Tag Archives: Turnaround Consulting

The General Motors Bankruptcy: A Costly Solution

When a company cannot move forward with profitable operations because of accumulated debt  meaning they are not in a positive cash flow position, they must close the business and restructure. Either solution is costly. Restructuring with the protection of Chapter 11 of the US Bankruptcy code adds to the costs. 

The cost of restructuring is not because of the people working to restructure or the bankruptcy court. The costs are generally a result of mistakes in the past. General Motors has access to many of the best and brightest in the world.  With all this talent, they still managed to steer a company to bankruptcy.  That is sad.  How that happened will be guessed and reported on in many other articles and books. The purpose of this article is to give you a glimpse of what’s next. 

In GM’s case, there has been  an attempt  to negotiate a structure for moving forward prior to the filing.  An agreement was not reached.  It is my personal view from being close to a number of restructuring opportunities that in many instances a rational solution is ignored. When that happens it often is because most everybody negotiating is an employee of somebody. Consequently the number one item on the agenda is  “cover my ass.”

My turnaround and profit improvement work is often with privately held corporations where one or more people running the business are owners. Having held executive  management positions (employee) with large pubic and private companies and having the experience as a business owner, I can assure you there is a huge mindset difference.  The mindset of an owner is solution and action oriented. The mindset of an employee is “how do I get this done and protect my job”.  Of course there are exceptions and most would say my mindset has nearly always been that of an owner whether I was one or not.

If  your company is not growing revenue and profits,  if your company is not cash flow positive Click Here for more information about Turnaround Consulting Services for Business In Crisis 

Most of the restructuring of  GM led by the company’s respective employees and advisers  began prior to the bankruptcy filling p. Part of this included  the company saying to the US Government “bail us out since certainly baseball, apple pie and General Motors is protected by the US Constitution”  Our president (an employee who we hired) says OMG I can’t let the automobile industry crater. He and his subordinate employees throw a Hail Mary pass to fuel  the restructure with a lot of money…our money.  So the employees tell the owners of the money, the US citizens,  how it will be spent and the owners (us) just shrug and say “OK”.  

So the US Government steps in to the newly defined role of bailing out certain large companies and notice that the GM bailout did not avert a bankruptcy filing.  So the brain trusts that run our country decide to send billions of our money to a company that months later files bankruptcy.  Do such investments happen outside of Government bailouts? Of course.  Investment funds make decisions all the time that don’t turn out as planned. The difference is that they are not using taxpayers money.

Taxpayers’ money is not the only money at risk.  There are billions of dollars owed by GM that will never be paid back. The ripple effect of  radically changed business is huge. Thousands of companies linked to the GM supply chain will go out of business or already have, since GM will cram down the money owed these unsecured creditors.  They won’t be paid and they won’t have business fast enough to replace that lost. Of course the direct and indirect job loss is enormous.  Again, don’t blame the restructure plan or the bankruptcy process. This situation is a result of how this company has been managed for decades.

The bankruptcy is necessary since not enough people agree on the latest restructuring  plan promised to move GM to the land of profitability. So GM executives, advisers and others to benefit  we will carve out a deal using the protection of Chapter 11 of  the US Bankruptcy Code.  This is a federal law designed to offer companies the opportunity to restructure and move forward profitably. Great idea except there are a few things you may want to consider:

Who pays for the bankruptcy filing?

Who always get paid during a bankruptcy?

Where is management’s attention during a bankruptcy particularly during the early phases of uncertainty?

Answers:

The administrative (accounting, lawyer, trustee) fees associated with any bankruptcy are enormous and the people who are owed money prior to the bankruptcy are the main contributors to paying these costs.  For example, if a secured creditor is owed $10 million dollars, when the bankruptcy reorganization is filed, they may be offered 30% of the balance paid out over time  depending on how much money is projected to be available . Think of a home mortgage.  A bank holding the mortgage is secured by the value of the home.  Normally that is good protection but if the bank loaned 110% of appraised value then the value dropped 30% the security does not cover the amount of the loan. It looks as if the bailout money given to GM is at high risk of not being paid back 100%.  Time will tell. Unsecured creditors are  not likely to  get anything in a bankruptcy or pennies on the dollar. 

