Biting off more than you can chew
Jan 4, 2013 / 5:00 am
Have you bitten of more that you can chew?
You may need to restructure your Corporate Credit with a Business Turnaround.
Debt and its management are at the core of a financial restructuring process for your business.
In a typical business turnaround, it is the debt to suppliers, landlords and the government that has become unmanageable.
Some of the symptoms are:
- collectors are calling daily
- credit accounts are frozen awaiting payment
- threats are being made
- bailiffs and court documents arrive
- bank accounts are seized.
In our experience, the business owner has already unsuccessfully sought solutions. The visit to the bank, sweaty palms clutching the company financials, ended badly with the bank saying no to a refinance, consolidation, further loans or extensions.
The owner’s house was mortgaged to the hilt in the last few years. Personal credit has been used up and the credit cards are now maxxed out. Friends and family have already been tapped on the shoulder for a loan. Factoring of the receivables yielded enough cash to continue for another 2 months. A lease back of the company equipment produced enough to buy materials for another month.
There is nowhere else to turn.
At this point the company is hollowed out. A glance at the balance sheet would show no value. The owner’s credit and company credit are in the tank. The company is technically bankrupt. Even at the Fiscal Cliff there is still hope.
Dire situation: What do you do?
A circumstance like this requires a third party intervention to solve the problems. Caught early enough, the issues can be worked around. Caught too late, it is painful and expensive because the courts might get involved.
Canada is blessed with probably the most enlightened legislation on the planet to allow companies to seek a dignified exit or to buy the time to get back on track.
At Floodlight we have the 50 years of experience and know how to use all available tools to salvage the company and pull it back from the brink. Floodlight will help to illuminate the dark corners of your business and to expose things that the business owners don’t always look at closely enough. Our goal is to help the business owner maximize results and achieve a business turnaround.
Floodlight first assesses the situation: which creditors are most dangerous; who owns the debt; which debt is secured and which not secured. Then we move to protect all possible assets.
Then Floodlight assembles a written and detailed plan. This plan is built to convince the creditors that working with the company instead of torpedoing it is in their best interests.
Not all creditors can be convinced but the presence of third party of professionals is often enough to persuade them to give it a try.
Floodlight deploys a 3 pronged approach to the plan: create a time out with the creditors, re focus the marketing of the company to increase sales and work with the owners to build strategic plans for growth.
On the financial side the plan is first to work on cash only which usually involves teaching the company and owners to operate on C.O.D. Then a deal is struck with the creditors whereby the debt is repaid in a structured way over a period of time according to the capacity of the company to pay. In this way the debt is reduced to manageable levels.
Meanwhile the marketing arm of Floodlight raises the profile of the company to increase sales, often re-defining the target markets and finding new strategic partners.
At the same time we meet with the business owner’s weekly working on the business to refine management goals and apply new business strategies.
This process can take from 90 to 180 days to develop and 12 to 18 months to see through to a successful conclusion.
What our clients like best is that they have regained their self esteem and with a new confidence can begin to build their business with a strong foundation for growth.
When we first met Floodlight we were floundering in a financial quagmire, not knowing which way to turn or who to call on for help.
We had approached one financial institution after another in an attempt to secure debt amalgamation but we were refused.
Floodlight has extensive back ground in financial and business matters. Upon meeting with Floodlight we immediately felt at ease with their approachable and helpful manner.
Although we met with them several times, they never once made us feel ill at ease regarding our financial situation. They showed empathy and were very pragmatic in outlining a financial path for our consideration.
We feel very comfortable in recommending Andrew Gregson and Donald Robichaud to anyone who is seeking sound, well thought-out, financial and business advice.
Neil and Sandra
Read more Build your Business articles
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- Five keys to profitability: Part 5 Nov 22
- Five keys to profitability: Part 4 Nov 8
- Five keys to profitability: Part 3 Oct 25
- Five keys to profitability: Part 2 Oct 11
- Five keys to profitability: Part 1 Sep 27
- Push and pull marketing Sep 13
- Baby boomers, business & Freedom 85 Aug 30
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