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Business Loan Delinquencies

We need to be prepared for business loan delinquencies.

Special Asset departments of banks have been busy. Really busy. The Special Asset department of a bank is the group of people who work with problem loans. If you need to work with them, they will decide:

  • If your loan is called early
  • Terms get extended
  • Credit lines are reduced
  • How to work out getting refinanced

The Special Asset employee at the bank can become your best friend or a challenge to work with, depending on how you deal with them.

They want information.

They want explanations.

They want realistic forecasts.

They want action plans.

They want you to succeed so the loan is paid off.

How do they know that they'll get payments? The basic tool that is used is a 13-week cash flow model.

Solid, realistic sales forecast.
Expenses under control.
Planned payments to vendors.

I'd love to be connected to special asset managers. Please, introduce me if you know any.


E-mail me at [email protected]

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All Options are On the Table

I’ll never forget the day my father, Neil, stood on a box in front of the entire company. He was the President; I was 22 years old and was the entire “IT department.” 90% of the 150 employees worked in the factory.

He stood up and said, “Our company is in trouble, but we have a plan to survive and then grow again. Part of the plan is asking all employees to take a 10% pay cut.

“The senior staff will be taking a 20% pay cut.

“I know that this is not easy for anyone, but we commit to raising the wages back as soon as possible. Any questions?”

After a few complaints, a tall and broad man named “Big John” raised his hand. He said with a crack in his voice, “I’ve been laid-off twice. No one ever asked my opinion or gave me a choice.

“Thank you for asking. I support the reduction 100%.”

Everyone fell in line after that.

The company survived and wages were eventually restored.

The lessons I learned?

  • Employees like...
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Challenges of a Family Business

family human resources Dec 06, 2022

Let me tell you a story. Tony gave me 3 weeks to train his 20-year-old son to be a financial guru.

Tony ran a collision and towing company that was in trouble. His father started the company and his son, Frank, wanted to take over. The fundamental problem with Tony׳s plan: he wanted Frank to start at the top.

I love family businesses, but they’re often dysfunctional when younger members are given responsibilities well beyond their current capacity.

Frank understood the number theory, but he didn’t know the business. He didn’t realize:

  • The tow truck drivers were likely pocketing cash
  • How long it takes to do the repairs
  • The rules for selling cars towed by the police and not picked up
  • etc, etc!

The biggest challenge? Nobody had taught Frank how to dig deep by asking the right questions. He wasn't prepared to do what was asked of him.

If you own a business that is facing challenges, let me know. I know how to dig deep quickly and effectively and offer solutions to fix...

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Common Loan Mistakes and Solutions

cash flow finances Nov 15, 2022

I've worked with people who get a credit line or a working capital loan, and have no idea of what happened to it.

They are unhappy and upset that they took the loan, and feel like they made a mistake. They did make a mistake, but it is not taking the loan. The mistake is spending the funds without understanding where or why, instead of using the funds for targeted expenses.

In the past, I have talked about how to plan to use loan funds that are coming in from PPP, EIDL, or commercial financing sources. Here are the basics:

1. Use a separate account for loan funds to ensure they are used for the planned purpose
2. Use a 13-week cash flow model to plan the use and the repayment
3. When you can, put excess funds back into the loan account so you don't just spend the "extra"

If you want, subscribe to my YouTube channel to make it easy to find all of my videos, including a webinar where I discuss this very issue.

Question: What do you think the biggest challenge will be for companies...

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Cash Flow Management is Mostly Mental

Did you know that cash flow management is mostly a mental game?

Yes, you need to do all of the numbers, the pluses and minuses, but that's the easy part of cash flow. The hard part is the management of your cash flow. Here are some cash flow management activities that take emotional intelligence and clear thinking to get right:

1. Confidence in projections
2. Good relationships and open communications with vendors
3. Creative solutions for bringing cash in faster
4. Ideas to pay vendors later
5. Working with all stakeholders (employees, vendors, creditors, etc.)

A key observation about business owners in financial trouble is they can't handle the situation emotionally. They don't prioritize or make decisions well. I help them make decisions.

