So What Happens If The Workout Does Not Work Out?

There is a frequently asked question that comes in a few varieties such as:

• What is the worst-case scenario?
• What happens if they just say “no”?
• What are my odds for success?
• How likely is it for this to happen as you say?

In short, a workout sounds too good to be true.

So, what happens if the workout does not work out? In a word: NOTHING. Absolutely, positively nothing. You are not any better or worse than you were before we started the workout, although we still may have succeeded in isolating your business from any debt. (Though, I guess that we could also have failed to do that in this make-believe inquiry.)

The real bottom line is this: we never fail. Our strategies are exemplary and we are doing the right thing for all involved. It is appropriate and responsible action in a bad situation. It is what responsible borrowers in default should do. Thus our strategies always work out.

Sometimes our clients fail in the process as either their core business was too severely damaged by the recession and revenues are too low to support a business, or the defaulting borrower simply does not have adequate cash flow, revenue, profit, etc., to support a workout strategy as it does cost money to do. In these instances, clients have been unable to support the strategy so yes, they fail.

But too good to be true? No! It is both very good and true; our track record speaks for itself. We wrote the book. We know how to do this.

Call us for a no-obligation teleconference. Norm will arrange it and we can discuss our strategies and how they would work for you: 413-584-2581.

OK, You Attacked the Banker, Threatened Litigation and Had Your Lawyer Write A Threatening Letter. Now What?

I see this more often than I would like. On occasion, small business owners are outraged by what appears to be an unreasonably aggressive, unsympathetic banker refusing to cooperate and making impossible demands. Business owners get aggressive and insulting, they refuse to cooperate and, worse yet, engage their lawyers to “get” the banker. How silly.

Remember one specific point: You have no rights to a workout. The bank has no obligation or commitment to cooperate with your default, make adjustments or work with you. The bank can always simply go right to foreclosure, borrower be damned.

As annoyed, offended, and angry as you may be, you still need the banker on your side for the final offer in compromise discussions. It is here the damage is revealed and it is here that the banker can cause you severe harm in retaliation. It is here that we need his “thumbs up” positive support endorsing our plan and recommending that it be accepted. Ultimately, the banker’s opinion is very important and carries a lot of weight; his support is crucial to your successful workout conclusion.

So, what if you have made the classic mistake of attacking the banker and have clearly jeopardized the relationship putting yourself in serious jeopardy? It’s done, it’s a fact, over and out. Now what?

Hire a workout consultant, as a new party can intervene and save the day. In these situations we acknowledge the bad behavior, accept its existence and work to create a new, mutually beneficial relationship with the bank if we do enter into a workout strategy—together. We accept the banker’s venting about the borrower and even agree with whatever they say about the situation, allowing them to get it off their chest, and then we move into a cooperative workout mode. We kind of throw our borrower “under the bus” so to speak, so we all can drive over him a few times and then get on with business. We are the good guys—we’ve done nothing to anger, annoy, or insult the banker, so we can replace the borrower’s bad behavior with our good behavior and onward we go to a positive conclusion.

This works. We have been in this situation many times and we know how to step in and be the good guy, deflecting the tension previously created by the borrower and replacing it with quality communication, goodwill, full cooperation and a plan that works for everyone. Try it—it is an opportunity for a second chance and it does work very well. Sometimes you do need a little help. Sometimes you do get in so deep that it is very difficult to reverse directions on your own, maybe even impossible.

Call us. Norm will arrange a no-obligation teleconference to discuss your options and our strategies: 413-584-2581.

Why You Must Be in Default to Do a Workout.

Every day, I speak to small business owners all over the country. I hear the same issues every day. No one ever wants to go into default. Every business owner I speak with fights tooth and nail to pay their loans and other bills. Small business owners take pride in honoring their commitments and their word, as they should.

Unfortunately, reality has away of controlling our desires, and in this case, reality wins. You must be in default to enter into a workout. Why would a bank or creditor of any type be willing to enter into a workout negotiation if you are current?

Despite how much sacrifice you are enduring, and the problems you are experiencing, if you’re current there is little incentive for a creditor or lender to adjust the obligations. After all, you are current so why should they? Thus the obvious answer is that default is critical to put the workout ball into play from a practical point of view. However, and this is the real show stopper here, the reality is in fact the rule for entering into a workout with a bank and especially any loan guaranteed by the SBA; loan default is fundamentally required before a workout discussion can occur. That’s the rule.

