Whether it's delivered by phone or mail, the message from the bank no business owner wants to hear is: We are concerned enough about our business with you that you need to work with one of our selected consultants to demonstrate everything is in order.
The bank may give the owner three names to choose from and its stopwatch has certainly started ticking. The bank wants answers fast.
The owner's response is often predictable: denial, fear or a combination of both.
Nearly all companies faced with this situation do not recognize the depth of their difficulties, but denial is not an option. And there is good reason for fear: typically a business in this state cannot operate on its own. If they lose (or have lost) the ability to borrow, the business will continue to struggle to meet day-to-day obligations and its long-term future will be bleak.
But some owners — the ones whose businesses have the best chance for recovery — see the situation differently. These owners grasp that the bank prefers to see their business succeed but within limits that require immediate improvement if they are to control their destiny. They understand that they will experience discomfort but recognize it as an opportunity to accelerate moving their business in a new direction.
Unfortunately, many owners do not recognize this need for their business. To understand its compelling nature, consider a medical analogy. The banker is your primary care physician, and he's looked at your financials, your lab results, and is uncomfortable enough to say you require the attention of a specialist. Ignoring or discounting this advice puts the patient more at risk, while immediately seeking expert help from a specialist exponentially increases the odds for successful diagnosis and recovery.
As specialists, bankers, turnaround consultants and turnaround attorneys have heard all the rationalizations of owners in denial or unaware of the severity of their situation. "This problem is temporary, just like the ones we’ve gotten through in the past" or "we don't need any help because we've already made or tried the necessary changes." And, they say, "If the bank thinks we're strapped for cash, why are they forcing us to spend more money on a consultant?"
Those thoughts are understandable, but your banker knows better. They see these types of situations day after day. They have developed the experience and data-driven metrics that help them identify troubled businesses and have heard nearly every rationale more than many times. Add to this the tightened regulatory changes over the past five years and they are even more diligent in heeding the early warning signs of a business in trouble. READ MORE
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