In 1953 the Department of Health, Education and Welfare became a cabinet level department in the United States. In 1979 the Department of Education Organization Act split HEW into the Department of Education and the Department of Health and Human Services. HHS is responsible for the health, safety and well-being of residents of the United States. This mandate also extends internationally for cross-border health and safety issues.
HHS administers over 300 programs with a budget of over $737 billion. HHS mission includes a wide range of human issues, including substance abuse, Medicare and Medicaid, childrens health, health disparities, disease prevention and health promotion. It is the largest grant-making department within the Federal Government.
In 1979 the Department of Health and Human Services established the Office of Small and Disadvantaged Business Utilization to develop and implement outreach to the small business community. The Office performs its mission through small business fairs, procurement conferences, trade group seminars, conventions and forums.
The Office of Small Business Development, also called OSDBU, is host to Vendor Outreach Sessions that happen twice monthly. The purpose of these sessions is to introduce and educate vendors on the small business program and to provide them information so that they can effectively market their products and services to HHS.
The Department of Health and Human Services is the only executive agency where Small Business Specialists report to the OSDBU Director. These Small Business Specialists are located within the eleven agencies of HHS.
Every day, these Specialists work with Contracting and Program Office staff, so as to determine the best acquisition strategy; they also work to make their approach unified so that when vendors deal with Health And Human Services, this unity will benefit them.
Currently, HHS does not provide grants or loans to help small businesses get going, but it is in fact the largest organization to make grants within the federal government. It has over 300 grant programs today, and it handles mission-specific topics, which are in turn delegated among the various HHS operating agencies. The Catalog of Federal Domestic Assistance profiles all Federal grant programs; these provide financial assistance and include HHS programs. In addition, specific points of contact for obtaining applications or additional information are also provided.
Vendors who are interested in doing business with Health And Human Services do not have to have any special certification, but instead, the Small Business Administration provides certification to firms under the Business Development Program, the Historically Underutilized Business Zone Program, and the Small Disadvantaged Business Program. Businesses that are Women-Owned, Veteran Owned, Service Disabled Veteran Owned, or Small Businesses are generally managed with self-certification. Self-certification is not challenged unless or until an interested party or competitor provides protest to it. In addition, an HHS Contracting Officer may request that the SBA provide a size determination.
Thursday, September 16, 2010
Wednesday, September 15, 2010
How to Work With Turnaround Professionals - How They Operate and How to Find Financing
The turnaround specialist offers a new set of eyes, skills and understanding of troubled situations to independently evaluate a company's circumstances. The turnaround specialist very quickly must face a series of questions that existing management may never have asked, such as: What is the purpose of this business? Should it be saved? If so, why? Are those reasons valid?
The turnaround specialist must gather information, evaluate it for accuracy and analyze it quickly so that those initial questions can be addressed openly and honestly. That process generally focuses upon the following issues:
* Is the business viable?
* Is there a core business?
* Are there sufficient sources of cash to fuel a recovery?
* Is existing management capable of leading company?
The specialist should discuss those questions openly with his client, and if it is determined the answer to any of the above questions is "No," the parameters of the engagement should be reexamined. Should a specialist still be engaged? What kind of plan is needed to otherwise minimize the losses and to maximize the value of the business for the benefit of his client.
The process of recovery undertaken by the turnaround specialist involves several stages.
Fact-finding. The turnaround specialist must learn as much as possible as quickly as possible so that he can assess the present circumstances of the company.
Analysis of the facts. The turnaround specialist should prepare an assessment of the current state of the company.
Preparation of a business plan outlining possible courses of action. Depending upon the engagement and who his client is, the specialist will seek client input to determine which of alternative courses of action should be undertaken.
Implementation of the business plan. Once the course of action has been chosen, the specialist should be involved to put the plan in place whether as interim manager or as a consultant to management. This is the time a specialist begins to build a team both inside the company and from outside resources.
Monitor the business plan. The specialist should keep vigil over the plan, analyzing variances to determine their causes and the validity of the underlying assumptions.
Stabilization and transition. Assuming liquidation is not a cornerstone of the business plan, a specialist should remain involved in an engagement until stabilization is achieved and to assist a business in transition of management if necessary.
Turnaround specialists immediately focus on cash flow since it is often a cash shortage that causes troubled businesses to seek help. The specialist's first goal is to stabilize cash flow and stop the hemorrhage. The specialist performs a quick analysis of the company's sales and profit centers and of its asset utilization.
In many cases, these factors indicate that the business may have lost focus of its core. To remedy cash shortage, turnaround specialists generally analyze which assets are available to generate a quick infusion of cash and which operations could be terminated thereby stopping the cash outflow. These are difficult decisions since they intrinsically involve down-sizing the company and eliminating some jobs. On the other hand, it has the effect of saving the good parts of the company - and many jobs.
After the specialist has been engaged and a business plan designed, the specialist plays many roles. Since many troubled businesses often lose much of their credibility with lenders, trade suppliers, employees, customers, shareholders, and the local community at large, retaining a turnaround specialist is often the first sign to outsiders that the company is taking positive steps toward both recovery and rebuilding damaged relationships. The turnaround specialist usually serves as a liaison or intermediary with these outside constituencies to calm troubled waters and to present bad news as a preamble to a plan for recovery.
Because management's credibility is often strained, the specialist actively assists in the preparation of a viable business plan and advocates its approval and adoption by the various constituency groups whose cooperation is necessary for implementation. The turnaround specialist is experienced in negotiating both with lenders and with trade suppliers in the midst of a crisis. The turnaround manager brings their personal integrity, their own credibility, and their track record to the table in contrast to that offered by existing management, which finds itself in a downturn.
The turnaround specialist often directs communication for the troubled company with outsiders and company employees. The job of the turnaround specialist is to determine what is in the best interests of the business objectively, regardless of any other agendas. The turnaround specialist must take into account the objectives of the assignment and approach difficult decisions without the weight of historical expectations on his back.
The effective turnaround specialist is a teacher and knows that it is critical to success that a capable management team with acute awareness of its goals must be left behind. If management is deficient, the turnaround specialist has the very delicate task of communicating that message, identifying appropriate roles for existing managers and facilitating a transition.
Special skills the turnaround specialist may also bring to the engagement include knowledge of sources of de nova financing and familiarity of trade relationships necessary to assure the flow of product the company needs to fuel its recovery.
Business Ownership's Resistance to Turnaround Specialists
Given difficult questions that a troubled business must face, there is often tension between owners, management, employees of the company and the turnaround specialist. One main problem is that businesses in trouble will often postpone action because their own owners no longer can tolerate jarring change and an uncomfortable transition to something new. Despite statistics indicating otherwise, owners and management may generally believe that its particular situation fits within those minority cases in which decline is attributable to uncontrollable external factors.
