Business Distress Warning Signals Buckeye Power 10182016
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October 19, 2016 Mark Barbash WARNING SIGNS OF BUSINESS DISTRESS
Transcript of Business Distress Warning Signals Buckeye Power 10182016
October 19, 2016
Mark Barbash
WARNING SIGNS OF BUSINESS
DISTRESS
NCIS/
How to know if your customers are having
problems?
(Without breaking and entering)
Big picture: Why Businesses Fail
How business problems impact your community
How businesses respond to problems
Red Flags of Financial Distress
Setting up your own research department
The Big Picture: Why Businesses Fail
• Business cycles• Survival rates for start up
businesses• Understanding the supply
chain• Why businesses fail• How do businesses respond to
problems
Even Big Business Can Fail
Business Problems Ripple Through Communities: The Supply Chain
Business Supplier DistributionLocal
Technical Services
Customer
The Honda Supply Chain
The Multiplier Effect:Increased income in a community increases spendingon local goods and services. Decreased income canreduce spending on local goods and services.
Inexperienced Management
Failure to Keep up with Competition
Lack of R & D / Innovation
Shortage of Working Capital
Operational Inefficiencies
Costs Out of Control
Why Businesses
Fail
How Distress Impacts Business Response?
Action Reaction
Cut Back on Salaries. Shifts, Bonuses Morale, Accidents, Absenteeism
Deferred Maintenance Building Deterioration, Accidents
Reduction in Inventory Inability to Deliver Product
Reduction in R & D Product Obsolescence
Reduce on non production expenses Admin / finance problems
Cutbacks in Training Accidents, Production Delays
Operational Hints of Distress
Changes in local management (firing, replacement, etc.)
No obvious succession plan
Lack of industry risk profile
Change in Company Ownership (Away from the community)
A new “boss” or CFO brought in from “the home office”
Shifting of work to other company facilities
Asking the plant to complete with other company facilities for business
Complaints about local “business conditions”
Community Hints of Distress
Declining business at local service stores (café, gas station, grocery and hardware stores)
Reduction in corporate contributions to area charitable organizations
Management not living in the community
Changes (or layoffs) in local management
The business is selling assets, refinancing and/or leasing assets
Increase in business at local social service groups (ie: food banks)
Let’s Take a Ride
Look around the building
Broken Sidewalks
Unrepaired Fences
Broken Windows
Landscaping Not Tended
Look around the building
Roof Tiles Missing or Broken
Empty Parking Lot
Outside Utilities in Disrepair
Check out the building condition
Trash Hidden Behind Building
Messy Designated Trash Areas
Exits Not in Good Condition
Look around the Neighborhood
GraffitiBoarded up Buildings
Public Roadways in Disrepair
Look around the Neighborhood
Vacant LotsVacant Space for Lease
No One Eating in Local Cafe
If you can take a plant tour…
UnstockedShelves
Empty Warehouses
No One Answers the Phone
If you can take a plant tour
People Hanging Around
Messy Desks
Closed
Create Your Own Research Department
Set up Google Searches
Watch Industry Trends
Hang OutWatch
Newspaper Notices
Watch out for these excuses ….
• Rosy Scenarios: “Everything is fine. It’ll get better. “
• The Reasons for Failure: “It’s someone else’s fault.”
• Networking in the community: “Haven’t seen you around much.”
• Managers not living in the community: “I did it for the school system.”
• Keep an eye on lawsuits: “Don’t worry. It’s routine.”
• WARN Notices: “It’s no big deal. They require us to file it.”
• Age of Owners: “I’m gonna pass it on to my kids.”
• Location in gentrifying neighborhood: “It’s getting pretty expensive here.”
• Business vacancies in the area: “Where did my neighbors go. “
Final Words…
• It’s tough for a business to survive
• “Just the facts, ma’am” Joe Friday
• You know what they say about “assume”…
• A rumor goes in one ear, then out of many mouths.
• You win if the business succeeds
• You win if the business recovers from adversity
