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My Mentor and Friend – Judge Robert C. O’Hara

Friday, August 13th, 2010

I met Bob sixteen years ago, at a conference in California.  Improbably so, because we only lived a few miles apart, here in Delaware.  I liked him immediately and we became fast friends.

He helped me start this business debt relief and turnaround management consultancy a short time later.  Bob was an expert mediator and arbitrator and has provided free advice and counsel ever since.

I discovered Bob’s pride in his Irish ancestry and heard the story of his trip to County Mayo, the home of his paternal ancestors.  And about his law school experiences at Penn.  His teaching at Widener.  His work in legal practice.  His experience as a Superior Court judge.  And his involvement in Delaware party politics.   All of this discussed with a characteristically deep chuckle.

When Bob’s wife, Mona, called me two days ago to inform me of his death, it was like a punch in the gut.  Bob’s health had been deteriorating.  But it was a shock, nevertheless.

While becoming concerned about Mona’s immediate anguish and needs, the selfish thought entered my head that I no longer have my mentor to depend on.

For a while, after starting out in 1995, I got into the habit of name dropping.  “I work with Judge O’Hara”, I would say.  It comforted me to do so, as do my memories of him.  I will always draw upon my recollection of his perspective and wisdom, when faced with particularly contentious situations.

The death of anyone who has lived a well spent live is terribly sad to family and friends.   But it’s also a celebration.  And in Bob’s case, he truly has left a positive and enduring mark.  You only have to visit the courthouse, to speak with those who knew him.  Or to attorneys who worked with him in his law practice or appeared before him, in court.

In short, Bob was interested in everything and everyone.  And because of this interest, and his kind nature, he himself was deeply interesting and fascinating.

I will miss Bob.  I’ll really miss him.  I’ll miss his wisdom, counsel and friendship.  I’ve shed a few tears.  But rather than becoming consumed with grief, I prefer to celebrate his life.  Because, after all, he has had such a positive impact on so many. 

He is loved, respected, appreciated and remembered.  And for any of us, when we reach the inevitable end of our lives, what could be better than that?

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Ongoing Problems with Collectors

Thursday, June 10th, 2010

The collection industry continues to get hammered by complaints to state agencies.  West Virginia’s attorney general, Darrell McGraw, announced yesterday that his office has reached a $75,000 settlement with a debt collection agency.  Small potatoes in the overall scheme of thigs.  But the unlawful practices mirrored those which I encountered last year.

I was being called at home by a persistent and rude woman, spitting threats and accusations, alleging that I owed a large sum.  I eventually had to contact the firm’s management, warning them to check their facts and call her off. 

It was an interesting experience for me, but one that might have caused real concern to anyone unfamiliar with rogue collector tactics. 

Individuals fall under the protection of the Fair Debt Collections Practices Act (FDCPA).  Businesses, or their personal guarantors, have no such luck.  But in my experience, dealing with business collectors every day, the rude and unprofessional ones are becoming less common.    We remember the exeptions, which proves the rule.                  

Bill Bartman, American entrepreur extraordinaire, build a billion dollar business based on effective, ethical collections practices.   As in our own debt settlement line of work, he has shown that collectors are far more successful if they communicate honestly and openly with the other side.

There are bad eggs in every sphere of life, collectors and debtors alike.  But let’s hope that Bartman’s philosophy will continue to influence the collection community as a whole.   Harrassing and and threatening debtors?  It might work occasionally.  But it’s counter-productive in general.  And it’s unethical and just plain dumb.

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Business Debt Collection Activity at an All-Time High.

Monday, May 3rd, 2010

The Commercial Collection Agency Association (CCAA) handles the lion’s share of commercial collection accounts in this country.  Its Executive Director, Emil Hartleb, reports that member agencies were assigned almost $18 billion dollars in collection accounts in 2009.  (www.ccaacollect.com).  

That’s a record.  It represents an increase of 33.4 percent over the previous year.  The last quarter of 2009 was particularly strong, or weak, depending on your perspective.  It showed a whopping 48 percent increase over the same period in 2009.  No statistics are given on collectability.  

Last year was dire in many respects.  From our own experience, good companies frequently became so hamstrung by out-of-whack liabilities that they could not survive without working out long term discounted  payment schedules with creditors.   Drop dead settlements, even at less than fifty cents on the dollar, were often out of the question, as cash reserves were tapped out.  Their own payables problems commonly arose from being unable to collect from previously solid business customers.          

Ultimately, a firm’s only salvation is to do what it takes to ramp up net revenues.  Business debt relief can only go so far.  But sadly, so many of the company owners that are currently being bombarded by this huge increase in collection activity are traumatized by shock.  They can neither figure out how to placate creditors or to increase revenues.   