A variety of misconceptions and myths abound, which make businesses leery about hiring a turnaround specialist.
The turnaround specialist has "no heart". He does not care about employees, long-time suppliers or bank with whom the company has been doing business for many years. He is cutting employees and telling creditors that they are not going to be paid. Do not forget that the specialist is goal oriented and recognizes that his job is to make hard decisions. The turnaround specialist is an experienced negotiator with creditors to whom he tells the truth, be it good or bad and relies upon his credibility to build the consensus necessary to build for the future.
The turnaround specialist does not understand the company's corporate culture. This is a legitimate observation, but it does not follow that without history on his side, the turnaround specialist is not capable of bringing order out of chaos and adding value to the client. One of the most appealing aspects of a turnaround specialist is that he brings a new set of eyes to a situation as well as an experienced and knowledge base of managing businesses through the turnaround process.
The company's employees have no loyalty to the turnaround specialist. Just remember that management, labor and the turnaround specialist have a responsibility to the organization to work together for the common good, and any power struggles will ultimately hurt the company and the turnaround effort.
The turnaround specialist does not know the client's particular business or industry. The skill the specialist brings to the table is his management ability, his ability to marshal resources and maximize the value from those diverse resources. If the business requires special expertise, the turnaround specialist should assist in attracting that expertise. Most importantly, these issues should be discussed prior to the engagement.
The turnaround specialist has a private agenda. The specialist is ultimately interested in purchasing the business, is using the business as a springboard into other ventures, or is there to maximize value to his referral source without regard to the other stakeholders. These issues with particular emphasis on independence should be addressed pre-engagement and potential conflicts should be addressed in an engagement agreement.
The turnaround specialist will not have to live with his recommendations for change and probably will not even live in the community beyond the period of the engagement. As a result, the turnaround specialist is not accountable to anyone. In reality, however, the turnaround specialist is motivated to perform the best if the troubled company is used for purposes of future references or if the company reports the results of the engagement to the referral source. The turnaround specialist's credibility and recommendations are the basis upon which lenders and trade suppliers will ultimately rely in deciding whether to offer support - and throw future business his way.
The turnaround specialist will steal ideas, techniques. If the company has proprietary property, it should legally protect itself. Otherwise, engagement agreement should cover points of privacy or proprietary content which the turnaround specialist must leave behind or be restricted through contract provisions similar to non-disclosure and non-compete agreements.
Remember to Be Cautious
Because the number of successful corporate turnarounds has been steadily increasing during the past few years, the increased visibility of the industry has attracted operators masquerading as qualified turnaround specialists. The expression "Ready, Shoot, Aim," rings all too familiar. Businesses seeking management assistance should be cautious to carefully consider each turnaround candidate.
Beware of the turnaround specialist who refuses to supply references. Since the profession is relatively young, there is limited general knowledge in the marketplace regarding the capabilities and backgrounds of turnaround specialists. Particularly, check with attorneys and CPAs with whom the turnaround specialist has worked and obtain as much specific information regarding the turnaround specialist's actual experience as possible. The TMA has implemented a Certified Turnaround Professional (CTP) designation, which checks professional and client references, and requires CTP to pass a three-part rigorous examination before qualification.
Like any professional, the competent turnaround specialist will not guarantee results whether it be a recovery, new funds, a renegotiated loan, an equity investor or buyer, or any other guaranteed result. A guarantee of any result, other than a best effort, is a signal to keep interviewing.
If the turnaround specialist makes an effort to impress the company with his particularly close relationship with banks, trade suppliers, investor, or any particular resource the business may need, investigate that particular relationship further. Make sure that the turnaround specialist has adequate independence from other sources so that he can provide the company not only with his undivided attention, but also so that the company can be comfortable that his advice and leadership will be void of any possible conflicts of interest.
A turnaround specialist who tries to impress the company with a "look how much our firm has grown" sales approach is equating quantity with quality. The implication is that the firm has grown because the marketplace recognizes the quality of the work performed.
The issue of the turnaround specialist taking equity is a double-edged sword. Some turnaround specialists believe that taking equity or having an opportunity to receive an equity position with a client is a conflict of interest, which could impair their management judgment. Others believe that, as an equity holder, the turnaround specialist not only shares the risk but also must maximize shareholder value, and therefore, benefit all constituents, to receive the full compensation. This is effectively the same theory underlying stock option plans for management in many companies. Regardless of whether equity participation is good or bad, the company and the turnaround specialist should fully discuss equity participation prior to the engagement and define the potential role of equity, if any, in the engagement agreement prior to employment.
Investigate the turnaround specialist's actual experience. Ask what portion of this business has actually been in turnaround situations rather than in other executive or consulting capacities. Although the number of turnaround specialists is rather small at this time, try to avoid providing a job in transition for an executive or a training ground for a consultant.
When discussing fees, provide specifically for what expenses are to be reimbursed and the level of reimbursement generally expected. Most importantly, do not let it become either a surprise or a source of disagreement. Again, cover as much as possible prior to the engagement in a written engagement contract.
Engagement Agreements
Always insist upon a written engagement agreement to outline the terms of the engagement. Provisions that should at least be considered include:
* The purpose of the engagement.
* General responsibilities of the turnaround team, the company's management and staff.
* Time the specialist will devote to company. (What other commitments must specialist deal with simultanously?)
* Specialist's staff.
* Company staff.
* Specialist's core of professional support for the business (attorneys, accounting firms, etc.).
* Terms of any equity opportunities for the specialist (The entire question of the turnaround specialist and equity is one of the more troublesome in this growing profession. It is critical that all parties understand the rules up front. For example: discuss equity kickers, the specialist as an equity participant, finder's fees, etc.).
* Term of the engagement (Define the time period of the engagement).
* Fee arrangement, terms of performance bonuses, payment schedule.
* Project "deliverables" (What the specialist is expected to deliver, even if it is only a best effort. A schedule of anticipated benchmarks where both parties may measure progress and satisfaction with the other.)
* Fee for acting as a broker in selling the business.
* Regular reporting mechanism (to assure communication between the parties.)
* Specialist's follow-up responsibilities after the engagement is concluded.
* Termination provisions (includes notification periods, for both parties.)
Turnaround Financing For Financially Distressed Companies
While most owners of distressed businesses believe that access to more money would solve their company's financial problems, turnaround specialists recognize that the shortage of capital is often only a symptom, rather than the primary problem facing a distressed company. Although sufficient and available financial resources are necessary to implement turnaround plans, a successful turnaround must first attack and solve the business problems which produce the cash crisis.
Financing is an integral part of a troubled company's plan of reorganization. An effective financing plan will stabilize the cash position during crisis, provide necessary capital base to allow the company to return to profitability, and restructure the balance sheet so it can support the company into the future.
