December 2013    


As the year comes to a close, it's appropriate to provide a recap, so this newsletter is devoted to summarizing both ideas and accomplishments.

For ideas, we're offering a series of our recent "Tip Sheets," the key suggestions found in our newsletter feature articles. In the last year or so, we have discussed recruiting and hiring techniques, exit interviews, surveys and occupational fraud. The tips published here will remind you of best practices in each of these areas and may prompt you to review our newsletter articles for a more complete discussion of each topic.

This newsletter also includes summaries of some of our more interesting engagements. These brief reports highlight the skills we bring to a wide range of assignments – turnarounds, restructurings, liquidations, receiverships and requests for management advice.

I'm also sharing a report on the recent small business confidence index, based on a survey conducted by the Wall Street Journal and Vistage International. I am a Vistage member and have seen many businesses benefit from the collaboration and guidance offered by the organization.

We hope you find these ideas helpful, and we encourage you to forward this newsletter to anyone you think might find this information valuable.

As always, your comments are welcome, and we look forward to hearing from you.

May you have a joyous holiday season and a Happy New Year.

President CMC CIRA



Small Businesses Shake Off Government Turmoil

After dropping to a nine-month low in October, the Wall Street Journal/Vistage index reversed in November and rose to 100.5, just above the baseline score of 100. Of the 820 businesses that participated in the online survey, 27 percent said they expect better economic conditions over the next 12 months, 70 percent said they are expecting stronger sales, and 44 percent said they planned to increase spending. Each of those figures represents an improvement over the October survey results.

There was little change in hiring plans, with just over half of the businesses surveyed in October and November saying they planned to hire additional workers in the coming year.

Also, the business leaders surveyed were hardly impressed with economic growth during the past year. Only 36 percent said the economy had improved during the period, while 16 percent said that conditions were getting worse.




Super Tip Sheet  

To minimize the risk of fraud in your business:

Set high ethical standards, and be sure to practice and enforce them.

Identify and correct areas of weakness within your organization.

Establish strong controls and oversight for all business accounts.

Monitor inventory carefully.

Encourage employees, vendors and customers to report any suspicious activity. Consider creating a system to accept anonymous tips.

To create surveys that benefit your business:

Keep surveys short, simple and focused.

Make your sample size large enough to obtain accuracy to within plus or minus 5 percent.

Use a 1 to 5 scale for easy scoring.

Start with general questions, then move to specifics.

Include a couple of open-ended questions.

Review responses carefully.

Act on the results.

To make your hiring interviews more productive:

Establish key job competencies.

Design interview questions that focus on these competencies.

Have multiple interviewers asking the same questions and applying the same standards in their evaluations.

Drill down for more detailed responses.

Take good notes and write up a summary of each interview as soon as it is completed.

Assemble the entire interview team to discuss the candidates and make a final evaluation.

To improve your hiring and recruiting process:

Define job requirements carefully.

Look for repeated patterns of success in the candidates' background.

Look beyond the resume and consider each candidate's network in your assessment.

Use your own professional network to search for prospects who might not be actively seeking a new position now.

Find, and use, a recruiting platform that lets you prescreen candidates before the interviewing begins.

Do not settle. Be confident you have the right candidate before making an offer.

To make the most of exit interviews:

Standardize the process, with separate meetings to discuss administrative (severance, benefits, etc.) and work issues.

Make the departing employee feel comfortable, and ensure confidentiality in all discussions.

When conducting multiple interviews, look for recurring themes that suggest areas where the business should consider change.

Keep the employees’ supervisors and top management informed of all significant findings.

Treat departing employees with dignity. It will help preserve the standing of your business in the community.

To view additional articles, please go to:



Situation: A privately held injection molding company found itself unable to compete due to increased domestic manufacturing costs and eroding margins.

Result: The owner retained Beane Associates to maximize recovery by orderly winding down his business in an effort to ensure full repayment on debt. We assisted the company with building and implementing a 13-week liquidation budget and conducting a thorough analysis of ongoing WIP. We also assisted with the collection of accounts receivable, which enabled the owner to exit with a significantly reduced liability to the secured lender.