The company pays for the costs of the bankruptcy process including filing fees, trustee fees, attorney fees and  accounting fees. Of course paying for these costs means that money cannot be used to pay debt or suppliers. These costs are normally much larger than most people imagine.  These fees are always paid. In some cases the court will require a reduction in fees charged but usually not.

A bankruptcy filing is very disruptive to normal business operations. The attention of management and ultimately many others is on what is happening with the case. This is particularly acute in high profile cases that are covered by the press like the GM case.

If  your company is not growing revenue and profits,  if your company is not cash flow positive Click Here for more information about Turnaround Consulting  Services for Business In Crisis 

Are Their Benefits To This Process?

The company’s regular business operations are protected while the case is active meaning creditors are not able to pursue lawsuits or size secured property.

A creditor’s committee will ultimately approve a reorganization plan. This plan is usually one with fewer assets than were in place before the filing since a lot of money will have been spent on bankruptcy related expenses. Generally the plan is similar to what the company wanted to do prior to the filing but had to file because people could not agree.  Seems like once a company is in bankruptcy, employees who work for creditors are more likely to agree to a reorganization plan since they can always represent “well this is the best we could do as the company is in bankruptcy.” 

Some company’s emerge successfully from this process and go on to restoring profitable growth. In General Motor’s case time will tell.  There seems to be structural costs that will not be resolved in this case which are the labor costs driven by the union. Retirement benefits are being publicized as being a concern. Ultimately the company will determine what it is able to afford and changes will have to be made. 

Ed Koch has been retained as the turnaround expert.  His firm is very reputable and he has a number of notable turnaround successes. The one thing no one can predict with certainty is to what extent customers will want the product the company makes. The public has many choices and there may be too much resistance to this brand long term for any plan to be viable.  

The media is already reporting the estimated impact of the bankruptcy on jobs and the economy. They are missing a key point. The impact is not from the bankruptcy. The impact is from how this company has been run in the past. The consistent implementation of a profit strategy has not been in place. From the outside looking in it seems the focus has been on preserving high paying  jobs and lucrative benefits while placing secondary priority on innovation and a profitable infrastructure. If those priorities remain during and following this bankruptcy, the company will not survive.

 

Sharing with all my readers the energy of peace, happiness and abundance

Steve Pohlit, The Profit Expert

Email Me, Steve Pohlit to schedule A No Obligation ConsultationOn Building Your Business Profits.  Need more customers? Let’s discuss how to use cutting edge Social Media Marketing in the revenue building cycle of your business to drive your profits sky high. If  your company is not growing revenue and profits,  if your company is not cash flow positive Click Here for more information about Turnaround Consulting Services for Business In Crisis 

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FREE Report:
How To Increase Business Profits by 30% or More in 90 Days or Less

The Key To Business Profits In A Difficult Economy

The phrase “cash is king” is widely recognized because it is true.  When you solidify cash flow you solidify your business.

Cash of course can be borrowed. For  many companies, traditional sources of financing are nearly non existent.  Lines of credit are being tightened and there is little or no room for  loan covenants variations.  In this and all situations, the sooner management accepts responsibility for  the state of their business, the sooner they are in a mindset for moving the business forward.  What are the primary options for restructuring a business facing these circumstances?  The primary alternatives are:

1. Secure a lending facility from a source that is not a traditional bank.

2. Negotiate a new note with your existing bank – very unlikely right now.

3. File a restructuring plan under Chapter 11 of the US Bankruptcy code – an action of last resort and very costly.

4. Sell the business: viable if your business is attractive to a strategic buyer. You will need a creative contract if you expect to get much more than having your personal guarantees removed from the debt.

5. Close the business and do something else. You may feel you may want to do that but be careful since if your business assests upon liquidation do not cover the senior debt, your personal assets may be at risk. In this environment institutions are taking homes .

You may be thinking the above is written for a business experiencing losses in market share and profits.  Companies with bright pictures being painted are experiencing the impact of banks not lending. The money channeled to banks from the government is not flowing through to  companies deserving loans.

For this reason, alternative sourcing of funds is often needed.  A lot of time and energy can be spent finding the right deal or you can select a firm with the contacts that will get this done quickly on your behalf.

