Clear communications, is it asking for too Much?   Apparently so.

I did not hear that…

I thought you meant something else…

I forgot…

I told you I couldn’t…

The manager said to do….

The client said….

I could not finish on time so I ….

You never told me that so I …

And on it goes…costly time consuming, client destroying, profit eroding errors, because we do not communicate carefully, clearly, specifically, adequately.

I am not going to teach you how to communicate successfully, we all know how, we just do not do it. However I will point out to you some frequently missing components, ways to prevent bad communications and support clearer communications.

Why not:

1. Ask If the directions were fully understood.
2. Ask the listener to repeat them to make certain the communication was received as intended.
3. Do it in writing, what a novel thought, takes time but prevents failure in the long run.
4. Have systems in place, in writing, that assure successful repetition.
5. Create  interim inspections of the process to assure accuracy. ( isn’t that a managers job?)
6. Train, train, train, do not reinvent the wheel for every situation.
7. Develop key indicators, and quality control benchmarks to support success and to make reporting more effective. It does not have to be an investigation every time someone gets confused.
8. Organize teams so no one has to do it alone, each team member can help each other…team success, is more valuable then individual success.
9. Incentive based rewards for successful performance works.

It can be done. Effective communications can be a hallmark of your business which will result in greater success and a more profitable business model. It is basic but if we are not succeeding in communicating successfully, how can we possibly succeed as a business.

It seems an impossible concept, properties that cannot be appraised. How can that be? Certainly every property has some value, so how can it be that a property cannot be appraised by a licensed trained appraiser?

In fact it is not an issue of value. Certainly many properties that cannot be appraised are very valuable indeed and would sell for a very substantial price, but cannot be appraised. Of course if a property cannot be appraised, the buyer cannot get financing as financing is controlled by appraised value, no appraisal…no value…no financing…no sale or purchase possible.

So I ask again, how could it be that a trained certified appraiser cannot appraise a property that has clear value?

It’s because of the lack of comparatives.

Appraisals are driven by the sale of comparative properties in the same market. If there are no comparative sales then an appraisal cannot be done, no comps no appraisal.  No appraisal no financing, no financing no sale.

So in reality an appraisal has almost nothing to do with valuing the target property, it has only to do with what other similar properties in the same area have sold for…that’s it, that’s all there is, and if no similar properties have sold in the immediate area there will be no appraisal and the property has for all practical purposes for financing reasons, no value, as it cannot be appraised as the system requires.

This makes absolutely no sense at all. But this is the way the system works.

I have had properties in an area were no sales activity has occurred and have not been able to have a property appraised and thus it could not be financed or sold, even though a waiting buyer wanted to purchase.

I have had unusual properties in the middle of robust markets but because of the lack of comps for particular unique properties…no appraisal available.

It is an unusual problem…but it occurs more often then you may think…If you are confronted by his issue, call, we always have a solution.

We talk about the need to downsize to accommodate reduced revenues and increased overhead, and frequently we  focused on reducing payroll,  negotiating a discount on rent, and reducing other controllable overhead items, all good ideas, actually necessary strategies in today’s changing economy.

However we seldom talk about the need to reduce our client base, sounds crazy. Why would we ever want to do that, especially when confronting reduced revenues?

If anything we want to increase the number of clients we have, not reduce the number.

Is a simple concept most often overlooked but a very necessary evaluation and  an effective internal adjustment that will yield great results.

Over time, in our effort to build sales revenues, one frequently ignores the profit earned from each sale and from each customer, focusing more on gross revenue, believing the higher the better.

In our drive to build gross revenues we forget net profit is far more important.

Thus we sometimes sell at the lowest price to small volume clients or we give away shipping charges, or we sell to clients who pay in 120 days, bounce checks and always owe you as they order every 90 days. Sometimes we have sales and extend the sale price indefinitely, sometimes we have sales and only manage to sell the same amount to the same clients but at lower prices achieving no gain,  and on it goes. There are many ways we erode our profit, yet our cost of goods and overhead remains the same.

