There is Always “Hair” On a Workout. Yes, Each Workout is Unique.

A workout is always a unique experience.

Every workout is different.

Every workout requires a focused, specific strategy to handle the unique aspects of the particular fact pattern that the situation requires.

Every workout has its own twists, its own issues and its own demands.

It may be a particularly tough landlord who will sue on the defaulted personal guaranty and not negotiate.

It may be a tough second or third lien holder who refuses to accept zero, despite the appropriateness, and holds up a transfer or sale or a conclusion of some sort.

It may be a difficult lessor of equipment not willing to accept our offer.

Maybe it is a spouse unwilling to accept the proposed strategy.

It could be the issue of a large and valuable–––but difficult to collect–––accounts receivable aging.

It could be large inventory or expensive collateral not worth much even at auction.

It could be co-guarantors with collateral and net worth.

Maybe it is a home with no mortgage, thus not upside down at all.

Maybe it is a partner who does not want to do a workout.

It could be license issues, contracts in process that cannot be assigned or minority-owned status that is important to maintain.

Maybe it’s cross-collateralization by other profitable business entities owned by borrower.

The list of unique possibilities and unusual issues goes on and on and on. Every workout is unique. The strategy may be similar but the unique facts of each situation requires a fresh review and a creative application of our skills to successfully protect and support a successful workout. The important point to understand is that we recognize this fact and do not employ a “one strategy fits all” approach. Quite the opposite is true. Every workout is unique and requires an adapted strategy designed to handle the specific issues of each unique workout situation. Never are two the same. Never are two inclusive of the same challenges. Every workout must be designed for the specific problems encountered in the workout being addressed.

Yes, there is always “hair” on every workout, i.e., unique facts that make each workout special. We know this, and thus it is exactly how we approach every unique situation, giving it what it needs. This is one reason why we are so successful at what we do. We treat every debt workout uniquely, specifically and with great respect for its nuances and differences.

This works. Call us. Examine your options. This is the only place to turn for alternative solutions, alternatives to disaster. Call 413-584-2581 and Norm will arrange a no-obligation teleconference to discuss your situation.

Stop Pretending the Economy is Getting Better.

It is not getting better.

Stop waiting to make the necessary adjustments required for your long-term survival. What we have now is what we will have for a very long time. You cannot simply “wait for the clouds to pass.” They are not going away. The economy is not going to get better for a long while.

• Unemployment rates will remain the same, with modest adjustments up or down (probably down) meaning fewer people will be spending, and those that are employed are spending less.

• The real estate market is showing little change, with foreclosures continuing and the commercial real estate bubble next in line to burst. In other words, more downward pressure on the economy and spending. The trades are devastated because of the huge downturn of demand for new homes.

• Cities and states are broke and the public unions are sapping the lifeblood out of the cities remaining reduced revenues.

• Taxes will continue to rise, increasing overhead for the already crippled small business owner.

• Consumer purchasing attitudes are changing dramatically. People are buying less, wanting a good deal when purchasing and not squandering money on unnecessary wants.

Yet the newspapers are telling us we are gaining ground, that things are better, that we are turning the ship around. Please do not believe this wishful thinking. Things are not better. We are not turning this problem around and what we have now is what we will have for a long time to come.

The only prudent path to take–the only plan that makes sense–is to prepare for the worst and hope for the best. So, let us assume that the business conditions we have now are what we will have for a long while, and that they will possibly get even worse along the way in some areas and industries.

I hear far too many small business owners telling me that they are “hoping” things will get better. Hoping is fine, but acting as if things are going to get better, making that part of your plan, is not the way to go… at all.

If I am wrong, no harm done. You will be ready to take advantage of the upswing. If I am correct, you had best heed my advice and make the necessary adjustments now, before it is too late.

Downsize, re-invent your business model and DO THE DEBT WORKOUTS!
Debt kills… quickly.

Stop deluding yourself, believing your wishes will come true. Be practical and pragmatic. Do the work now, before it is too late.

What if I am right?

Call us for help and direction. Norm will arrange a no obligation teleconference for us to review the strategies you need for survival.

Pssst! A Warning to Married, Male Business Owners…

Men, I am about to give you a gift of enormous value, a secret which, if understood and implemented, will improve your home life, office life and marital relationship manyfold. It is, without a doubt, a golden nugget.

Here is the brutal truth:
A man’s relationship with his business is typically first in his life. His wife is second. There, I have said what we all really know to be the truth with male small business owners/entrepreneurs. This is not to say that married men do not love their wives, are not dedicated to them or do not hold them in the highest esteem. Of course they do… most of the time.

But frequently, a man’s first love is his business–whether or not he will admit it is another issue. Men must compete; small business owners are passionate about their business and will stay late, work on weekends and be thinking about their business 24/7. It is part of their DNA, their makeup. It is what men do.