Financing strategies differ from situation to situation according to the liquidity and viability of the distressed business. Initially, turnaround specialists attempt to maximize the liquidity to provide sufficient time to evaluate the viability of the business. In addition, the turnaround specialist is likely to implement cost reduction plans and attempt to renegotiate the terms and covenants of existing financing arrangements to a level the company can live with during the recovery period.
When necessary, the turnaround-financing plan can involve a recapitalization, or a restructuring of the right side of the balance sheet. This involves changing the relationship between existing financial stakeholders through a combination of debt and equity conversions, exchange offers, stock rights offerings, and the addition of new financial stakeholders. Obviously, the more sever a company's situation is, the more difficult it is to work out an arrangement with existing trade creditors, lenders, equity holders, and the harder it is to attract new stakeholders.
Turnaround financing specialists provide financially distressed companies a number of financial resources and expertise to draw upon. Capital resources and the range of services differ widely among lenders, equity investors, and purchasers of securities and claims of distressed companies.
Historically, asset based lenders have been a primary source of loans to distressed businesses. These loans are often made at premium rates while the lender requires an enhanced security position. With the increasing number of Chapter 11 bankruptcies, debtor-in-possession lending departments emerged in many large commercial banks and investment banks. Debtor-in-possession loans are made to a company after it files for bankruptcy protection. To encourage these lenders to undertake the risks, the law provides a super priority status for repayment of their loans.
Actually, because of this super priority status, some companies must file a bankruptcy case to provide the lender with the level of security it seeks. Ironically, many lenders prefer the control aspect of the bankruptcy process. Without court's protection and supervision, in a non-bankruptcy environment, these same lenders may well lend to a distressed company but with restrictive covenants and fees that may seem burdensome. In addition, taking into account the higher fees and rates - coupled with other restrictions to be anticipated in a distressed situation - management flexibility is limited and higher interest rates often slow the recovery. Therefore, the turnaround-financing plan is only effective if viewed on a long-term basis, and if it ultimately helps the company achieve recovery.
When a distressed company is unable to find a suitable lender, management should consider turnaround equity investors who will infuse equity capital into the business. As one would anticipate, equity funds are also an expensive alternative. Equity investors typically require a controlling interest in the company in exchange for their capital and in consideration of the abnormal risk. Equity investors often specialize in particular industries, company sizes, investment minimums and maximums, and anticipate varying management roles. Since investors bring different capabilities to the table, management should determine whether the company would best be served by financial or strategic assistance.
Financial investors sometimes have turnaround management and bankruptcy experience and are able to assist management through the complexities of the reorganization process. Investments are often made at a significant discount compared to the business's underlying asset value. While most financial investors remain involved only at the board of director level, they occasionally fill top management positions if necessary to protect their investment.
While some financial equity investors have funds committed and immediately available, others act as financial intermediaries receiving an equity position in the company as their compensation upon completion of the investment. These investors act as a "gate keeper" between the financially distressed company and the alternative sources of financing. While many financial intermediaries are skilled financial advisors and have a wide network, management should be aware of possible conflicts of interest between the advice they receive from the financial intermediary and his compensation arrangement. Full disclosure should be sought to assure that the primary motivation for putting the deal together is not the fee involved.
Alternatively, strategic equity investors are identified by their specific industry or geographic requirements and generally provide specialized experience and knowledge with their investment. These investors often acquire financially distressed companies to consolidate with their existing companies and typically become involved in the management of the acquired business at a senior operating level. Since the passage of time usually works against a financially distressed company, the strategic investor may provide the company with a more timely, or occasionally, the only solution.
Regardless of the type of equity investor, the financially distressed company will often benefit from the increased negotiating leverage with its constituencies that a credible new investor brings to the turnaround. Once new equity funds are infused into the business, the company's existing lender may be more willing to modify the loan agreement if they feel that their loan is protected from further impairment. Trade creditors may agree to credit terms more favorable to the troubled business if they believe that future payments have become more certain and if no trade creditors are being preferred over others. A local government may be more willing to provide tax concessions and financing if it believes jobs will be saved so that the business can continue to contribute positively to the local economy. Of equal importance, employees may be more willing to consent to concessions if they believe that the company's survival is at stake, that their jobs are in jeopardy, and that they are an integral part of the recovery process.
Purchasers of securities and claims of financially distressed companies do not infuse capital directly into the business. However, management should be aware that these investors can have a tremendous impact on the company's turnaround efforts through their purchase of securities and claims from the existing financial stakeholders. Investments are typically made in company's debt, since in a bankruptcy, debtholders have a higher priority status than equity holders and are able to influence management's reorganization efforts through participation on the creditors' committee. In some cases, these investors will infuse equity capital into the business as part of the plan of reorganization to increase the returns on their investments.
This growing number of investors look for opportunities to purchase securities and claims at significant discounts from financial stakeholders who prefer immediate liquidity rather than the uncertainty of recouping their investment over the long term. They believe that their investments will yield considerable returns upon the successful reorganization of the financially distressed business.
Experienced turnaround specialists have networks to assist their clients to find the funds necessary to fuel the recovery.
The turnaround specialist must gather information, evaluate it for accuracy and analyze it quickly so that those initial questions can be addressed openly and honestly. That process generally focuses upon the following issues:
* Is the business viable?
* Is there a core business?
* Are there sufficient sources of cash to fuel a recovery?
* Is existing management capable of leading company?
The specialist should discuss those questions openly with his client, and if it is determined the answer to any of the above questions is "No," the parameters of the engagement should be reexamined. Should a specialist still be engaged? What kind of plan is needed to otherwise minimize the losses and to maximize the value of the business for the benefit of his client.
The process of recovery undertaken by the turnaround specialist involves several stages.
Fact-finding. The turnaround specialist must learn as much as possible as quickly as possible so that he can assess the present circumstances of the company.
Analysis of the facts. The turnaround specialist should prepare an assessment of the current state of the company.
Preparation of a business plan outlining possible courses of action. Depending upon the engagement and who his client is, the specialist will seek client input to determine which of alternative courses of action should be undertaken.
Implementation of the business plan. Once the course of action has been chosen, the specialist should be involved to put the plan in place whether as interim manager or as a consultant to management. This is the time a specialist begins to build a team both inside the company and from outside resources.
Monitor the business plan. The specialist should keep vigil over the plan, analyzing variances to determine their causes and the validity of the underlying assumptions.
Stabilization and transition. Assuming liquidation is not a cornerstone of the business plan, a specialist should remain involved in an engagement until stabilization is achieved and to assist a business in transition of management if necessary.
Turnaround specialists immediately focus on cash flow since it is often a cash shortage that causes troubled businesses to seek help. The specialist's first goal is to stabilize cash flow and stop the hemorrhage. The specialist performs a quick analysis of the company's sales and profit centers and of its asset utilization.