Do you need help implementing a cash flow management system? Call or message me on WhatsApp (+1.510.3566).

What do you think is the hardest part of implementing a cash management system? Let me know.

 

E-mail me your comments at...

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Inventory

cash management inventory Oct 04, 2022

Inventory, inventory, inventory...who deals with inventory?

Anyone in your company who helps you with inventory is a key player in your cash management! 

Here are a few thoughts about inventory and cash:

Smaller is usually better. An Optimal amount is best.

If possible, don’t own the inventory, but keep it nearby or on hand.

Look at suppliers as key partners to help you keep investment costs down.

NOTE: The investment is the amount you buy before you use it. Cost is what you pay.

The lowest cost per unit is not always the lowest cost of acquisition.

I could keep going and going!

All of these impact your cash going out of the company.

The worst problem I've ever seen was a retailer that had over a year of inventory.

What’s the worst inventory problem you’ve seen?

E-mail me your comments at [email protected]

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Be Wary of Bad Advice

Do you ever read cash flow articles to learn how to improve your cash flow?

If you do, beware of the advice you read! Most articles have "common knowledge" lists that are often bad decisions for many businesses! There is usually a final recommendation that directly relates to something that the author is selling.

Worst of all, the fixes are usually cosmetic but don't dig down into fundamental profitability.

If you want to fix YOUR cash flow, I suggest the following to start:

  1. List all of the issues that you know are causing your problems
  2. Start fixing the biggest problem and the easiest problem to fix at the same time.
    - Fixing the easiest problem will give you momentum
    - Fixing the biggest problem will help you the most

    Here is the key issue: Are you fixing the underlying problems or just the symptoms?


    If you are just fixing symptoms, you will have the problem over and over again.

    Any thoughts?

    E-mail me your comments at [email protected]

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Emotions in Business

Sometimes cash flow issues are not about the cash. They are about the people involved in a business, the emotions, and the mindset.

"I am very appreciative of the time David was willing to spend with me. From the first contact, he was warm, welcoming, and sincere and that carried over to and throughout our initial consultation. David's advice and feedback were certainly helpful in regard to the nuts and bolts of my situation, but also, and possibly more importantly, in regard to my personal mindset and view of the challenges faced. 

I am impressed with David’s vision of how he can help small and large businesses alike become more efficient and effective. I am equally impressed by the way he is going about accomplishing that vision! I am happy to give my recommendation."

Cash flow and business challenges can be very emotional. It is never "just business."

Are you totally detached and unemotional about your business?

E-mail me your comments at [email protected]

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Can You Grow Sales While Running at Full Capacity?

margins revenue sales Aug 23, 2022

As a manufacturer running at full capacity, can you still grow sales?

That all depends on your creativity, your willingness to say “no” to clients and products, and your ability to analyze sales.

Let me tell you about a success story along these lines...

My clients were at maximum capacity.

Sales were falling.

Margins were falling faster.

We analyzed and adjusted the product mix, distribution channels, and pricing model.

The result?

In about one month the distribution model changes were generating an additional $20,000 a month in sales.

The incremental sales generated 95% margins.

These were perpetual results for a company with about $2.1 Million in annual revenue.

Want to learn more?

Do you have questions about how we achieved this?

E-mail me your comments at [email protected]

 

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Crowdfunding

Do you know that crowdfunding can be an effective cash management tool for raising capital?

Crowdfunding is pre-selling products that are in development. You owe people something, but usually at a good profit margin. You don't sell equity in your company and you don't go into debt. You do get:

- Publicity before you launch

- Feedback on your product

- Ideas for additional product

- An idea for market acceptance

- Names for your mailing list

- The cash you need to launch the product or business

Most people think of Kickstarter or Indiegogo (I've used Indigogo) as only for new companies...wrong! You can introduce new products as well.

I've done crowdfunding for non-profit as well as for-profit organizations. Possibilities for funding:

- Book launches

- Food vendors

- Manufacturers

- Service providers

- Race/adventure organizers

- Non-profit fundraising

The possibilities are literally endless.

Have you done any crowdfunding? 

Have you bought something from crowdfunding? I've only had positive...

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