Biz911

Financially strapped business owners often overlook the fact that they can get a break in their rent, if only they ask for it.  Rent can be a huge component of fixed costs and anything you do to stem the bleeding - even for a few months – can make the difference between survival and disaster.  

Landlords come in all stripes.  They may be struggling with a mortgage to pay for the property.  Or the ownership may be a large, well-heeled entity.  But don’t be afraid to discuss your situation with them, or their agent. 

You can be sure that the landlord will not want to incur the costs, hassles and uncertainty of finding a new tenant, especially if you vacate the space in the meantime.

Your negotiating strategy will depend on your circumstances.  You can seek rent relief, to restructure the lease to lower the monthly payments.  Or you can aim to get rent abatement, so that you pay less than your original obligation.  This will typically involve lower or zero payments for a specific period.

Seek the help of a qualified specialist if you feel unable to do this yourself.  We generate rent relief and abatement settlements for our clients on a regular basis.  You can also call upon a building lease specialist such as the highly regarded Dale Willerton at www.TheLeaseCoach.com.

Whatever you do, take measures to cut other costs first.  And make sure your landlord knows it. 

Don’t be like one local business owner, who recently decided to try to negotiate rent relief on his own.  Trouble is, he was driving a brand new Porsche.  And he always parked it in the most prominent place in his retail store parking lot.  Guess how that one turned out?

It is a sobering thought that our great nation was totally unprepared for the attack on Pearl Harbor.  It eventually made us much stronger, but at a huge cost in lives and treasure. 

The 9/11 attack in New York signified another, possibly more sinister, kind of danger from which lessons have been learned.  We’d better stay vigilant.

That being said, our small to medium sized businesses are all too frequently managed in ways in which they are left unprotected and open to attack. 

It is frustrating to be called in to help struggling incorporated companies, or LLC’s,  where the owners and possibly their spouses, are all tied up with personal guarantees.  Or where judgments have been filed and unattached assets have already been plucked at a sheriff sale.  Or where a myriad of steps could have been taken to protect the business and its officers from distress.

Every business runs into a constant series of problems to be resolved.  The thing is, nobody makes all the right decisions, all the time, to steer it in the optimal direction.  We cannot always predict or react quickly enough to fickle market realities, or to the impact on technology and everything else that determines our revenues.      

You sell yourself short if you operate your business unprotected from the downsides.  It doesn’t take much to fall under attack.  Business people don’t always see it coming, or may be in denial that real trouble is brewing. 

If you and your business are not bullet-proofed, it can be a very tough to experience a personal and business Pearl Harbor.  

Your company and livelihood are worth defending and fighting for.  Prepare for the worst and plan for the best.  You don’t need  to go through the unnecessary stress of a business failure just to make you stronger in the long run.

I’ve just received an email from a prospective client.  After going over it several times I can’t make head or tail of it.  It’s not just that it is one long series of sentences.  Or that it is full of complaints about a crooked ex-partner who stole all his money.  It’s just that it still doesn’t throw light on his true situation or what he wants me to do.

It strikes me that lawyers and accountants must bill huge sums for the time taken to truly understand their clients’ predicaments.  Much of this time can be cut, if the business person is clear and concise.  In our business we get paid for results – not for activities.  And so it is especially appreciated if we are given the facts that we need in as palatable form as possible.

It’s effective to be able to write something down, because it can clarify your thoughts.  I had asked the business owner to articulate how he would like to see his business in twelve months and to list the barriers he perceives in getting there. 

I had asked for basic targets for gross revenue and debt settlement.  With that, we can get cracking with plans for results.

In this case I got neither.  And it’s understandable, when you are in the vortex of a business crisis that seems to be pulling you under.  I know the feeling.  I’ve been there and done that.

My point is, though, that you have to be able to think rationally to surmount business troubles.  And you have to explain your needs and aspirations as logically as possible to those standing ready to help you.  Just give us the facts.  And we need the whole story, not just part of it.