But here is the deal–men must learn not to constantly remind their wives that they are second to the business. This we can do. Wives understand this relationship men have with their businesses, but they do not want to be constantly reminded that they come second, or at least, they do not want to be reminded as often.

How do we remind them?

• Always coming home late for dinner
• Not listening or paying attention to what women are saying, while privately thinking about our business instead
• Postponing vacations

…and on it goes. We all know what I am talking about.

Here is the cure:

• Keep your word to her. If you say you will be home at 6:00 pm, be home at 6:00 pm. Not 7:00 “because something happened” at work. You can do this, it is possible. She deserves it. Do it.
• When at home, pay attention to her and what she says. Listen to her fully and completely. Do not calculate cash flows while you are talking to her. Do not read/write emails while you are with her. Do not talk business to her, or on the phone, while with her.
• Show her complete attention and consideration while you are with her. It is not about quantity, it is about quality. Give her your best when you are with her and she will forgive you for holding your business in first consideration and her in second.

I could go much further on this subject, but if you do at least this much, you will go to the head of your class and enjoy a better quality of life both at home and in your business. You will have achieved more balance and will be doing the right thing.

Remember, a happy wife = a happy husband.

Bonus point: Many men who are fathers also put their children before their wives. This is a huge mistake. To be a good father you must first be a good husband.

Think about it. Do it. Your wife deserves it, and you along with your family will reap huge dividends from such consideration.

Management By Wandering Around (MBWA). Do it. It Works.

“Management by Wandering Around” (MBWA), a Tom Peters phrase, is a hallmark of my management practice and I highly recommend it to every small business owner with more than a few employees.

Alternatively, you sit in your office, isolated from what is going on “on the floor” and guarded by your gatekeeper, secretary, assistant or whomever guards your office, diligently preventing easy access and flow of information. Unfortunately, this is very typical.

Here is what happens when you wander around:
1. Employees see you and understand that you are interested in what they do.
2. There is a free exchange of communication.
3. The boss learns what is going on.
4. The employees get immediate and direct feedback from the boss regarding what they are doing and how they are doing it.
5. Mutual respect is enhanced and relationships created.
6. Morale is boosted.
7. The boss can see firsthand what needs improvement.
8. Happy accidents occur; things happen that are unpredictable and usually very good.

My office employs an open floor plan using low dividing partitions, even for me. It works very well for us, as everyone can hear everything that is being said at any given time and thus we communicate very well. Everybody knows what’s going on. I get to hear everything and intervene when appropriate, train on-the-spot, give guidance, and be available for questions and support. I know what is happening and what each person is doing. Open and easy communication occurs. I can do this without even leaving my desk. I am in the work flow, part of it, and the employees get to hear and see me work as well.

However, I also get up during the day and wander to visit telemarketing, accounting… I visit each station and talk with my employees, offer guidance, direction, support and yes, just kibitz, asking about family and other personal things. This works very well, this “management by wandering around” and being part of the workforce, not just their boss, experiencing exactly what is happening firsthand. This works.

Get out of your office, be available, walk around, talk to your employees. Let them see what you do as well. You will learn much, be a better manager and a more useful boss. This is your vision, your mission… you invented this business. More than likely, no one knows better than you what you want to deliver, so you’d better get on the floor and see what is actually happening. Stop hiding in your office when the action is on the other side of the door.

Divorce May Be a Great Asset… in a Workout.

Personally, I am not a fan of divorce. However, it happens, and all too frequently. Also all too frequently, it either causes the breakdown of a business, or accelerates the downfall, or simply supports a workout because of the very nature of a divorce––the splitting up of assets––and thus, must be considered in the light of a workout.

The key point is that Probate Court will take control of the assets waiting to award the appropriate split between husband and wife. Most important is the Probate Court’s position in securing the well-being of the children, thus taking control of marital assets for the benefit of the children. Often, there are court orders preventing the sale of assets or the withdrawal of capital, or simply protecting certain assets for the use, enjoyment and security of the children (and possibly, the custodial parent).

This is potentially good for the defaulted borrower. Once Probate Court gets involved, the banks and the SBA must take their position into consideration and redefine which assets are reachable and can be liquidated. Frequently, important and valuable assets are locked up by the court, a situation which supports a weaker payoff for the lenders, diminishing the net worth of the guarantors.

There are a number of strategies that work with these issues which have the effect of reducing the workout payoffs.

I say again, I am not a fan of divorce, and am not in any way suggesting that it is a good idea. I am, however, stating clearly that once in divorce, one’s financial condition drastically changes. With the power of the Probate Court issuing protective orders, the business debt guarantor is in a worse financial condition than he/she may believe or understand in regards to a debt workout which will ultimately benefit the guarantor in the long run (or benefit his/her family), leaving the bank with fewer reachable assets.

Divorce is not typically a good financial planning tool; quite the opposite is true. However, if it occurs, it is a meaningful factor in workout strategy and the conclusions reached.