So, the first lesson of the day is to swallow your pride, remove your ego-driven attitude and buckle up for reality. If your revenues are down and you can no longer afford to service your debt, and you must enter into a workout negotiation to survive, you need to cease making the impossible debt service payments you are struggling to keep current and default on your payment so a workout can be engineered.

It is reality, it is the rule. It has little to do with your personal success or failure, or your word, or your commitments. It is the only way to succeed; you have no choice. Thus leave your commitments and your ego at the door, follow the rules and understand the requirements. You must be in payment default to enter int0 a workout negotiation and experience debt forgiveness, the only path to success in this recession.

I Have a Secret That Will Solve Your Employee Issues.

I am about to tell you a very valuable secret that I discovered many years ago and continue to successfully exploit to this day. Any small business can utilize this strategy as it is basic and it works very well.

Hire young college grads a few years out of school who have demonstrated an excellent work ethic in post-grad jobs.

They need not have any experience at all doing whatever your business does, and that is one of the benefits of this program. It is like programming a blank slate or filling an empty vessel. Train them as you want the job done and you will get exactly what you want. Never again will you have an employee issue and never again will you say, “I cannot get good help.”

Here is what I have discovered:

1) Young people have unlimited energy.

2) They believe there is nothing they cannot do.

3) They learn quickly and will do exactly what you want them to do without preconceived notions, barriers, bad experiences or history.

4) They have few barriers that prevent them from doing their jobs.

5) Once trained they will perform your tasks impeccably.

6) They are not yet damaged material with limitations and bad habits.

7) They want to work.

8) They make great team players.

9) They will do anything you ask.

10) They may cost less.

11) If treated well, they will stay around for a long while.

12) They want to learn and are easy to train and will add value to their job.

13) They appreciate the opportunity and are typically very respectful.

I have built entire businesses around young college grads and have been extremely successful doing this. Try it, you will succeed. It is a terrific strategy that works very well. I highly recommend it.

I have also learned one more secret… young people have valuable opinions and are on the cutting edge in skills and generational information. They can add value to your mix if you tap this hidden resource of incredible potential and power. They end up telling us how to do our jobs better. In the end, the student teaches the teacher.

This is very good stuff. Do it.

Sue the Bank? Because You Can’t Repay and They Did Something You Do Not Like?

I see it often enough, borrowers in default find a way to make it “the bank’s” fault. Somehow, the borrower gets it into his mind that the bank did something wrong to violate the borrower’s rights and if it were not for this wrong, the borrower would be fine. (Silly, silly, silly.) So, they sue or complain or do something to get back at the bank. This makes the borrower feel better and completely destroys their working relationship with the bank. Nice job.

For example:

1. “They said they would cooperate and they went straight to a demand letter. Not fair, I will complain.”

2. “They took so long doing a modification that I went into default. It’s their fault.”

3. “They would not give me an accounting and I think their numbers are wrong. I will not pay until they comply with my reasonable request.”

4. “They conspired with the seller and knew the numbers were cooked. It’s their fault.”

5. “They mislead me. Whatever. Of course.”

6. “It took way too long for them to do something so the resulting failure is on them. If they acted faster none of this would have happened.”

7. “They did not do what they said they were going to do.”

8. “They held up the closing for many months, costing me a fortune in wasted time and money and then the money was inadequate to do the job. It’s their fault.”

9. “They did not lend me enough. I told them I needed more and they would not listen to me so I came up short. It’s their fault.”

…and on and on the bad excuses go. They complain, file suits, write offensive letters, call their senators, etc. In short, they do everything they can think of  to upend the bank which only results in the borrower receiving similar treatment in return and no chance of any real opportunity to work the matter out.

It’s simple: do not sue the bank. You will lose, it costs a fortune and what is the point anyway? Do not write insulting, incriminating letters. It is ridiculous. Do not call politicians because they are powerless; this is a commercial contract not a political issue. You defaulted, not the bank. They lent you the money, how could they really be wrong? You cannot win by being aggressive. You must work with the bank and then be firm on your purpose and objectives but cooperate and be reasonable; they are your business partner and they can hold you to your contract, or, if you do it correctly, you can gain their cooperation in a workout. That’s the way to do business.

It is bad business to attack the bank. It will not work, it will not yield a positive result and it is counterproductive.

Work with the bank, get expert assistance and do your workout. Call if you need help. Call faster if you have attacked the bank and now realize that did not work out as hoped. Norm will arrange a no-obligation teleconference for us to discuss your options: 413-584-2581.