In my experience, the most resilient business people are those that can take stock and at least present their crisis situation and goals in logical terms.    

One we know what’s needed, we can go to bat.  Whether we have to settle debt or increase revenues, we have to communicate effectively with others.  But we can’t do that if we don’t get clear messages from our client at the outset.     

Its all too easy to lose our entrepreneurial cool when our businesses run into trouble.  We are used to planning, then following through, to reach the goals that we want.  But when these plans go awry, few have a contingency plan to face the new realities.  And that’s where the trouble starts.

When you’re running scared you lose focus.  You feel pushed around and buffeted by new realities.  And you may be inclined to take measures that are counter to your goals.

Hard as it may seem at the time, you have to call a mental time-out.  You need a few days to assess what’s happened and is ongoing.  Then plan out a strategy.

There’s no “magic-bullet” to resolve every business issue.  But the central focus has to be on you and your team’s positive attitude in working through the crisis.

At risk of over-simplifying, business problems most frequently boil down to inadequate income for a given fixed and marginal cost structure.  Obviously, this can result from a myriad of causes.  It may be necessary in the short term to negotiate business debt relief settlements with suppliers, but this will be of no help unless the longer term issues are resolved.  And if you don’t know how to change course, you need help to do so.

Business turnaround is not always the best option.  If, in the final analysis, your business can not be saved, then the best approach is to figure out how to get out without losing your shirt.   Ultimately, you have to realize that your business is not you.  It’s a separate entity.  And if you have to part ways, you want to land on a feather bed with cash in your hand, rather than with a thud on the sidewalk and vultures circling overhead.

So often I come across good business people who are running scared.  They have been spooked by collectors and creditors’ attorneys into decisions counter to their own best interests.  They have lost their resilience and are unable to recognize their strengths.

They don’t know how to protect their company’s assets or increase net revenues under all the pressure they are facing.  And, in the last analysis, they have lost heart and become unable to work through these issues.  As a final insult, they are pressured into filing bankruptcy when their business could have been saved.

I’m convinced that many potentially successful businesses fail because of poor or inadequate professional advice.  And that advice may be counter to the entrepreneur’s own best interests.  Business owners have to be aware of this possibility.  They have to realize that, if they feel themselves starting to run scared, it’s a sign that they need to take a few steps back and seek help to map out their options.

Our economy’s backbone is made up of millions of small to medium sized companies.  So often, so many of their owners go out of business under stressful circumstances, whilst running scared.  It doesn’t have to happen that way.  And that’s a shame.

“You’re too pushy”, frowned the prospective client.  I was sitting in his office, laying out what we could do to rescue his company.  Sales had tanked.  Collectors were snapping at his heels.  And I was trying to get him to make the decision to take us on.  The first task was to handle a law suit, which claimed a very substantial sum for a past-due debt.  If left unattended, it promised to sink his business.

I had been trying to overcome his inertia for weeks, after learning that his business was in trouble.  He was indecisive and couldn’t figure out what next to do.  Times were tough, for sure, but he hadn’t been adjusting to the new realities.  And his firm ended up getting well behind with its payables.

My retort was that he needed sales people who were “pushy”, and a marketing plan that effectively pushed his customers’ hot buttons.  There seemed to be no sense of urgency to his business.  Creditors were being pushy, as were collectors and collection attorneys.  So he’d better start thinking that way himself.    

Competitors will eat you alive if you don’t let your customers know how you can satisfy their needs – and then follow through with your promises.  

Business people tend not to know much about the debt settlement and turnaround profession.  This is changing fast, but a majority of small to medium sized business owners and their profesional advisors still don’t go looking for someone to preform this service.  So part of our job is to to reach out and contact them.

Clearly, nobody likes a pushy salesperson.  But every company has to be imbued with a sense of urgency and common purpose and attention to customers’ needs.   

