Warning Signs & Risk Management

Do you know the red flags that signal impending business distress? More importantly, would you like to know how to organize your management team to deal with such challenges in a highly effective manner?

• Does your company borrow more than $500,000 from a bank or other lending institution? Is the relationship with the lender on solid ground? Do you personally guarantee the loan? Would you like to know how to reduce the risk under your personal guarantee?

• Can you analyze the operating performance and financial condition of your business the way bankers do? Do you understand the key terms and conditions of the Loan and Security Agreement you signed with your bank? Would you like to know the secrets to keeping your "friendly banker" an ally of the company even during financial difficulties?

• Do you have a "worst case," 12-month cash flow forecast prepared as a contingency plan? Can you say with confidence that your company will have ready access to credit availability during periods of economic uncertainty?

• Do you have a business plan oriented to survival? Are you familiar with concepts such as: EBITDA and enterprise value; exit strategies; liquidity events; and alternative sources of financing?

• In dealing with "hostile" creditors do you know how to negotiate without using lawyers or resorting to a Chapter 11 Bankruptcy proceeding? Are you aware that the overwhelming majority of companies that file backruptcy end up being liquidated rather than reorganized?

• Would you like to avoid or at least minimize using outside professionals to solve your company's problems?

• Do you know how to reduce the risk of creditors "piercing the corporate veil?" Is "corporate governance" a familiar term? Does your company have a group of independent directors or advisors providing strategic guidance? Are you and they fully informed as to the duties, responsibilities and risks of "statutory" boards of directors compared to advisory boards?