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Business Distress Warning Signals Buckeye Power 10182016

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Business Distress Warning Signals Buckeye Power 10182016

  1. 1. October 19, 2016 Mark Barbash WARNING SIGNS OF BUSINESS DISTRESS
  2. 2. 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
  3. 3. 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
  4. 4. Even Big Business Can Fail
  5. 5. Business Problems Ripple Through Communities: The Supply Chain Business Supplier Distribution Local Technical Services Customer
  6. 6. The Honda Supply Chain
  7. 7. The Multiplier Effect: Increased income in a community increases spending on local goods and services. Decreased income can reduce spending on local goods and services.
  8. 8. 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
  9. 9. 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
  10. 10. 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”
  11. 11. 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)
  12. 12. Let’s Take a Ride
  13. 13. Look around the building Broken Sidewalks Unrepaired Fences Broken Windows Landscaping Not Tended
  14. 14. Look around the building Roof Tiles Missing or Broken Empty Parking Lot Outside Utilities in Disrepair
  15. 15. Check out the building condition Trash Hidden Behind Building Messy Designated Trash Areas Exits Not in Good Condition
  16. 16. Look around the Neighborhood Graffiti Boarded up Buildings Public Roadways in Disrepair
  17. 17. Look around the Neighborhood Vacant Lots Vacant Space for Lease No One Eating in Local Cafe
  18. 18. If you can take a plant tour… Unstocked Shelves Empty Warehouses No One Answers the Phone
  19. 19. If you can take a plant tour People Hanging Around Messy Desks Closed
  20. 20. Create Your Own Research Department Set up Google Searches Watch Industry Trends Hang Out Watch Newspaper Notices
  21. 21. 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. “
  22. 22. 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
  23. 23. Thank you Mark Barbash Mark.Barbash@gmail.com (614) 774-7599

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