If potential clients and customers of any good business are not made aware of the benefits on offer, they are not being well served.  And if the honest and open process of promoting urgently needed goods or services is occasionally interpreted to be ”pushy”, then it’s unfortunate, but so be it. 

This story has a happy ending.  The major law suit and urgent demands were settled to meet the cash flow limitations of our client.  Creditors received a lot more than the alternative, had the firm declared bankruptcy.  The company is alive and thriving, lessons learned, and moving ahead with a new and ”pushy” lease on life.              

It can be catastrophic to lose equipment that is needed to generate business income.  Unfortunately, when sales are down and costs have already been cut to the bone, it still may be impossible to keep current with essential equipment lease payments.  That’s when the real trouble starts.

Once the leasing company, or lessor, starts to send threatening letters or enlists the help of a law firm, you have to act quickly and effectively.  

Assuming that you have realistic plans to get back on track with revenues, you must to be able to communicate to the lessor that you need its help and consideration.  It helps to provide information on:

1. what precisely caused this problem, together with
2. the current status, and
3. outline of your strategy for a turnaround. 

The lessor wants to keep you as a paying customer.  Its willingness to restructure payments or to give you a break in the total sum owed will be influenced by the percentage of monthly payments made to date and the equipment’s estimated garage-sale value.  It does not want to lose out, big time, if your firm goes under.  

A key to resolving lease issues is to recognize the lessor’s potential loss.  It is generally understood that businesses operate in an imperfect, risk-laden world.  A lease is not an annuity.  It is your job to bring out the necessary facts and propose a realistic, practical solution. 

Your proposal has to be aimed at the lessor’s best interests, emphasizing the upside of doing wihat you suggest and the downside if not.  Given that the lessor has lost a certain degree of faith in your ability to make monthly payments – restructured or not – you have to give it some confidence in your ability to follow through on a payment schedule that your firm can sustain.

Equipment lease disputes can appear to have no solution to troubled business owners and managers at the receiving end of hostile telephone calls and correspondence.  

These issues can be compounded by replevin law suits, the intent being to have the sheriff turn up with a court order to seize the equipment.  This could traumatize you and your employees and suck the life blood out of your business. 

The essential thing is to act quickly and decisively, before the problem gets worse.  Don’t make false promises that will prove impossible to meet.  Get professional help to deal with the issue. 

Your time is better spent in developing new ways to generate business income than in the uncharted territories of dealing with a lease dispute that may be critical to your business survival.    

Businesses in desperate shape can often be saved.  Frankly, not all should.  Maybe the market is not there, or management isn’t up to the task.  But if the business shows resilience and the potential to thrive, disputes can generally be satisfied to meet the needs of the company and its creditors’ alike.  This takes effective communication.  The exception is where conflicts are based on personal issues, such as rancor, distrust and even hatred, rather than on rational, financial considerations.

A business in trouble can become beset by those who understandably feel justified in getting as much as they can, in short order, while paying little heed to its potential to give them lifetime customer value.  These complex debt issues can involve banks, equipment lessors, landlords and trade suppliers.  As well, business partners may be fighting with each other.  To those involved it can seem like an irreconcileable mess.  Everyone wants their bite out of the company and are prepared to pay for good legal help to get it.    

It’s easy in this situation for accounting or legal professionals to view the situation as hopeless and recommend bankruptcy.  But Chapter 11 will cost tens of thousands of dollars, padding the pockets of the professionals involved, rather than being used to make proportionate reduced-cost settlement payments to creditors.  This loss of cash to the company and its suppliers is one of the reasons why most Chapter 11 filings are quickly converted to Chapter 7 liquidations.

When a company’s creditors look out for their immediate self interest, it can kill the business, together with the unsecured suppliers’ hopes for getting paid.  It’s akin to the well known “Tragedy of the Commons” scenario, which describes the dilemma where individual livestock-owners see it in their best interest to add more and more cattle to the commons.  It makes sense in the short term, but it results in the eventual destruction of the commons’ ability to function as a productive grass-producing system.  And if the grazing disappears, everyone loses out. 