This reduces our net profit  which is damaging to our well being and we do it to ourselves.

So here is the fix. Review your clients one at a  time and evaluate whether or not  each one is worth keeping as a client. When you discover prices too low, or net profit being eroded for any reason, call the client explain you must adjust appropriately as they will no longer be shipped at the previous terms and conditions. If they reject the changes good let them go, If they stay with new terms and conditions even better.

You are unlikely to make more profit selling more goods or services at low margins, too low to yield adequate net profit. It does not work. In fact you will find out that most of your profit comes from a small percentage of your clients and if these were the only ones you had, you could downsize and increase profitability simultaneously.

Review your client base and the sales you are making  to each one, see what it looks like and then make the appropriate decisions one at a time.  You may be able to increase profit and reduce payroll This is quality downsizing.

Do it, it works.

I was talking to a banker yesterday representing a sizable bank with a dedicated workout department, Special Assets they call it, and she commented about a particular borrower whom they were reluctant to give us a workout opportunity, let alone a resolution. I went to speak with her personally as her position was quite resistant and thus unworkable, something I had to overcome.

After talking, she explained that this borrower refused to talk with us, would not answer his calls, would not provide appropriate paperwork, financial reports or even an explanation of his intent. The file had been passed around the room to many different workout officers and no one could reach him or gain any level of participation and cooperation. They had offered workout opportunities and wanted to help him resolve his issues and default with them, but to no avail.

Thus they commenced foreclosure. Upon the borrowers receipt of foreclosure notice, he then reached out and called the bank. Understandably, from their perspective, although unrealistic and quite emotional, they now would not speak with him and referred him to their council who simply explained he was being foreclosed upon.

At this point he sought out professional help, us and I got involved.

I was getting long with the banker and she further explained that if the borrower refuses to cooperate, when they then enter the legal process they too will now refuse to cooperate, when he finally surfaces, which he inevidably will. She explained that the workout deal they would have done before, which was very reasonable, is off the table, not available because of his failure to cooperate when given an opportunity. Their intent was to now grind him down and take what they can get, even greater losses.

Apparently their deal that was reasonable before was no longer acceptable to them now because they were emotionally upset and wanted to punish the borrower even at their own loss. Sounds silly yes but very true. Bankers are also emotional beings as so many business people are. Emotion or ego clouds the decision making process and supports bad decisions, not good ones.

They preferred to now punish the borrower rather then finally settling. Not unusual, I spend much time calming the anger of disgruntled lenders and workout officers, and they all say the same thing, they are angered by the avoidance and lack of cooperation and participation thus they withdraw their reasonableness and prefer to simply make them pay, despite their inability, so they foreclose and liquidate spending more and getting less, all in the name of justification because the borrower ignored them.

Silly? Yes! True? Yes!

More fortunately I am able to deal with this as I spend the time to create trust and respect between myself and the banker, creating a working relationship and restoring the lost trust the borrower destroyed.

The net result was and always is that while the banker remains angry with the borrower, the banker is NOT angry with me and I therefore can manage to move them back into a negotiating stance as I, the third party expert, am reasonable, trustworthy, respectful,  cooperative and committed to the banks success, and my clients debt workout and resolution.

It works well and supports two conclusions.

1. Communicate effectively and respectfully,  and timely, failure to accomplish this simple task is fatal.

2. No matter what, the banker usually has some ire with the defaulting borrower as in their eyes the borrower breached his/her word. We, as third parties, can  gain much more traction and respect then the borrower can and thus we are more successful in gaining the results we need.

All to frequently we hear borrowers in default exclaim “…but I offered them that long ago and they refused and now they accept  it from you? We even achieve deeper discounts, how does that happen?”

Simple, We have credibility, and treat tem respectfully and effecively, the defaulting borrower does not.

The lesson, respond intelligently and effectively, do not hide,  or fail to cooperate. Hire professionals to represent you, we will do a better job and achieve better results.

It works, do it.