In many cases, these factors indicate that the business may have lost focus of its core. To remedy cash shortage, turnaround specialists generally analyze which assets are available to generate a quick infusion of cash and which operations could be terminated thereby stopping the cash outflow. These are difficult decisions since they intrinsically involve down-sizing the company and eliminating some jobs. On the other hand, it has the effect of saving the good parts of the company - and many jobs.
After the specialist has been engaged and a business plan designed, the specialist plays many roles. Since many troubled businesses often lose much of their credibility with lenders, trade suppliers, employees, customers, shareholders, and the local community at large, retaining a turnaround specialist is often the first sign to outsiders that the company is taking positive steps toward both recovery and rebuilding damaged relationships. The turnaround specialist usually serves as a liaison or intermediary with these outside constituencies to calm troubled waters and to present bad news as a preamble to a plan for recovery.
Because management's credibility is often strained, the specialist actively assists in the preparation of a viable business plan and advocates its approval and adoption by the various constituency groups whose cooperation is necessary for implementation. The turnaround specialist is experienced in negotiating both with lenders and with trade suppliers in the midst of a crisis. The turnaround manager brings their personal integrity, their own credibility, and their track record to the table in contrast to that offered by existing management, which finds itself in a downturn.
The turnaround specialist often directs communication for the troubled company with outsiders and company employees. The job of the turnaround specialist is to determine what is in the best interests of the business objectively, regardless of any other agendas. The turnaround specialist must take into account the objectives of the assignment and approach difficult decisions without the weight of historical expectations on his back.
The effective turnaround specialist is a teacher and knows that it is critical to success that a capable management team with acute awareness of its goals must be left behind. If management is deficient, the turnaround specialist has the very delicate task of communicating that message, identifying appropriate roles for existing managers and facilitating a transition.
Special skills the turnaround specialist may also bring to the engagement include knowledge of sources of de nova financing and familiarity of trade relationships necessary to assure the flow of product the company needs to fuel its recovery.
Business Ownership's Resistance to Turnaround Specialists
Given difficult questions that a troubled business must face, there is often tension between owners, management, employees of the company and the turnaround specialist. One main problem is that businesses in trouble will often postpone action because their own owners no longer can tolerate jarring change and an uncomfortable transition to something new. Despite statistics indicating otherwise, owners and management may generally believe that its particular situation fits within those minority cases in which decline is attributable to uncontrollable external factors.
A variety of misconceptions and myths abound, which make businesses leery about hiring a turnaround specialist.
The turnaround specialist has "no heart". He does not care about employees, long-time suppliers or bank with whom the company has been doing business for many years. He is cutting employees and telling creditors that they are not going to be paid. Do not forget that the specialist is goal oriented and recognizes that his job is to make hard decisions. The turnaround specialist is an experienced negotiator with creditors to whom he tells the truth, be it good or bad and relies upon his credibility to build the consensus necessary to build for the future.
The turnaround specialist does not understand the company's corporate culture. This is a legitimate observation, but it does not follow that without history on his side, the turnaround specialist is not capable of bringing order out of chaos and adding value to the client. One of the most appealing aspects of a turnaround specialist is that he brings a new set of eyes to a situation as well as an experienced and knowledge base of managing businesses through the turnaround process.
The company's employees have no loyalty to the turnaround specialist. Just remember that management, labor and the turnaround specialist have a responsibility to the organization to work together for the common good, and any power struggles will ultimately hurt the company and the turnaround effort.
The turnaround specialist does not know the client's particular business or industry. The skill the specialist brings to the table is his management ability, his ability to marshal resources and maximize the value from those diverse resources. If the business requires special expertise, the turnaround specialist should assist in attracting that expertise. Most importantly, these issues should be discussed prior to the engagement.
The turnaround specialist has a private agenda. The specialist is ultimately interested in purchasing the business, is using the business as a springboard into other ventures, or is there to maximize value to his referral source without regard to the other stakeholders. These issues with particular emphasis on independence should be addressed pre-engagement and potential conflicts should be addressed in an engagement agreement.
The turnaround specialist will not have to live with his recommendations for change and probably will not even live in the community beyond the period of the engagement. As a result, the turnaround specialist is not accountable to anyone. In reality, however, the turnaround specialist is motivated to perform the best if the troubled company is used for purposes of future references or if the company reports the results of the engagement to the referral source. The turnaround specialist's credibility and recommendations are the basis upon which lenders and trade suppliers will ultimately rely in deciding whether to offer support - and throw future business his way.
The turnaround specialist will steal ideas, techniques. If the company has proprietary property, it should legally protect itself. Otherwise, engagement agreement should cover points of privacy or proprietary content which the turnaround specialist must leave behind or be restricted through contract provisions similar to non-disclosure and non-compete agreements.
Remember to Be Cautious
Because the number of successful corporate turnarounds has been steadily increasing during the past few years, the increased visibility of the industry has attracted operators masquerading as qualified turnaround specialists. The expression "Ready, Shoot, Aim," rings all too familiar. Businesses seeking management assistance should be cautious to carefully consider each turnaround candidate.
Beware of the turnaround specialist who refuses to supply references. Since the profession is relatively young, there is limited general knowledge in the marketplace regarding the capabilities and backgrounds of turnaround specialists. Particularly, check with attorneys and CPAs with whom the turnaround specialist has worked and obtain as much specific information regarding the turnaround specialist's actual experience as possible. The TMA has implemented a Certified Turnaround Professional (CTP) designation, which checks professional and client references, and requires CTP to pass a three-part rigorous examination before qualification.
Like any professional, the competent turnaround specialist will not guarantee results whether it be a recovery, new funds, a renegotiated loan, an equity investor or buyer, or any other guaranteed result. A guarantee of any result, other than a best effort, is a signal to keep interviewing.
If the turnaround specialist makes an effort to impress the company with his particularly close relationship with banks, trade suppliers, investor, or any particular resource the business may need, investigate that particular relationship further. Make sure that the turnaround specialist has adequate independence from other sources so that he can provide the company not only with his undivided attention, but also so that the company can be comfortable that his advice and leadership will be void of any possible conflicts of interest.
A turnaround specialist who tries to impress the company with a "look how much our firm has grown" sales approach is equating quantity with quality. The implication is that the firm has grown because the marketplace recognizes the quality of the work performed.
The issue of the turnaround specialist taking equity is a double-edged sword. Some turnaround specialists believe that taking equity or having an opportunity to receive an equity position with a client is a conflict of interest, which could impair their management judgment. Others believe that, as an equity holder, the turnaround specialist not only shares the risk but also must maximize shareholder value, and therefore, benefit all constituents, to receive the full compensation. This is effectively the same theory underlying stock option plans for management in many companies. Regardless of whether equity participation is good or bad, the company and the turnaround specialist should fully discuss equity participation prior to the engagement and define the potential role of equity, if any, in the engagement agreement prior to employment.