Situation: Secured lender requested Beane Associates review operations and management, including a review of borrowing base certificates, for an assembler of aftermarket truck parts.

Result: Beane Associates conducted a thorough analysis of financial documents and collateral while interviewing key personnel. We discovered that inaccurate financial information was being submitted to the bank, resulting in advances being made out of formula.


Situation: A custom millwork and fabrication firm with a forward-thinking owner asked Beane Associates to provide an overview of his business by conducting a thorough review of the company and its operations. The business had a history of high profitability but the declining economy and a reduced demand for high-end custom product had forced the owner to personally fund operations. He was considering a complete shutdown.

Result: Beane Associates provided a detailed overview report that resulted in creating a job cost system methodology and a weekly cash management program that improved profitability and cash flow. The business streamlined and reorganized to emphasize new channels to market and realized improved core business efficiencies in pricing and operations. The owner recovered his personal debt and maintained the business.


Situation: An importer of construction materials had allegedly committed fraud related to overbilling and pre-billing of invoices and continued to be uncooperative after agreeing to wind down his business.

Result: The secured creditor retained Beane Associates to assist with an orderly wind-down of the business. While conducting our initial review, we discovered additional borrowing base inaccuracies. Weekly on-site presence and monitoring allowed for a prompt selling of assets and collection of outstanding accounts receivable. This greatly improved recovery and provided for a reduction in the loss originally anticipated by the secured creditor.


Situation: A regional family-owned commercial sign company was experiencing major cash-flow problems due to changes in product mix and payment terms and had drawn down a significant portion of its available line of credit.

Result: The secured creditor retained Beane Associates to work with the company to build a 13-week cash flow, review the sales order backlog and perform a viability analysis. With the assistance of the data we provided, the secured creditor gained a comfort level and entered into a short-term forbearance with the business. This arrangement facilitated the company being refinanced within three months of the start of the engagement.


Situation: A regional snack food manufacturer had experienced losses for three consecutive years and was being pressured by the secured lender to exit.

Result: The company retained Beane Associates to assist with a review of operations with suggestions for improvement, in order to return the company swiftly to profitability. The immediate implementation of a true 13-week cash flow helped the company develop a new direction and re-establish creditability with the secured lender. This resulted in entering into a forbearance agreement with a favorable debt structure that provided the time necessary to solidify operations and eventually find alternate financing.

Construction rental equipment: Advisory

Situation: A regionally owned equipment rental group with absentee and uncooperative ownership was having difficulty meeting its debt service. The company had violated numerous financial covenants.

Result: After failing to receive timely financial information, the secured creditor retained Beane Associates to perform a viability analysis. By meeting with the owner and branch managers, we were able to gather financial data that enabled the secured creditor to have a clear understanding of the company’s situation. This allowed the secured creditor to rework existing debt into a more manageable term and payment schedule, providing the time necessary for the company to exit the financial institution.

Foreign auto dealership: Advisory

Situation: A foreign automobile dealership was undergoing considerable change due to new management and deteriorating sales in the poor economy. This resulted in a significant out of trust position and customer trade lien payoff approaching $1 million that could not be reversed.

Result: The secured lender hired Beane Associates to review and monitor the out of trust position and review ongoing operations. Weekly auditing of the books and records resulted in stabilizing operations, reducing out of trust violations and ensuring on-time payments for newly sold vehicles.

Electrical component manufacturer: Advisory/turnaround

Situation: The manufacturer experienced a substantial decline in business following the death of a partner who had managed sales and marketing. The declining economy also caused a substantial shift in its customer base. Although sound operationally, the business was in a severely unfavorable cash and revenue position and was months behind in payments to its bank.

Result: Beane Associates was sent in to review an owner-proposed refinancing through receivable factoring and to evaluate possible liquidation scenarios. We determined that the business could recover, provided it implemented regular and strict cash management, improved inventory to production management processes, and redirected marketing and sales priorities. The bank accepted a proposal based on taking these actions. We advised and monitored the business through its transitions until the bank was fully reimbursed and a cash surplus existed so that a line of credit was no longer required.

