Fidelis Blog

Reflections 3 – Getting the Tough Deal Done

After repeated attempts to find a new lender, do you ever get to the point where you begin to wonder whether there is any escape from not having enough cash?  Sooner or later, even well-run companies run into a cash crisis.

The common roadblocks to success are insufficient capital, too much debt, ineffective financial information and a non-believable plan with unrealistic projections.

It all starts with a great plan.  Credibility is important, so it is best when an independent 3rd party vets the plan.  This is particularly important since most likely the Company has been losing money and lacks strong financials.

The key to a great plan is a great vision of the future (no “hockey sticks”), a well thought out transition from the past to forecast (a believable “bridge”) and specific action items that link to measurable data (directly drive “future state”).

First impressions are tatamount, since the lender / investor sees lots of deals and if they can’t get it immediately they will pass.

Once they are interested, due diligence needs to be easily obtained and understood.  All assumptions and changes need to be “bridged” and believable.  If this process becomes difficult, as the “onion is pealed”, they will move on.

Most importantly, you never want to look “shopped”.  After several new lenders or investors have seen your package, word gets around.  This will make a solution even more difficult.

It’s time to turn this “tough” deal into an opportunity.

Let’s have a conversation.

Reflections 2 – What keeps CEO’s / Owner’s up at night?

When Wobble turns into Crisis, even the most accomplished business leader wonders, “Why didn’t I see it coming?“

The CEO, who has always been able to overcome obstacles and challenges in the past, begins to lose sleep and worry.

  • Cash is tight
  • Always balancing building cash for payroll while covering operating needs
  • Senior lender is tightening credit
  • Critical vendors are on COD and want payment plans
  • Customer delivery dates and fill rates are at risk
  • Shipping costs are high due to special handling to meet due dates
  • Employees are nervous and the industry is “talking”

Wouldn’t it be great if the company had more time and more options?

Wouldn’t it be great if Owners had someone on their side who had been through this before?

Often times, the senior lender will force a company to hire outside help. Wouldn’t it be better to get ahead of the curve and feel more in control?

In these situations, a company needs a great plan, vetted by an independent third party and consensus between all interested parties.

Let’s have a conversation.

Can You See It Coming?

Undetected tremors ultimately lead to quakes, wobbles and panic.

Was your company spinning like a top and then did it start to wobble?

How do you re-energize it before it falls?

You don’t have much time do you?

Let’s have a conversation?

Can You See It Coming? Reflections 1 – It’s the People

Hindsight is always 20-20, he now knew the Wobble began when he took his eye off the business and it became secondary to his personal life.  After all, after 20 years busting his hump, doing everything to drive this business to where it was, wasn’t it “his” time to enjoy the fruits of his labors?

His two boys were going to be gone soon.  The older was in his Junior year at college and his younger was a senior in private school.  If he didn’t take time now, then he would have no relationship with them.  His time away had provided, but it was now time to travel with his sons and golf with his buddies in Scotland and far away places.  He deserved it.

When the trouble came, it came quickly and hit hard.  It was like a “perfect storm.”  There was no one on his team who could act in his absence.

This is common and particularly difficult for smaller business owners, since they have no one to hand off the day-to-day …… no second or third in line who has all the entrepreneurial skills to manage the enterprise.

What I have found after nearly 25 years in doing turnarounds is that most of the “answers” are common sense and reside in the organization.  What is missing is empowerment, cross-talking and action.

There are certain points in every business that create a need to change how things are managed and those seem to happen at around $25m in sales, again at $45m and again at $60m.  The complexities, speed and shear mass of activities challenge the owner to create a more empowering organization.

This can be done with existing people, but they need constant improvement training (they are worth it) and learn how to cross-talk (breaking down silos).

THE SYSTEM IS THE PEOPLE – HOW THEY INTERACT – WHAT THEY DO

Introduction

I have been a business trauma surgeon for 25 years, helping companies transition through difficult times.  Owners and management have complimented me on my ability to extend time during crisis and help them come up with more options.  My blog will tell stories and hopefully stimulate your thinking.  Let’s have a conversation!