and suggesting possible courses of action. Depending upon the engagement and will seek the input of you to determine which of alternative courses of action should be undertaken.
- Implementation of the business plan. Once the course of action has been chosen, we are involved in putting the plan into place whether as an interim manager or as a consultant to management. This is the time we begin to build the team of players both inside the company and from outside sources.
- Monitor the business plan. We have to remain vigil over the plan, analyzing variances to determine their causes and the validity of the underlying assumptions.
- Stabilization and transition. Assuming that liquidation is not the cornerstone of the business plan, we remain involved in the engagement until the business has achieved stabilization and to assist the business in a transition of management if necessary.
I immediately focus on cash flow since it is often a cash shortage that causes troubled companies to seek help. Our first goal is to stabilize the cash flow, to stop the hemorrhage. I usually perform a quick analysis of the company's sales and profit centres and of its asset utilization.
In many cases, these factors indicate that the business may have lost focus of its core. To remedy the cash shortage, we generally analyze which assets are available to generate a quick infusion of cash and which operations could be terminated thereby stopping the cash outflow. These are difficult decisions since they intrinsically involve "downsizing" the company and eliminating some jobs. On the other hand, it has the effect of saving the good parts of the company and many jobs.
After I have been engaged and a COMPANY OPERATIONAL EFFICIENCY TROUBLESHOOTING DIAGNOSTICS REPORT been banged out, I play many roles.
Since many troubled companies often lose much of their credibility with lenders, trade suppliers, employees, customers, shareholders, and even the local community at large, retaining a turnaround specialist is often the first sign to outsiders that the company is taking positive steps toward both recovery and rebuilding damaged relationships.
I usually serve as a liaison or intermediary with these outside constituencies to calm troubled waters and to present bad news as a preamble to a plan for recovery.
Check out the COMPANY OPERATIONAL EFFICIENCY TROUBLESHOOTING DIAGNOSTICS REPORT to detect costly flaws and improve the bottom line
RESULTS ARE JUST A CLICK AWAY ON EITHER A PERMANANT OR TEMPORARY BASIS WITH MODEST COST TO GAIN RESULTS
Significantly reducing business monthly reporting time by more than 57% from 7 to 3 days by unifying POS, ecommerce, CRM, marketing, inventory, order management, business intelligence and financials on to a single platform, gaining annual cost savings in business activities of up till $60,000 while utilizing over 98% of your inventory and resources and a net gain of 1.6 productive hours/day on average constantly.