Last week I was in a meeting discussing options, strategies and pricing for services. It is very common for owners to begin calculation how much money firms make when a deal closes. This money is commonly called success fees. I explained that success fees are in proportion to the solution delivered.  The right professional firms have the experience and the contacts to move quickly and get results. How valuable is that when considering the alternatives?

Sharing with all my readers the energy of peace, happiness and abundance

Steve Pohlit, The Profit Expert

Email Me, Steve Pohlit to schedule A No Obligation Consultation On Building Your Business Profits.  Need more customers? Let’s discuss how to use cutting edge Social Media Marketing in the revenue building cycle of your business to drive your profits sky high.

Follow Me and I Follow You
Join My Fan Page on Facebook

FREE Report:
How To Increase Business Profits by 30% or More in 90 Days or Less

Reorganization Under Chapter 11 of The Bankruptcy Code – A Last Resort

 

All Business Crisis Management and Business Turnaround consulting work is done with the direct involvement of Steve Pohlit, President of International Busines Consulting Resources.

I follow the five step process outlined on the main page my business crisis management site -click here. I will do everything possible to avoid a legal reorganization under the Federal Bankruptcy code. When that vehicle is necessary to protect your business, it must be a last resort. The reason is that the administrative costs of reorganization under Chapter 11 of the US Bankruptcy Code are huge. There are attorney fees, administrative fees of the court, trustee fees and professional accounting fees. All of these costs must be paid by the assets of the business or from concessions made by creditors. If your business is struggling, the sooner you call so we can begin addressing your core weaknesses the better.

My experience includes very successful business  turnarounds outside of bankruptcy court, successful turnarounds with the protection of the US Bankruptcy court and failures within the US Bankruptcy Court. I have turned around my own business that I purchased and was failing. I have worked with small and large companies, public and private. If you are concerned about the strength of your business you want someone who has personally been through the process as a business owner as well as an advisor. My business experience is extensive. If your business can be turned around, we will do it.

Steve Pohlit, President
IRConsulting, Inc

Offices:

Las Vegas:
3651 LIndell Rd., Suite D162
Las Vegas, Nevada  89103

Tampa
12233 94th St N
Largo, Florida 33773

Direct Phone Contact: 727-587-7871

Business Crisis Management by Business Turnaround Specialist

If your business is in a crisis there are several compelling reasons why you should call a Business Crisis Management Specialist. However before you do, please review the following and download your detailed report on The Exact Steps To Business Turnarounds.  It is possible you can do this yourself. However, it is likely to be in your best interest to use a business turnaround specialist.

How do you know if your company is in trouble? (For a complete presentation please visit Business Crisis Specialist )

Here are key indicators:

  • Do you worry about running out of cash?
  • Has your financing bank or lender reduced your line of credit or, even worse, called your loan?
  • Do most of your key vendors have you on COD?
  • Have any checks issued by your business bounced?
  • Are you delinquent paying taxes or benefit insurance?
  • Are revenue trends decreasing and accounts payable increasing?
  • Have your valued employees left for a “better opportunity”?
  • Are you spending all of your time fighting fires?
  • Do you wake up at night fearing you will be out of business?
  • Do you fear you will not have enough cash to meet your next payroll? What about the next?
  • Are you thinking or have been advised that a reorganization of your business under Chapter 11 of the US Bankruptcy code may be the answer?
  • Do you feel you are at or near crisis stage?

“If you answered yes to more than one of these questions, then you need to call me, Steve Pohlit,  at 727-587-7871 Right Now. That is my direct line. I will personally determine if I can help you solve your business problems or refer you to someone who can. This call will cost you nothing and may well save your company.”

Steve Pohlit, President
IR Consulting, Inc.
Turnaround Business Consulting
Restructuring, Recapitalization, Business Crisis Management

FREE Report: The Exact Steps To Turnaround Your Business
and Move From Crises To Profit

Name:
Email:

There Are Two Compelling Reasons To Consult With A Business Crisis Management or Business Turnaround Specialist:

  • An independent professional skilled in turning around business crisis situations, brings credibility to your business turnaround process which serves to quiet the companies and people fearful of not getting paid.
  • A key component of a successful business turnaround is developing and implementing a business plan for improved performance long term.  Enlisting the assistance of an independent specialist communicates to employees, creditors and the marketplace you are serious about becoming a stronger company.