To head this off, all the livestock owners would need to understand that it’s in their best interests to control their desire to get everything they imediately want.  They would need to come to realize that they are playing a part in killing the productive asset that they need, unless they hold off.  Someone would likely have to get them together and let them know the situation.  It’s a similar scenario in complex business debt workout situations, when you communicate with creditors and ask for their patience and understanding.

The key in resolving complex debt predicaments is to get everyone (whether or not suits have been filed) to step back and take a holistic view of the problem. In the short term, they can minimize their losses.  In the longer term, they can maximize their benefit with a strengthened business relationship and loyal customer.  

This process akes place by thoroughly analyzing the situation and assessing the claims of each and every one of the creditors.  It is effective to start by putting together a simple report, for distribution to them, outlining the issues and alluding to solutions that would move everyone forward.

Time is of the essence.  If a suit has filed and served, it has to be answered.  The plaintiff has to be tied up in court by competent legal counsel for long enough to get the overall situation resolved.  

If your business faces multiple creditor issues, tackle the situation in a holistic way.  If you handle each issue in piecemeal fashion, you will be less likely to succeed.  

I love gardening and landscaping.  It gives me time to clear my head and come back to work better focused for the weekly challenges.  This weekend was especially hectic, because alternative periods of high heat and excessive rain had delayed most of our vegetable seeding and planting.  Our family had gotten well past the deadline for putting in most of our stuff, so we had to bear down and get it done.  Time and tide just don’t let you wait.

When it comes down to it, we’d get little done without deadlines.  It often takes external events or someone else to push us.  A lot of cash-strapped business owners don’t seek help until it’s too late.  They don’t act at an early stage to do the right things at the right times to prevail.  As troubles build up, they become increasingly frustrated, hoping that their ship will stay afloat.  And of course it won’t do this on its own.

A big frustration in our business is being called in to help resolve tough business issues at a very late stage, when the options are far fewer than they might have been just a month or two before.  If there’s ever a need for urgency, it’s when collectors are calling and suits are being filed.  It’s not too smart to get into denial and then be forced to act at the eleventh hour to try to avoid an immediate default judgment.

Collectors want to create a sense of urgency, don’t they?  Their success in doing so will determine if they succeed or fail.  And a suit filing by an attorney really gets your attention.  As a business owner, you have to adopt the same sense of urgency as the other side.  If not, there’s not much sense in trying to stay in business.

Are you concerned about diminishing revenues and mounting debt load and don’t know where to turn?  Get professional help.  We will help you to set up measurable debt reduction and top line revenue goals – with specific deadlines – to get you back on track.

The real estate entrepreneur had come to realize that she was in a real bind, for which there seemed few positive outcomes.  She felt boxed in from all sides and was behind in payments to several lenders.  Her income was way less than planned and the price of her main asset had declined.

The lenders knew her situation and her plans for recovery in fine detail.  They had gotten the information in writing.  But they were showing little cooperation in her need for business debt relief at this stage and simply demanded to get paid, immediately.  Precisely how these funds were to materialize was of no interest to them.

A lender will obviously expect to get paid according to the terms of its contract.  No doubt about it.  It will only accept a compromised settlement when it knows that it cannot be repaid in full.  We believe that, with adequate information, the lenders will come to this realization and we will be able to cut the necessary deals, once we have the ability to do so.

The client is smart.  She has that upbeat, resilient quality so typical of a true entrepreneur.  She understands that where she is now is no reflection on where she will be in twelve months, or five years.

It’s all in the head.  Rather than going to pieces, she is proactively looking at new strategies to bring in cash and is open to doing anything possible to minimize the damage to herself and her creditors.  Given the lessons learned in this situation, she is poised to join the legion of successful business owners who have gone through adversity in their way to wealth-building success.

As with so many other of our clients facing financial challenges, it is extremely satisfying for us to be able to support her in this endeavor.