Investigate the turnaround specialist's actual experience. Ask what portion of this business has actually been in turnaround situations rather than in other executive or consulting capacities. Although the number of turnaround specialists is rather small at this time, try to avoid providing a job in transition for an executive or a training ground for a consultant.
When discussing fees, provide specifically for what expenses are to be reimbursed and the level of reimbursement generally expected. Most importantly, do not let it become either a surprise or a source of disagreement. Again, cover as much as possible prior to the engagement in a written engagement contract.
Engagement Agreements
Always insist upon a written engagement agreement to outline the terms of the engagement. Provisions that should at least be considered include:
* The purpose of the engagement.
* General responsibilities of the turnaround team, the company's management and staff.
* Time the specialist will devote to company. (What other commitments must specialist deal with simultanously?)
* Specialist's staff.
* Company staff.
* Specialist's core of professional support for the business (attorneys, accounting firms, etc.).
* Terms of any equity opportunities for the specialist (The entire question of the turnaround specialist and equity is one of the more troublesome in this growing profession. It is critical that all parties understand the rules up front. For example: discuss equity kickers, the specialist as an equity participant, finder's fees, etc.).
* Term of the engagement (Define the time period of the engagement).
* Fee arrangement, terms of performance bonuses, payment schedule.
* Project "deliverables" (What the specialist is expected to deliver, even if it is only a best effort. A schedule of anticipated benchmarks where both parties may measure progress and satisfaction with the other.)
* Fee for acting as a broker in selling the business.
* Regular reporting mechanism (to assure communication between the parties.)
* Specialist's follow-up responsibilities after the engagement is concluded.
* Termination provisions (includes notification periods, for both parties.)
Turnaround Financing For Financially Distressed Companies
While most owners of distressed businesses believe that access to more money would solve their company's financial problems, turnaround specialists recognize that the shortage of capital is often only a symptom, rather than the primary problem facing a distressed company. Although sufficient and available financial resources are necessary to implement turnaround plans, a successful turnaround must first attack and solve the business problems which produce the cash crisis.
Financing is an integral part of a troubled company's plan of reorganization. An effective financing plan will stabilize the cash position during crisis, provide necessary capital base to allow the company to return to profitability, and restructure the balance sheet so it can support the company into the future.
Financing strategies differ from situation to situation according to the liquidity and viability of the distressed business. Initially, turnaround specialists attempt to maximize the liquidity to provide sufficient time to evaluate the viability of the business. In addition, the turnaround specialist is likely to implement cost reduction plans and attempt to renegotiate the terms and covenants of existing financing arrangements to a level the company can live with during the recovery period.
When necessary, the turnaround-financing plan can involve a recapitalization, or a restructuring of the right side of the balance sheet. This involves changing the relationship between existing financial stakeholders through a combination of debt and equity conversions, exchange offers, stock rights offerings, and the addition of new financial stakeholders. Obviously, the more sever a company's situation is, the more difficult it is to work out an arrangement with existing trade creditors, lenders, equity holders, and the harder it is to attract new stakeholders.
Turnaround financing specialists provide financially distressed companies a number of financial resources and expertise to draw upon. Capital resources and the range of services differ widely among lenders, equity investors, and purchasers of securities and claims of distressed companies.
Historically, asset based lenders have been a primary source of loans to distressed businesses. These loans are often made at premium rates while the lender requires an enhanced security position. With the increasing number of Chapter 11 bankruptcies, debtor-in-possession lending departments emerged in many large commercial banks and investment banks. Debtor-in-possession loans are made to a company after it files for bankruptcy protection. To encourage these lenders to undertake the risks, the law provides a super priority status for repayment of their loans.
Actually, because of this super priority status, some companies must file a bankruptcy case to provide the lender with the level of security it seeks. Ironically, many lenders prefer the control aspect of the bankruptcy process. Without court's protection and supervision, in a non-bankruptcy environment, these same lenders may well lend to a distressed company but with restrictive covenants and fees that may seem burdensome. In addition, taking into account the higher fees and rates - coupled with other restrictions to be anticipated in a distressed situation - management flexibility is limited and higher interest rates often slow the recovery. Therefore, the turnaround-financing plan is only effective if viewed on a long-term basis, and if it ultimately helps the company achieve recovery.
When a distressed company is unable to find a suitable lender, management should consider turnaround equity investors who will infuse equity capital into the business. As one would anticipate, equity funds are also an expensive alternative. Equity investors typically require a controlling interest in the company in exchange for their capital and in consideration of the abnormal risk. Equity investors often specialize in particular industries, company sizes, investment minimums and maximums, and anticipate varying management roles. Since investors bring different capabilities to the table, management should determine whether the company would best be served by financial or strategic assistance.
Financial investors sometimes have turnaround management and bankruptcy experience and are able to assist management through the complexities of the reorganization process. Investments are often made at a significant discount compared to the business's underlying asset value. While most financial investors remain involved only at the board of director level, they occasionally fill top management positions if necessary to protect their investment.
While some financial equity investors have funds committed and immediately available, others act as financial intermediaries receiving an equity position in the company as their compensation upon completion of the investment. These investors act as a "gate keeper" between the financially distressed company and the alternative sources of financing. While many financial intermediaries are skilled financial advisors and have a wide network, management should be aware of possible conflicts of interest between the advice they receive from the financial intermediary and his compensation arrangement. Full disclosure should be sought to assure that the primary motivation for putting the deal together is not the fee involved.
Alternatively, strategic equity investors are identified by their specific industry or geographic requirements and generally provide specialized experience and knowledge with their investment. These investors often acquire financially distressed companies to consolidate with their existing companies and typically become involved in the management of the acquired business at a senior operating level. Since the passage of time usually works against a financially distressed company, the strategic investor may provide the company with a more timely, or occasionally, the only solution.
Regardless of the type of equity investor, the financially distressed company will often benefit from the increased negotiating leverage with its constituencies that a credible new investor brings to the turnaround. Once new equity funds are infused into the business, the company's existing lender may be more willing to modify the loan agreement if they feel that their loan is protected from further impairment. Trade creditors may agree to credit terms more favorable to the troubled business if they believe that future payments have become more certain and if no trade creditors are being preferred over others. A local government may be more willing to provide tax concessions and financing if it believes jobs will be saved so that the business can continue to contribute positively to the local economy. Of equal importance, employees may be more willing to consent to concessions if they believe that the company's survival is at stake, that their jobs are in jeopardy, and that they are an integral part of the recovery process.