One more thing – delaying can mean the difference between a successful business turnaround and having to close your business….or worse….having your assets siezed.

I will help you if at all possibe, but you need to make the next move!

Steve Pohlit, President
IR Consulting, Inc.
727-587-7871
Click Here for The Business Turnaround Consulting Practice
Restructuring, Recapitalization, Business Crisis Management

Turnaround Management, Crisis To Profits

The headlines today scream credit crunch and bank failures. There are two very important points to remember:

  • People are still spending money
  • Money is available to finance business

If your business is experiencing a profit squeeze and liquidity crunch, even those two points are not very comforting.  What you need is a laser beam focus on saving you business now.

Candidly, it takes experience, a serious but balanced posture and a clear plan that is implemented right now to save a company in trouble.  I have updated the symptoms of a business crisis situation as well as a detailed action plan  on what to do at my business turnaround site. This information is free.  If you are concerned I recommend you Click Here to visit Turnaround Management now.

Sending all my readers the energy of wellness, peace and abundance

Steve Pohlit,  www.StevePohlit.com

Network with me on Facebook: LinkedIn: Follow me on Twitter

Steve is the President of International Business Consulting Resources. His firm specializes in guiding companies to rapid increases in revenue and profits with a sustainable growth rate. Don’t miss my FREE Report: How To Make More Money With Your Business Now and Long Term I am building my practice and welcome new client inquiries. Call me for a fee consultation at 727-587-7871

This report may be freely distributed without restrictions with the original content including this resource box remaining unchanged. Author: Steve Pohlit, Business Consulting Services, Executive Coaching, please visit www.stevepohlit.com

Is It A Recession? Is It A Depression? Doesn’t Matter ….Stop Your Bitching and Moaning And Take Purposeful Action

The last thing my readers need is another economic analysis report or some suggestion that I or anyone else out there flapping their jaws really know all the facts about the reason for current climate.  Ladies and gentlemen. reading those headlines and spending time analyzing the crap in the news is a monumental waste of God given talent. Stop your bitching and moaning and take responsibility for what you have control over which is your life. All change starts with one person. Do you want to know who that person is?  Look in the mirror.

If your business is suffering, if you have lost your sources of cash flow, if you are feeling tired, down, stressed or in general not very good, recognize this: it is very true that the way you feel is absolutely a direct result of how you think.  Don’t believe it?  OK by me if you want to be a martyr.  For those of you that want to take responsibility here is a quick 5 Step Plan to move forward fast:

A Five Step Speed Action Course For Achieving Your Goals In Changing Economic Times:

1. Recognize that most people you meet and talk to are going to be bitching and moaning about something or multiple things. Don’t play in that sandbox.  There are a small group of people totally optomistic about the unlimited possibilities. These are the people you want to “hang out” with.  So you don’t know anyone like that?  I’ll tell you one source where I have met some wonderful people. Register for an account at www.Facebook.com  and www.twitter.com   You can begin by adding me (Steve Pohlit) as a friend and if you don’t think I am wonderful, you will soon find a large number of people who are.

2. Understand the dynamics of doing business are always changing. Since 1994 with the introduction of the Internet browser, the rate of advancement continues to accelerate. Do you remember a few years ago where Google Adwords was all the rage for on line marketing? Do you know the impact social networking is having on the Adwords market?  When you look at the financial results of Google the impact may not seem obvious because Google is still the 800 pound gorilla.  But if you become active in the social networking markets like Facebook, MySpace, YouTube and nearly daily growing rate of others you will see changing trend lines. I recently activated a site www.youtubemastery.net  that begins to teach people how to use video to market their business and products on line. I can’t imagine recommending that even as recently as three years ago. I know at that point there were some progressive internet marketers using video but to encourage brick and morter businesses to use it would not have been very credible for me at that time. Now it would be irresponsible if I didn’t recommend it and teach it.

