Business & Tactics

Tactics are what the helmsman uses to guide the business through a crisis

Recent Project

The owner of a contracting business had concluded that he had to close down his business; in fact he had already given most of the people their final pay checks. Now he had to deal with the realities of getting everything out of the building, collecting as much money as he could – as fast as he could, dealing with all those he owed money to, handling the personal guarantees he had given on several obligations and taking care of a hundred other details.

To make matters worse his controller had walked out and the only person left inside was the former payroll clerk.

The owner had told a few close business associates he knew that he needed a CFO to help. One recommended Art and so they met. Over lunch he described the situation. He concluded by stating that his biggest concern was that he might have to file bankruptcy.

Art asked a number of questions and after he was convinced he was getting valid information Art said he’d come in and get the job done.

What follows is a partial list of what took place over the next four months:

$1.3 million of the $1.8 million starting A/R was collected.

A $350,000 one-year old A/R was placed in the hands of an attorney Art had worked with for more that 25 years. He and Art negotiated a settlement of $200,000 with the customer.

Over $1.5 million in A/P was negotiated down to $800,000 with structured payments over 12 months. This amount included two personally guaranteed obligations which were negotiated down to 35% cash payments.

Only one creditor initiated a law suit and it was settled before reaching the discovery stage.

A favorable, short-term rental agreement was negotiated with the landlord to provide time for an orderly exit from the 11,000 sq ft building

After interviewing several companies a contract was negotiated to encase and remove all the hazardous waste

The 401K program was terminated

All the equipment at the job sites was retrieved

All the equipment and tools were sold in private transactions.

The entire inventory was either sold or moved to a storage yard (owned by another of Art’s resources) to be sold when the economy improved and values rose.

The truck fleet was turned back to the lessor and a negotiated settlement was made for the remainder of the lease obligations.

Three handymen (from Art’s resource group) came in to perform the necessary labor and to get the inoperative equipment running.

The payroll clerk was smart and very capable. With minimum guidance she quickly took on all the administrative tasks. She did the data entry, produced the daily operating reports, shaped up the office and, in accord with the record retention regulatory requirements filed the appropriate documents in dozens of in-transit storage boxes.

During this four month period the owner took his salary, redirected his efforts and became part of another organization which looks to be a perfect match for both parties.

And, bankruptcy is no longer a concern

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