Purchasers of securities and claims of financially distressed companies do not infuse capital directly into the business. However, management should be aware that these investors can have a tremendous impact on the company's turnaround efforts through their purchase of securities and claims from the existing financial stakeholders. Investments are typically made in company's debt, since in a bankruptcy, debtholders have a higher priority status than equity holders and are able to influence management's reorganization efforts through participation on the creditors' committee. In some cases, these investors will infuse equity capital into the business as part of the plan of reorganization to increase the returns on their investments.
This growing number of investors look for opportunities to purchase securities and claims at significant discounts from financial stakeholders who prefer immediate liquidity rather than the uncertainty of recouping their investment over the long term. They believe that their investments will yield considerable returns upon the successful reorganization of the financially distressed business.
Experienced turnaround specialists have networks to assist their clients to find the funds necessary to fuel the recovery.
Monday, September 13, 2010
Medical Transcription Outsourcing - Turnaround Time Guarantee
Turnaround time guarantee given by the medical transcription service provider plays an important role in the service provider selection process.
Why is turnaround time guarantee a deciding factor?
To answer this question, one needs to examine the importance of medical transcription and the part it plays in the provision of quality healthcare. Medical transcription is the process of creating records of the patient-healthcare professional encounter. These records then serve as the foundation for providing healthcare, for referring to specialists, as evidence in case of litigation and form the basis for billing.
One can see that the quality of healthcare hinges on the availability of accurate and timely information, therefore turnaround time is very important for a healthcare facility.
What is turnaround time?
Turnaround time is the time between the audio files is uploaded to the time when the final transcript is made available to the healthcare professional. Ideal lead time would depend on the type of report. For most reports a turnaround time of 24 hours would be considered ideal, but STAT reports would require of 4-12 hours.
How can a healthcare facility be ensured that the committed time would be met?
This would require the healthcare facility to have a careful screening process of various service providers. To ensure that a service provider would stand by their guarantee they need to be evaluated on the following:
· Technology used: The technology used by the service provider will have a direct impact on the time taken to revert back with the transcripts
· Training methods used: A team of well-trained transcriptionists would ensure that the time guaranteed by the service provider for reverting back with the finished transcripts would be met without any compromise to quality.
· Quality assurance methods used: The methods used to ensure quality would not only ensure accuracy but also save a lot of time in correction of errors, thereby fine-tuning the time required for delivering the transcripts.
· In-house transcription: Transcription done in-house and not through sub-contractors would cut down on time needed for delivering transcripts by avoiding dilution of control over the process of transcription.
While evaluating the quality of transcription services it is important to assess whether the transcription service provider can maintain accuracy and still meet turnaround time guarantees.
Why is turnaround time guarantee a deciding factor?
To answer this question, one needs to examine the importance of medical transcription and the part it plays in the provision of quality healthcare. Medical transcription is the process of creating records of the patient-healthcare professional encounter. These records then serve as the foundation for providing healthcare, for referring to specialists, as evidence in case of litigation and form the basis for billing.
One can see that the quality of healthcare hinges on the availability of accurate and timely information, therefore turnaround time is very important for a healthcare facility.
What is turnaround time?
Turnaround time is the time between the audio files is uploaded to the time when the final transcript is made available to the healthcare professional. Ideal lead time would depend on the type of report. For most reports a turnaround time of 24 hours would be considered ideal, but STAT reports would require of 4-12 hours.
How can a healthcare facility be ensured that the committed time would be met?
This would require the healthcare facility to have a careful screening process of various service providers. To ensure that a service provider would stand by their guarantee they need to be evaluated on the following:
· Technology used: The technology used by the service provider will have a direct impact on the time taken to revert back with the transcripts
· Training methods used: A team of well-trained transcriptionists would ensure that the time guaranteed by the service provider for reverting back with the finished transcripts would be met without any compromise to quality.
· Quality assurance methods used: The methods used to ensure quality would not only ensure accuracy but also save a lot of time in correction of errors, thereby fine-tuning the time required for delivering the transcripts.
· In-house transcription: Transcription done in-house and not through sub-contractors would cut down on time needed for delivering transcripts by avoiding dilution of control over the process of transcription.
While evaluating the quality of transcription services it is important to assess whether the transcription service provider can maintain accuracy and still meet turnaround time guarantees.
Wednesday, September 8, 2010
The Important Board Chairperson
The board chairperson is the most important person in the organization. Is that true in your organization? Do you treat recruiting the chairperson as important or necessary? Do you have a successor plan for the chairperson?
The board exists to lead the organization. The leadership should come from the wisdom and guidance it provides rather than the commands it issues. The board chairperson selects the agenda in consultation with the administrative head of the organization (principal, executive director, etc.). If the agenda is filled with non-mission related items, petty issues, and budget issues, where is the opportunity for the wisdom and guidance to emerge?
The chairperson should manage the board. Otherwise, the professional leader (principal, executive director, etc.) must manage the board. When the professional leader is managing the board, it creates problems. The professional has less time for the operational oversight. The board engages in more operational oversight and less planning and visioning. It is hard for the board to objectively evaluate the performance of the professional leader and team. With the professional acting as the board leader, it is awkward to do the annual performance review. The board discussions are often less strategic and more operational than is optimal. There is a risk the board will become a rubber stamp rather than a deliberative body. Is it fair to give one more job to the professional?
When the chairperson is managing the board, the board is usually more effective. There is usually a greater emphasis on planning, board structure, membership development, accountability, transparency, and mission.
Of course, all of the preceding depends on the person who is the chairperson. Without an intentional recruiting process based upon the specific needs of the organization at this moment in its evolution, success is more luck than design. When things are going well it is easy to believe one can be less selective.
Are things going well at the moment? Perhaps internally things are okay. Externally, this is a difficult time for our communities. Is the chairperson guiding discussions to ensure that the external problems have minimal affect on the mission and internal performance? What is the chairperson doing to monitor the health of the organization? Does the chairperson know that monitoring health at a time like this is more about predicting trends than looking at past results?
If the organization is under stress is the chairperson right for the job? We often see organizations under stress with a good firefighter as the chairperson. Firefighters are good at putting out fires. They are seldom called upon to keep the neighborhood from declining, preventing new fires, or helping to rebuild a neighborhood.
In times of stress, it is best to have a community organizer or turnaround specialist as the chairperson. Community organizers are good at gathering support, motivating people, and changing the status quo. Turnaround specialists have a broad knowledge, know how to plug leaks and trim excesses as well as set new direction. Both are high-energy individuals with a very strong goal orientation. Both are hard to find but worth the search when the need arises. Do you know which you need? Both need to be replaced as soon as the turnaround has self-sustaining momentum.