3. Nothing is the same forever…nothing.  I am very familiar and experienced with using eBay stores as an adjunct to selling physical products using internet sites and retail stores. Several years ago the eBay model seemed to be an unmovable foundation for the auction business. In the last two weeks I was asked for my expert evaluation of a global trading platform that is very popular in the Europe. The person who contacted me was considering making a commitment of money and time to this business that is scheduled to enter the US.  When I started studying this model I was amazed to discover that most of it was a completely new way of lookng at auctions and while I am not personally a person who has an interest spending time on landing an eBay deal,  I can see myself playing in this new areana.  Now since its origin is Europe, I had some difficulty understanding it. Once I thought I “got it” I developed an explanaton which you can see at www.dublian.com   The point is whether you are a multi-billion dollar business, an entrepreneur, or an employeed person with a company you feel is well established for the long term, don’t fall into the trap of complacency.  I’ll bet 6,500 people employed by Wachovia felt their position was secure until they discovered in the papers that their employer lost over $8 billion and was cutting their job. Nothing is permanent.  My strongest advise with every business is the same: be very aggressive in taking care of current customers and growing market share.  Do you think that advice would change under different economic conditions? It hasn’t and it won’t

4. If you are running a business with employees you should be very consistent on your expectatons for performance. It seems that when revenue and profits are under pressure, management starts taking a close look at employee performance. In some cases they don’t even care they just cut.  Just cutting is rarely justified and is analogeous to removing a body part if you want to lose weight. That approach is just plain stupid. There is no change in the guidance here: The formula is A-P=V  which stands for actual minus plan = variance.  There must be a person accountable for each key variance in your business. That is how their performance is measured. Is it a simple as that. Yes and no which is why companies engage my me and my firm for assistance.

5. If you are repsonsible for a business that is really feeling financial and cash flow stress, every day you wait to call for assistance is a waste of very precious time needed to define and execute a turnaround plan. I have written about this before and will write about it again because it is a fact. Please visit www.turnaround-consulting-firm.com or call me direct right now at 727-587-7871.

The blessing of a changing economy is that is results in an opportunity to re-evaulate how you are running your business and your life.  The people reading this either accept that they are responsible for what happens to them or blames everyone else. For a long time I had the mind-set it wasn’t me. Four years ago I concluded that mind-set was completely incorrect.

Accept The Responsibility and Take Action Starting Now!!

Sending all my readers the energy of wellness, peace and abundance.

Steve Pohlit
http://www.stevereports.com

Don’t Miss These Free Reports from my new business consulting site:

The Top 10 Action Stops That Will Make Your Business At Least 50% More Money in 90 Days or Less While You Spending Less Time Working Click Here For The Free Report

The Key Issues That Must Be Addressed Before You Buy Any Business of Any Size. Click Here For The Free Report

Steve is the President of International Business Consulting Resources. His firm specializes in guiding companies to rapid increases in revenue and profits with a sustainable growth rate. Don’t miss my FREE Report: How To Make More Money With Your Business Now and Long Term I am building my practice and welcome new client inquiries. Call me for a fee consultation at 727-587-7871 Remember many of my business building articles can be found at Steve Reports and my prosperity building tool (best tool ever for helping you manifest your goals and dreams) is The Prosperity Tool Chest and guiding articles posted very often at Prosperity Tip

Is It A Recession? Is It A Depression? Doesn't Matter ….Stop Your Bitching and Moaning And Take Purposeful Action

The last thing my readers need is another economic analysis report or some suggestion that I or anyone else out there flapping their jaws really know all the facts about the reason for current climate.  Ladies and gentlemen. reading those headlines and spending time analyzing the crap in the news is a monumental waste of God given talent. Stop your bitching and moaning and take responsibility for what you have control over which is your life. All change starts with one person. Do you want to know who that person is?  Look in the mirror.

If your business is suffering, if you have lost your sources of cash flow, if you are feeling tired, down, stressed or in general not very good, recognize this: it is very true that the way you feel is absolutely a direct result of how you think.  Don’t believe it?  OK by me if you want to be a martyr.  For those of you that want to take responsibility here is a quick 5 Step Plan to move forward fast:

A Five Step Speed Action Course For Achieving Your Goals In Changing Economic Times:

1. Recognize that most people you meet and talk to are going to be bitching and moaning about something or multiple things. Don’t play in that sandbox.  There are a small group of people totally optomistic about the unlimited possibilities. These are the people you want to “hang out” with.  So you don’t know anyone like that?  I’ll tell you one source where I have met some wonderful people. Register for an account at www.Facebook.com  and www.twitter.com   You can begin by adding me (Steve Pohlit) as a friend and if you don’t think I am wonderful, you will soon find a large number of people who are.