It is not urban legend. It is the truth. In the end, when nothing worked, the IRS and the SBA resort to the Department of Justice and its Attorneys to implement collection procedures for collecting debts owed to the US government. Now there is a problem for certain as they have an unlimited budget and you do not.

No, it is not time to flee the country. You will not be arrested and prosecuted as Al Capone was; you are not a criminal and will avoid prosecution. There may be a trial, a civil trial, but that too is highly doubtful, as these matters do get settled.

Unfortunately, if not settled early, and for sums that will probably be considered unaffordable, unrealistic, unreasonable, the procedures get rather dicey. The US Attorneys are tough, unyielding, arrogant, and obnoxious at times, unreasonably demanding, sometimes even silly in their conclusion and demands and unfortunately unwilling to bend…at all, so they want you to believe. It is a difficult path but one we win at.

I will be attending this hearing on behalf of my client. I will do my best to resolve this and bring back justice to the Justice Department and my clients. I will report back my success.

Do they shoot the messenger?

Do not let ego control your business decisions…it does not work.

Small business owners generally have a common disease….an over controlling ego.

It is understandable in part, the ego part, as an entrepreneur must have a strong ego to stand out in front of the crowds and  take the risk of opening up a business. This requires a very strong self image and an abundance of ego. However an ego out of control is a dangerous thing, as it will drive you to make the wrong decisions thinking you are 100% correct, irrespective of what logic would dictate and what the numbers clearly show. To strong  or controlling ego makes you believe you are invincible and take you down a collision course.

No one wants to hear this, because no one whose ego is engaged believes this. ‘Not me,’ they say…emotionally. ( emotion lives in ones ego). But they are losing money month after month and refuse to make the hard decisions, such as reduce payroll, “can’t fire anyone.” they say, “I need them.”

Best yet is the inevitable issue, the stone cold realization that the business cannot survive based on current revenues and dumping any more money in is folly, if there is any more to dump in. So one should clearly shut it down, but noooooo, they prefer to work it till the doors are shut by some other force to everyone’s extreme detriment, much wasted capital and time and the elimination of better options. But ego controls and onward they go right over the cliff, without a parachute or a plan.

I have spoken to many business owners who want us to remove their debt, a task we can accomplish and give them their second chance, our mission, and yet when I ask them if the removal of their debt will turn them right side up…and they ponder and say “ well no, but it is still what I want to do as I believe I may be able to make it work without the debt” wishful thinking  even though he is not paying his debt service now and is deeply under water unable to survive, operating below break even.

What’s the point? I ask…pure ego driven emotional commitment…that will not work out.

Many businesses will not, cannot and should not survive this recession.  The point is we need not go down with the ship.  There are far better more productive, safer, options including shutting the doors, on your terms.

Needlessly and foolishly walking off he cliffs edge without a parachute or a plan is irresponsible and very wasteful. Maybe even dangerous to ones family and self. Yet many recklessly walk this ego controlled path, refusing to accept or admit that this business must be closed.

It makes no sense. If you are losing money, month after month, take a walk and talk to yourself, ask yourself what you would advise a close friend in this situation and then take your own advise…close it down with a re-emergence or survival plan in hand.

It is the right thing to do. Prepare for another day.

A frequently misunderstood concept which results in rejections of what might have been a reasonable and acceptable offer if done correctly.

The reality is simply this:

Every partner except husband and wives, are reviewed individually and must provide an offer in compromise based on his/her individual financial condition. Thus one partner may pay more than another in an offer in compromise. This is a frequent result. Filing a joint offer will result in a rejection. Filing the same offer will also result in a rejection unless the financial conditions are the same.

Thus each partner must stand on his own financial condition and make the best offer possible to succeed.

Husbands and wives must file a combined offer unless here are unusual circumstances requiring separate filings.

There is much more to filing an acceptable offer then one may consider without deep experience. I highly recommend you acquire some expert assistance from someone who has filed dozens of offers with successful outcomes. Do not experiment on yourself, you will learn what does not work. What you want is what does work.