Next Step:
Determine where the organization is in its life cycle, what its immediate leadership needs are, and what its long-term goals are
Create formal selection criteria for the chairperson
Intentionally recruit to match the criteria and be prepared to invest in the chairperson (training, education, mentoring, etc.) to ensure his or her success
Create a successor plan, the chairperson is too important to leave the successor to chance
There should be two successors waiting. One who will be a great leader if things continue to go well. The other will be a great leader if the organization is under stress when the opening occurs. The depth of skills in the potential successors will add perspective to the board deliberations and increase the quality of the decision-making.
The chairperson is a very special individual and should be carefully selected based upon the immediate and long-term needs of the organization as well as where the organization is in its life-cycle. The right chairperson is able to foster growth regardless of the internal or external conditions because he or she was carefully chosen. The converse is also true. If growth is elusive, it may be appropriate to ask if the right person is the chairperson. If you believe that you have the right chairperson but still find growth elusive, it is time to bring in outside help.
The board exists to lead the organization. The leadership should come from the wisdom and guidance it provides rather than the commands it issues. The board chairperson selects the agenda in consultation with the administrative head of the organization (principal, executive director, etc.). If the agenda is filled with non-mission related items, petty issues, and budget issues, where is the opportunity for the wisdom and guidance to emerge?
The chairperson should manage the board. Otherwise, the professional leader (principal, executive director, etc.) must manage the board. When the professional leader is managing the board, it creates problems. The professional has less time for the operational oversight. The board engages in more operational oversight and less planning and visioning. It is hard for the board to objectively evaluate the performance of the professional leader and team. With the professional acting as the board leader, it is awkward to do the annual performance review. The board discussions are often less strategic and more operational than is optimal. There is a risk the board will become a rubber stamp rather than a deliberative body. Is it fair to give one more job to the professional?
When the chairperson is managing the board, the board is usually more effective. There is usually a greater emphasis on planning, board structure, membership development, accountability, transparency, and mission.
Of course, all of the preceding depends on the person who is the chairperson. Without an intentional recruiting process based upon the specific needs of the organization at this moment in its evolution, success is more luck than design. When things are going well it is easy to believe one can be less selective.
Are things going well at the moment? Perhaps internally things are okay. Externally, this is a difficult time for our communities. Is the chairperson guiding discussions to ensure that the external problems have minimal affect on the mission and internal performance? What is the chairperson doing to monitor the health of the organization? Does the chairperson know that monitoring health at a time like this is more about predicting trends than looking at past results?
If the organization is under stress is the chairperson right for the job? We often see organizations under stress with a good firefighter as the chairperson. Firefighters are good at putting out fires. They are seldom called upon to keep the neighborhood from declining, preventing new fires, or helping to rebuild a neighborhood.
In times of stress, it is best to have a community organizer or turnaround specialist as the chairperson. Community organizers are good at gathering support, motivating people, and changing the status quo. Turnaround specialists have a broad knowledge, know how to plug leaks and trim excesses as well as set new direction. Both are high-energy individuals with a very strong goal orientation. Both are hard to find but worth the search when the need arises. Do you know which you need? Both need to be replaced as soon as the turnaround has self-sustaining momentum.
Next Step:
Determine where the organization is in its life cycle, what its immediate leadership needs are, and what its long-term goals are
Create formal selection criteria for the chairperson
Intentionally recruit to match the criteria and be prepared to invest in the chairperson (training, education, mentoring, etc.) to ensure his or her success
Create a successor plan, the chairperson is too important to leave the successor to chance
There should be two successors waiting. One who will be a great leader if things continue to go well. The other will be a great leader if the organization is under stress when the opening occurs. The depth of skills in the potential successors will add perspective to the board deliberations and increase the quality of the decision-making.
The chairperson is a very special individual and should be carefully selected based upon the immediate and long-term needs of the organization as well as where the organization is in its life-cycle. The right chairperson is able to foster growth regardless of the internal or external conditions because he or she was carefully chosen. The converse is also true. If growth is elusive, it may be appropriate to ask if the right person is the chairperson. If you believe that you have the right chairperson but still find growth elusive, it is time to bring in outside help.
Monday, September 6, 2010
Business Networking For SME's
Business networking is something that has been around for donkey's years and can be the most effective way of doing business as it works on the premise that people buy off people. This fact has gotten diluted to some degree in the context of a global boom. In the market conditions that we found ourselves over the last 10 years or so businesses have been growing every year as a result of a global boom, this meant that instead of having to fight for most of our business, revenues grew simply because there was more employment and people had more money in their pockets. As a business was growing so to were internal budgets which in turn meant more money being spent which also resulted in further growth. Unfortunately all this has changed; the global market is going through one of the worst recessions since the 1930s. What does this mean? First of all what it means is the way we have been doing business over the last 10 years has to change, every business will have to restructure to cope with a recession and then reorganize so that they survive in a more competitive environment. It is often said that survival is the new success.
Business networking is one of the key ways of how a business can operate differently in an ever changing environment. In lots of ways it just means going back to the old way of doing business, whereby we meet as many people as we can in order to raise our profile and to educate people on what we do. Word-of-mouth is by far the most powerful method of marketing and business networking is by far the best way to use the power of "word-of-mouth" marketing. There are lots of organizations out there to help you improve the way that you network because it takes work, it takes preparation and also helps if you do something for somebody without asking for anything in return. There are lots of organizations out there like BNI, 4N, BRX and Venture that will help you improve your networking abilities so that you can get more business.
As a result of the recession business networking groups has grown substantially as SME's try to find new ways to do business in order to survive. The more people you meet more chance you have of doing business because in the current environment we all have to fight harder for less business. However once you know that and accept that you already have a better chance of surviving than most, business networking is a very effective way to get introduced to more people. One famous car sales man was asked how he was so successful and one of the things he said was that if you give me 1000 business cards I will be asking for more business cards in two months time, however if you give some of my colleagues 1000 business cards they will have 500 left at the end of the year. We are all good sales guys, it's just that I meet more people and therefore I have a better chance of doing business.
Business networking is one of the key ways of how a business can operate differently in an ever changing environment. In lots of ways it just means going back to the old way of doing business, whereby we meet as many people as we can in order to raise our profile and to educate people on what we do. Word-of-mouth is by far the most powerful method of marketing and business networking is by far the best way to use the power of "word-of-mouth" marketing. There are lots of organizations out there to help you improve the way that you network because it takes work, it takes preparation and also helps if you do something for somebody without asking for anything in return. There are lots of organizations out there like BNI, 4N, BRX and Venture that will help you improve your networking abilities so that you can get more business.
As a result of the recession business networking groups has grown substantially as SME's try to find new ways to do business in order to survive. The more people you meet more chance you have of doing business because in the current environment we all have to fight harder for less business. However once you know that and accept that you already have a better chance of surviving than most, business networking is a very effective way to get introduced to more people. One famous car sales man was asked how he was so successful and one of the things he said was that if you give me 1000 business cards I will be asking for more business cards in two months time, however if you give some of my colleagues 1000 business cards they will have 500 left at the end of the year. We are all good sales guys, it's just that I meet more people and therefore I have a better chance of doing business.