2. Understand the dynamics of doing business are always changing. Since 1994 with the introduction of the Internet browser, the rate of advancement continues to accelerate. Do you remember a few years ago where Google Adwords was all the rage for on line marketing? Do you know the impact social networking is having on the Adwords market?  When you look at the financial results of Google the impact may not seem obvious because Google is still the 800 pound gorilla.  But if you become active in the social networking markets like Facebook, MySpace, YouTube and nearly daily growing rate of others you will see changing trend lines. I recently activated a site www.youtubemastery.net  that begins to teach people how to use video to market their business and products on line. I can’t imagine recommending that even as recently as three years ago. I know at that point there were some progressive internet marketers using video but to encourage brick and morter businesses to use it would not have been very credible for me at that time. Now it would be irresponsible if I didn’t recommend it and teach it.

3. Nothing is the same forever…nothing.  I am very familiar and experienced with using eBay stores as an adjunct to selling physical products using internet sites and retail stores. Several years ago the eBay model seemed to be an unmovable foundation for the auction business. In the last two weeks I was asked for my expert evaluation of a global trading platform that is very popular in the Europe. The person who contacted me was considering making a commitment of money and time to this business that is scheduled to enter the US.  When I started studying this model I was amazed to discover that most of it was a completely new way of lookng at auctions and while I am not personally a person who has an interest spending time on landing an eBay deal,  I can see myself playing in this new areana.  Now since its origin is Europe, I had some difficulty understanding it. Once I thought I “got it” I developed an explanaton which you can see at www.dublian.com   The point is whether you are a multi-billion dollar business, an entrepreneur, or an employeed person with a company you feel is well established for the long term, don’t fall into the trap of complacency.  I’ll bet 6,500 people employed by Wachovia felt their position was secure until they discovered in the papers that their employer lost over $8 billion and was cutting their job. Nothing is permanent.  My strongest advise with every business is the same: be very aggressive in taking care of current customers and growing market share.  Do you think that advice would change under different economic conditions? It hasn’t and it won’t

4. If you are running a business with employees you should be very consistent on your expectatons for performance. It seems that when revenue and profits are under pressure, management starts taking a close look at employee performance. In some cases they don’t even care they just cut.  Just cutting is rarely justified and is analogeous to removing a body part if you want to lose weight. That approach is just plain stupid. There is no change in the guidance here: The formula is A-P=V  which stands for actual minus plan = variance.  There must be a person accountable for each key variance in your business. That is how their performance is measured. Is it a simple as that. Yes and no which is why companies engage my me and my firm for assistance.

5. If you are repsonsible for a business that is really feeling financial and cash flow stress, every day you wait to call for assistance is a waste of very precious time needed to define and execute a turnaround plan. I have written about this before and will write about it again because it is a fact. Please visit www.turnaround-consulting-firm.com or call me direct right now at 727-587-7871.

The blessing of a changing economy is that is results in an opportunity to re-evaulate how you are running your business and your life.  The people reading this either accept that they are responsible for what happens to them or blames everyone else. For a long time I had the mind-set it wasn’t me. Four years ago I concluded that mind-set was completely incorrect.

Accept The Responsibility and Take Action Starting Now!!

Sending all my readers the energy of wellness, peace and abundance.

Steve Pohlit
http://www.stevereports.com

Don’t Miss These Free Reports from my new business consulting site:

The Top 10 Action Stops That Will Make Your Business At Least 50% More Money in 90 Days or Less While You Spending Less Time Working Click Here For The Free Report

The Key Issues That Must Be Addressed Before You Buy Any Business of Any Size. Click Here For The Free Report

Steve is the President of International Business Consulting Resources. His firm specializes in guiding companies to rapid increases in revenue and profits with a sustainable growth rate. Don’t miss my FREE Report: How To Make More Money With Your Business Now and Long Term I am building my practice and welcome new client inquiries. Call me for a fee consultation at 727-587-7871 Remember many of my business building articles can be found at Steve Reports and my prosperity building tool (best tool ever for helping you manifest your goals and dreams) is The Prosperity Tool Chest and guiding articles posted very often at Prosperity Tip