Many business owners/CEO’s unfortunately don’t spot the signs that led to their company being on the verge of insolvency, or bankruptcy. So what are the signs that your company may be in distress?
• Strained financial resources
• demoralized senior management
• fearful employees
• unhappy customers
• tense bankers
• angry investors
• competitors waiting to pounce
Elusive growth, global market fluctuations, rapidly changing technology, and fragmented buyer behaviors are just some of the dynamics driving the need to have the right marketing leader in place. The question for many organizations often becomes when should such a leader be brought into the organization? Finding the right CMO takes significant recruiting resources and often more time than anticipated. Not all organizations are ready to make this commitment given their stage of development.
Troubled companies and their advisors are increasingly finding value in pursuing substantive balance sheet restructurings out of bankruptcy court. This shift has been driven by a number of factors, including the availability of risk capital, pressure from creditors to minimize costs, reduced management control in the context of bankruptcy, and the ability to negotiate favorable terms with severely impaired creditor constituencies.
As more companies facing financial distress seek to reorganize out of bankruptcy court, the key driver in right-sizing a balance sheet has shifted from aggressive legal tactics to savvy negotiating. Increasingly, advisors to distressed companies must be prepared to drive substantial, and potentially life-saving, change in their clients through impactful negotiations with key stakeholders.
As the Red Queen told Alice, “My dear, here we must run as fast as we can, just to stay in place. And if you wish to go anywhere you must run twice as fast as that.” This is often true with most companies, they must grow or the competition will leave them behind. In order to grow faster they must also make changes in their processes. The key to effectively managing change is to create a culture that is willing to embrace change as the new norm. To be effective, you must ensure the whole organization understands that the status quo will no longer be acceptable. The first step in creating a change-management culture is to get everyone’s head wrapped around some very basic definitions:
Management
Organization and coordination of the activities of an enterprise in accordance with certain policies in order to achieve clearly defined objectives
Change
To cause to be different
Change Management
A structured approach to transitioning individuals, teams, and organizations from a current state to a desired future state
Change Agent
A person effective at change management
I have yet to enter a turnaround situation that I didn’t hear the owner or CEO or the board say that the answer to all of their problems is more money. While in some cases this is a real need, it is seldom the systemic problem within the company. Chances are that they have some work to do. Needing ‘dollars’ is one thing … being ready to raise ‘dollars’ is another.
There is an abundance of funding available in the marketplace for good deals. The key wording in this statement is of course “good deals.” When a company is in trouble rarely is it considered a good deal without some fixing.
Don’t be surprised when you come to the realization that the company isn’t attractive to investors or lenders. This means that you have the opportunity to rebuild the company, or parts of it, so that it can be considered a “good deal.” Build a company that investors want to invest in.
A successful and effective supply chain works best for your company when every step in the process is properly performing, linked well, and communicating effectively. A good supply chain will be streamlined with every segment fully on board to execute their job without any snags and designed for improving the customer’s satisfaction while providing value.
Opening Communication
The first part of building a successful supply chain should begin with the customers themselves focused on a value stream end-to-end. A company with open communication channels will be much more in-tune with what the customers wants and needs. A company’s CRM process should be tracking all the important interfaces with Customers and highlight those communications from initial contact to product and service fulfillment.
Years ago a colleague of mine had a desk plaque that read, “The buck stops…over there.” For too long, this has been the mantra of the unwitting American healthcare consumer. Many Americans do not recognize themselves as consumers when utilizing the healthcare system. We are “patients” – often impatient, of course, but “patients,” nonetheless. We are people who, according to the definition of patients, “receive or are registered to receive medical treatment.” Therein lies the problem: patients “receive”, we are acted upon, we are passive participants in the healthcare process. We pass the buck.
**This article was published in Global Corporate Xpansion. See the posting at GCXMag.com here**
CGI is a manufacturer of medical devices, selling into the Latin American (LATAM) region. The first country the company entered was Argentina. When negotiating the first sale of 10,000 units together with the training service, it seemed like a walk in the park to get the company to agree to the product features, price, delivery and distribution terms. However, the terms of payment opened a whole new phase in the talks. Much time was spent structuring and going back and forth. And if this wasn’t enough, 21 days into the transaction they asked to renegotiate the terms of payments.
*This article is an excerpt from Dennis Cagan’s upcoming book “The Board of Directors for a Private Enterprise”.
When interviewing a candidate for a senior executive role he or she will most likely be a subordinate, or a peer, but nonetheless an employee. Personal chemistry and cultural fit within the company are of course most important. However, a director is not a peer, nor are they an employee, and it is not mandatory that they are a good fit with the company culture – still of course, it is desirable. In general they will not be working side-by-side, or socializing with employees. That said, they are required to understand, appreciate, and respect the company culture. On the other hand, the culture of the board, their personalities, and the dynamics between the directors, is critical. Board interviews will usually be conducted by the board chairman, the lead or presiding director, a member of the nominating or governance committee member, the CEO, or any combination of these.
I have lost count of the number of company owners I’ve met who need help but are scared to death about hiring a consultant. Owners say it all boils down to shoveling out a lot of cash to an outsider without being sure that it will pay off.
“I think a lot of times when the consultants come in, their big advantage is that they come across very self-confident and sound great,” a former Fortune 50 CEO recently told me in an interview. “But I’m always very worried about what I refer to as the articulate incompetent.”
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