Thursday, September 2, 2010
IT Jobs and Roles of the Open Source Specialist, Business Process Engineer and Capacity Manager
IT jobs and opportunities for open source specialists have become very popular and these professionals are high in demand. These professionals can connect directly with developers and can provide stable and widely used software products which include Apache and various others. IT jobs for these professionals are increasing as there provide services on open source technology which can enable anyone to develop the source code. IT jobs in this field includes processes that are highly reliable, secure and provide high performance applications. There in an increase in the demand for open sources and technologies in the market today. IT jobs for open source specialists are competitive compared to any other proprietary solution framework or development platforms and can provide solutions much better than the expectations of the client.
Professionals who seek IT jobs as business process engineers can provide business savvy technologists who can provide various ideas which can be mixed. These engineers can redesign and analyze work flow within and between various organizations. IT jobs can also involve these engineers combining various technical systems with business processes which can help IT professionals to get and keep key positions.
Capacity managers are very high in demand and can choose various IT jobs related to optimization of the servers performance and availability. Capacity manager can also seek IT jobs associated with identifying the existing and future bottlenecks and provide solutions for improvement. The capacity manager possesses the skills to reduce the downtime costs and can build in various intelligent features which can help to optimize servers, utilization and performance and also maximizing the server investment. Capacity managers can also stay high in demand when it comes to optimizing resources and accurately designing financial values to technology resources. Information technology is the strongest sector in the economy and professionals who make successful careers out of it can grow and achieve satisfaction. The professionals involved in this field possess skills in various sectors which can be used for development, networking, administration and in building secure databases and networks.
Professionals who seek IT jobs as business process engineers can provide business savvy technologists who can provide various ideas which can be mixed. These engineers can redesign and analyze work flow within and between various organizations. IT jobs can also involve these engineers combining various technical systems with business processes which can help IT professionals to get and keep key positions.
Capacity managers are very high in demand and can choose various IT jobs related to optimization of the servers performance and availability. Capacity manager can also seek IT jobs associated with identifying the existing and future bottlenecks and provide solutions for improvement. The capacity manager possesses the skills to reduce the downtime costs and can build in various intelligent features which can help to optimize servers, utilization and performance and also maximizing the server investment. Capacity managers can also stay high in demand when it comes to optimizing resources and accurately designing financial values to technology resources. Information technology is the strongest sector in the economy and professionals who make successful careers out of it can grow and achieve satisfaction. The professionals involved in this field possess skills in various sectors which can be used for development, networking, administration and in building secure databases and networks.
Wednesday, September 1, 2010
Business Debt Reduction - Key to Rebuild Profits and Surviving Downturn
Thousands of business entities are on the brink of financial disaster and recognize-it's no longer business as usual. Most don't realize that they can take measures, such as reducing debt to help save their businesses.
Enacting a plan to reduce business debt can save a business. Businesses that borrow unknowingly take on a demanding and parasitical partnership with creditors that often will dictate how a company operates and one that will siphon profits through interest payments. Using revolving credit for capital adds additional risks to operating your business and may not be the only alternative for starting or funding expansion. Any debt can be too much, if a business doesn't generate multiple times the principal and interest payments in added net profits attributable to the use of borrowed funds. So how much debt is reasonable for your business? The list below illustrates some acceptable levels of debt-to-capital for selected industries.
Industry Debt%
Publishing 34%
Home-building 37%
Advertising & Marketing 37%
Lodging & Gaming 56%
General Retailing 24%
Supermarkets Drugstores 33%
Commercial Transportation 18%
Packaged Foods 27%
Restaurants 23%
Health Care: Managed Care 20%
Movies & Home Entertainment 17%
Source: Standard & Poors
Credit and debt problems are evident. Solutions may seem less so. Most small businesses lack a basic understanding of alternatives and solutions including (business debt settlement) that can provide options to bankruptcy. Owners faced with excessive debt, tend to make cuts in operations just to maintain credit and seldom seek other alternatives to business closure or bankruptcy. These can include exercising alternatives such as Self-liquidations, Turnaround Specialists and even Assignment for the Benefit of Creditors (ABC's). A little know option called Business Debt Settlement can be highly effective as a debt reduction tool and can take a huge burden off the business owner, preserve cash flow and allow them to focus on running the business.
Business owners that find themselves in too much financial difficulty can and should begin to seek remedies to reduce non-fixed expenses such as bank debt, vendor and supplier debt and other related business debts to balance and restore profitability. If this is a challenge facing your business today, try to remember that whatever decision or course of action is taken, there is a price associated for everything including maintaining the status quo. Tough times, require tough action. Look for out-of-the box alternatives, which in today's economy can be the key to changing the situation for the better.
Enacting a plan to reduce business debt can save a business. Businesses that borrow unknowingly take on a demanding and parasitical partnership with creditors that often will dictate how a company operates and one that will siphon profits through interest payments. Using revolving credit for capital adds additional risks to operating your business and may not be the only alternative for starting or funding expansion. Any debt can be too much, if a business doesn't generate multiple times the principal and interest payments in added net profits attributable to the use of borrowed funds. So how much debt is reasonable for your business? The list below illustrates some acceptable levels of debt-to-capital for selected industries.
Industry Debt%
Publishing 34%
Home-building 37%
Advertising & Marketing 37%
Lodging & Gaming 56%
General Retailing 24%
Supermarkets Drugstores 33%
Commercial Transportation 18%
Packaged Foods 27%
Restaurants 23%
Health Care: Managed Care 20%
Movies & Home Entertainment 17%
Source: Standard & Poors
Credit and debt problems are evident. Solutions may seem less so. Most small businesses lack a basic understanding of alternatives and solutions including (business debt settlement) that can provide options to bankruptcy. Owners faced with excessive debt, tend to make cuts in operations just to maintain credit and seldom seek other alternatives to business closure or bankruptcy. These can include exercising alternatives such as Self-liquidations, Turnaround Specialists and even Assignment for the Benefit of Creditors (ABC's). A little know option called Business Debt Settlement can be highly effective as a debt reduction tool and can take a huge burden off the business owner, preserve cash flow and allow them to focus on running the business.
Business owners that find themselves in too much financial difficulty can and should begin to seek remedies to reduce non-fixed expenses such as bank debt, vendor and supplier debt and other related business debts to balance and restore profitability. If this is a challenge facing your business today, try to remember that whatever decision or course of action is taken, there is a price associated for everything including maintaining the status quo. Tough times, require tough action. Look for out-of-the box alternatives, which in today's economy can be the key to changing the situation for the better.
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