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

Thank you

Mark BarbashMark.Barbash@gmail.com

(614) 774-7599