Too many good small businesses go under without sending out a distress call for help, to work out debt and ramp up revenues.  This represents a massive loss of entrepreneurial capital,  jobs and relationships.  Much of that is avoidable, which makes the situation so frustrating to those of us in the business turnaround community.

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A better way to collect your B to B receivables.

Tuesday, March 30th, 2010

Your business can get into trouble fast if it cannot collect its receivables.  If you sell to other businesses, (“B to B”) , you can be particularly hard hit when a big customer goes south and takes your hard-won capital with it.

The standard tack is to assign late payables to a collector.  If so, you have to be careful.  Debtor firms come in all stripes.  You don’t want to alienate a good customer who represents significant business well into the future.

The problem is that you don’t always know why an account is late.  As often happens, your customer may not be forthcoming, so you figure the worst.  Are they paying others?  What’s the reason you’re not getting paid?  Do they intend to get this straightened away soon?  If so, what are their plans for doing so?   

Collectors are not all cut from the same cloth.  As with everything, there are good ones and bad.   Some will totally alienate those customers that wanted to get back on track with you.  And they may charge you a third or more of what they collect for the privilege.  That’s a shame.  Because you cannot afford to lump all of your late-paying accounts in the same category.

We can all get emotional about money that’s owed.  That’s understandable.  But we have to think of our long-term best interests – especially when dealing with something as important as a custormer who has paid us well in the past and represents that all-important future customer value.

If nothing else, it is worth a personal visit, if geographically feasible.  It also makes sense to contract with a turnaround specialist, to agree upon set dollar discounts to be given to those valued debtor firms.  After all, that person would likely be able to help ramp up the company’s revenues and prioritize payment of its account with you.  They would get paid by the debtor firm for doing so. 

What discount would you offer and under what terms?  It depends on the situation.  But rest assured, the discount you offer your customer will be less than the fee you would need to pay a collector.  And the collector will likely end any positive relationship you may have had with your customer.

If all else fails and you get no cooperation, assign delinquent accounts to a good collection attorney.   By this time, you’ll know not to expect any future business from that source.  You just want to get paid, as quickly as possible.  But make sure that you ask the lawyer to do their due diligence.  You don’t necessarily want to be lumbered with set-up costs, court costs and sheriff fees if the debt is later discovered to be uncollectable. 

It’s just not effective to lump your delinquent B to B receivables together.  Don’t throw out the baby with the bath water.  Some of them will grow to your benefit with the right care and attention.

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A Stitch in Time…

Thursday, February 18th, 2010

Our specialty is to help small to medium sized corporations and LLC’s to regroup and recover.  Generally, Job One is to stop the bleeding.  As with victims of traumatic accidents, a company’s wounds have first to be attended to, so that its precious blood flow – cash – can be conserved.   An important part of this process is to prioritize debt commitments and then to delay payment and work out deals, consistent with the realities faced by the business. 

Job Two is generally to take steps to increase revenues.  And this is often easier than it may seem to those caught up in the vortex of the crisis.

If we are approached at an early enough stage in a company’s decline, the emphasis can be much more on increasing the top line revenues than battling with creditors, collectors and collection attorneys. 

Human nature being what it is – mine included – we tend to wait too long before realizing that we need professional help.  I go for an annual medical checkup every five years, whether I need it or not.  But I have to say that I run into far too many troubled businesses where the struggle to survive would have been a lot easier if management had sought help much earlier.

Part of the problem is that everything can seem pretty normal until real trouble starts.  Sales may drop, but the business keeps on running.  Creditors start grumbling, but your ship gives the impression of a steady course.  It’s not until it starts to keel over that the orchestra slides off the stage.  Then, the real trouble starts.  The captain sends out a Mayday call.  But it’s too late.  The lifeboats are still shackled to the ship, which goes down like the Titanic.

The essential challenge in our business is to start work on turnaround issues as early as possible.  Sure, we can generally rescue businesses at any stage.  But it’s a shame that so many business owners wait until real damage has been done to supplier and lender relationships, and cash flow, before they  seek professional help. 

We all have gut feelings which, if listened to, warn us to steer away from trouble.  It is important to heed this basic instinct and to seek turnaround management help when dark clouds appear on the horizon.

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Reduce the rent of your business premises

Wednesday, January 6th, 2010

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?

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Protect your business from attack

Tuesday, December 8th, 2009

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.

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Clear written communication can save you money

Saturday, November 21st, 2009

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.

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Running scared amidst business debt problems

Friday, October 23rd, 2009

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 is 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.

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The occasional need to be pushy

Wednesday, September 30th, 2009

“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 action.  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.  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.

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