Call us for help, Call Norm at 413-584-2581 he will arrange a no obligation tele-conference to discuss your situation and offer you some advice.

If Ray Krock, the founder of McDonalds, had expanded his fast food concept to serve pie, and meatloaf, fish sandwiches, soup, etc etc,  he would have been a diner, serving a broad based menu, instead of specializing in just hamburgers and fries…he would never have opened his second location let alone his ten thousandth.

If Monro Mufflers decided to do brakes, tuneups, tires, general repairs,  windshields, etc, they would be a common every day service station, and could not have sold thousands of franchises.

If a steak house sold a full menu of everything, they would probably not be known as a steak house.

You get the point, but so any business owners miss this mark. Especially in this downturn, where competition is fierce and consumers are looking for the best deal and the best resources, specializing is the way to go.

Not wanting to lose business many business owners tend to expand their offerings to whatever the next person who walks in wants. Their thinking is they do not want to lose the opportunity to make money and do business, so give the customer whatever he wants.

What he is missing out on is far more valuable then the extra momentary business.

First, there is the value of specializing, it includes an economy of scale, if you just focus on one major item, you get very good at it, you limit the inventory and supply requirements, you have expertise, an identity, you can market with pinpointed focus you can buy better. You get very good at something, better than everyone else, and you become known for this expertise. You can charge less than other because of your efficiency and can therefore own your market share, or charge more than others because of your expertise and still own the market place.

Wow ! All that by just limiting the desire to be everything for everybody?  Yes just that.

It’s called your mission, and it should be focused, defined, specific and adhered too.

If you  sell tires, do it, exclusively, significantly, better than everyone else, and a better price point. It is a simple message, a simple direction and it works far better than generalizing.

There are specialties in law, medicine, almost every trade has its generalized practitioners and its specialists.

The specialists do better.

Be one, it works. review your position in the market and since you cannot really be good at providing everything for everybody, figure out what you do best and fill that niche better than anyone else in your market. That works.

Yes friends, we are about to be a bit more transparent. We are opening the door to our back room men, the men who form the teams to fight the debt that threatens to bury you and your businesses. These are the men who are on the front lines.

What they do, how they do it, what they see, hear and do.  What we learn about you and ourselves. Interesting? Absolutely. Revealing? I believe so.

Check it out: WWW.Secondwindtrenches.com

The times have changed. Revenues are down and expenses are up. Margins are thin as pricing is being forced into a downward spiral from brutal competition. Customers want value and are willing to shop to get it. Business owners need the revenue so deflation is the rule.

Business owners are reluctant to downsize by reducing the number of employees. Loyalty and waiting for the return of the demand are the excuses.

The answer is cut deeper then you think you need, eliminate as much of your workforce as you dare and then take more out. Old habits are hard to change and since productivity is usually in the area of 30-40%, you could maintain the same production with probably 1/3 fewer workers, if you could increase productivity while decreasing workforce. Since sales are down, cut to 50% and then rebuild with a new younger lower cost workforce willing to learn and work hard at far more then 30-40% productivity currently experienced.

There is a huge unemployed potential workforce available to rebuild with, and you can train them to be as productive as you want and now need.

The challenge is changing older workers work habits, getting them to increase productivity without developing animosity, very difficult to accomplish, and with a waiting available trainable new lower cost workforce available, the opportunity for a clean sweep and an upgrade is absolutely possible. Alternatively take the time and effort to reprogram a smaller current workforce, as they will be somewhat receptive as they see half their peers be dismissed. Cruel, heartless, you can’t do it? If you do not, you too will be out of work looking for a job, and we all know how that will work out.

Payroll is usually the largest expense line item, and it comes every week. Taxes and benefits are additionally huge. Reducing employee base is the quickest and most effective way to deal with the downturn. Increasing productivity is a crucial objective of downsizing, without it the downsize will fail.

Incentives, teams, reviews, training, cross training, appreciation programs, goals and objectives, better organization, all play an important role in increasing productivity and therefore increasing profitability.

Do it, you have no choice.