Semiprivate golf course: Receivership

Situation: A public golf course and training facility, once ranked in the top ten in the nation in annual revenues, overextended itself by building a premier clubhouse, lounge and restaurant. The owner was unable to manage its expanded property, nor could it plan and account for continued defaults and losses. Increasing financial distress distracted the owners from their business operations. This neglect resulted in a downward spiral of credibility, deteriorating management of the property and increasing discontent among employees.

Result: Beane Associates Inc. was appointed receiver to take possession, manage, operate and maintain all assets of the course. Because of numerous claims against assets combined with the disgruntled personnel, we immediately secured the facilities, reconciled inventory and established new operational arrangements to stem further decline of the site. Uncontested assets were returned to owners and turnkey grounds operations and security were established, allowing a successful transfer of ownership, on schedule and under budget.

Auto dealership (domestic): Advisory

Situation: A large domestic automobile dealership with multiple locations in the tri-state area was in a significant out of trust position.

Result: The secured lender hired Beane Associates to be a consistent on-site presence to review and monitor the out of trust position. This daily (eventually weekly) auditing of the books and records resulted in stabilizing and maintaining a fully “in trust” dealer floor plan. The dealer re-engineered itself and eventually centralized in a single profitable location.

Electrical contractor: Advisory

Situation: The company provided supplemental electrical services and relied on “event billing” when energy grids go down during severe storms. The company experienced a series of unseasonably mild periods and was dealing with restructures, ownership and personnel transitions and severe working capital limitations.

Result: Beane Associates reviewed cash flow projections and compiled data that identified improvement opportunities and alternate creditor buyout methods. By following these recommendations, the company established cash improvements to sustain operations while reducing debt and re-establishing management credibility. This gave the business time to relieve the current creditor and secure funding from another financial institution.

Marble and tile fabricator: Turnaround

Situation: A marble and tile fabricator was caught in the economic downturn. A major client filed for Chapter 11 protection that severely impacted revenues and cash while wiping out 35 percent of the company’s expected collectible receivables.

Result: Beane Associates was retained to work with the owner as he attempted to restructure and realign operations to fit the new economy and revenue base. We assisted the company with building and implementing a rolling 13-week cash budget, restructuring the organization and strategically realigning assets and sales to meet new market conditions.

Manufacturer of interactive office and school products: Advisory

Situation: A family-owned manufacturer of products directed to the education industry experienced continuing declining sales and was unable to repay its lender. The company was hindered by outdated technology and its largest customer starting a competing business.

Result: The lender retained Beane Associates to assist and monitor the wind-down of the business. The wind-down lasted two months with strict adherence to the approved budget. Additional cash discovered in previously non-disclosed bank accounts and the sale of intellectual property resulted in returns to the bank exceeding the initial estimate by 40 percent.

Self-storage contractor and management company: Advisory

Situation: A contractor of self-storage units with a large construction loan in default and an expiring forbearance agreement was no longer servicing its debt. The secured creditor insisted that cash needed to be tracked in order to enter into a revised forbearance agreement.

Result: Beane Associates was hired by the secured lender to review and compile a true cash flow. We were able to determine availability of cash for debt reduction. The secured lender used this information to institute a second forbearance agreement.

Commercial and residential fence contractor: Liquidation

Situation: A fencing contractor was unable to maintain debt payments. With a foreclosure imminent, the contractor filed a Chapter 7 bankruptcy. Significant account receivables and inventory remained.

Result: Beane Associates was hired to liquidate and monitor the remaining assets. Beane Associates aggressively sought collections of the receivables. These immediate collection efforts netted a return on receivables in excess of initial expectations. Remaining inventory was sold to a competing contractor. With the sales of these assets and the final sale of the real estate, the secured lender received a full recovery.


About Beane Associates, Inc.

Founded in 1984, Beane Associates, Inc. continues to build an impressive track record in helping private and publicly owned companies improve operational effectiveness and profitability during a time of financial challenge. The company has offices in Wilmington, DE, and Atlanta, GA.

22 The Commons, 3518 Silverside Road, Wilmington, DE 19810-4907
Phone: 302.479.5438 Fax: 302.479.5434