Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
HOW TO TURN AROUND YOUR DISTRESSED COMPANY
04 :: Figure out whether this company can be saved.
by Andrew Tellijohn
WHEN A SMALL BUSINESS is struggling, it is often difficult for the owner to determine what must be done to turn it around ? or whether the company is even salvageable. The business is that entrepreneur?s baby and the owner might be too close to find a solution. Of the owner might begin taking chances, digging into personal resources, taking out mortgages or putting personal assets on the line to save something that will end up a casualty.
Owners can help themselves answer some of these questions by taking a hard look at their business plan. That document, which was so vital when you started the business, should be relied upon throughout the life of the company. Refer to it now to see how your projections and market analysis then match up with the true situations now. The plan can help identify trouble areas and might provide a blueprint for turning your down fortunes around.
It?s also not a bad idea at this point to call in some advisers, be they the internal circle you?ve worked with since the business was born or some outside turnaround specialists. Experts say the earlier a struggling company attempts to find help the better the chances are the business can be salvaged. If you don?t know where to find these resources you can contact the Service Corps of Retired Executives (SCORE, www.scoremn.org) or the Turnaround Management Association (www.turnaround.org) for help. SCORE is a volunteer organization that offers advice at no charge.
In determining what kind of a future your company has, entrepreneurs would be wise to listen to advisers who can help provide them with an unbiased assessment of what is at the root of the problems and what needs to change. Often businesses will tweak or deal with individual symptoms rather than making the sometimes wholesale changes necessary to turn around.
Are cost-of-goods sold or labor costs too high? Are sales to some customers not producing high enough margins to make that business worthwhile? Is that new building you leased too expensive? Do you have too many employees? Business owners need to examine a myriad of areas to determine the root causes of their struggles.
These advisers will sit down with you and help determine your future as well. They?ll recreate where you are to date from a sales standpoint, examine income and revenue sources to see if they can meet debt obligations and project where the business will be a month, six months and further down the line.
If those projections don?t look favorable, these advisers will work with businesses to find a way to turn the business around or look into other options. The general strategies are fairly straightforward: cut expenses, focus on sales and look into alternative business strategies. After taking those steps a business owner should be able to figure out fairly quickly if there is a chance of turning the tide.
Don?t make the mistake of pulling back from advisers. Communication is key. And remember those people have both a vested interest in your success and a history of dealing with similar problems. Keep them apprised early on in your struggles and they will try to help you pull out of your swoon.
Finally, whatever problems your company is facing, always make sure they don?t end up affecting customers or clients. Any chance you have of reviving your business could go down the drain if your reputation is damaged.
CHECKLIST
? Cut expenses, focus on sales, and explore alternative business strategies that might work better in the prevailing market.
? It?s often difficult for the owner to let go enough to determine whether the business is salvageable.
? Communication with lenders, creditors and other vested players is key.
Make sure internal business struggles don?t carry over to clients and customers as that will quickly exacerbate the problems.
As the name suggests, Owatonna-based Kamp Automation looks for customers with a process they’d like to automate. It could be a small, inconvenient, tiny part that people can’t assemble. It could be a high-volume product so needed that the customer can’t find enough labor to produce it in the necessary quantities. “We’ll work anywhere from medical device companies to the seed industry for corn and soybeans,” says Kent Patterson, co-founder, president and CEO. “We just jump all over wherever there is custom automation.” The company started in his garage. Patterson and his partners built a machine. The company started to grow to the point where now it has 48 employees — and had a bunch of people and stuff in different locations. “We went from a garage to a shop to a shop and just kept moving to new places and signing leases,” he says. “We got to a point where it’s like, OK, this is getting big enough and sustainable — we felt that we wanted to look for our own space.’”
