More Trouble Ahead For Struggling Companies

Posted by Jim Connolly on 2 July, 2009  Email This Post -  Print This Post

Over the past four weeks, I’ve heard the same disturbing comment from at least six different people in different industries.  I’m hearing that companies that have been relying on their “rainy day fund” (i.e. savings and/or line of credit) to get them through the recession are reaching the end of the line with no end in sight for the recession.  Are you hearing the same thing?  Are you experiencing the same thing?

If this is true, we are in for another round of companies faced with dire options. 

I can’t effectively give consulting advice in a blog post, but if you are faced with this situation, I have three suggestions:

• Get help sooner rather than later.  You’ll need a proactive banker, a proactive CPA and a proactive business attorney.  If any of these three people have not been helping you proactively, replace them.  One client facing possible collapse was told by their CPA to make sure they got their statements out on time and to watch their accounts receivable balance.  That’s crap advice given by a so called professional only interested in collecting their hourly fee from a safe distance without any accountability for results!  Fire them as an advisor!
• If you’re faced with layoffs, cash flow problems or the prospect of closing the doors, get the help of an organizational restructuring or turnaround consultant.  But, be careful.  Find a person with the temperament that you are looking for.  Some aggressive turnaround consultants will come in and leave a wake of blood and broken glass that only makes the situation worse, not better.
• As much as you will focus on surviving day to day, focus on deciding which parts of the company are performing well.  What do you do well, provides the customer lots of value and is not easy for competitors to copy?  If something meets all three criteria, it’s called a strategic competency and it is the “secret sauce” that is unique to your company.  Maybe you’ll decide to discontinue products or services that don’t meet that criteria.  If that’s the case, at least you won’t be cutting the parts that can be a strong foundation for your company’s recovery.

These are very challenging times.  There are dire consequences and opportunities along the path.  All the best at negotiating the terrain ahead.

Personal Note: If I can be of assistance to any organization faced with this situation, please don’t hesitate to contact me for a confidential, no cost and no obligation phone call to discuss the challenges you’re facing.  

Jim Connolly
(309) 828-9060