Do More with Less – Or is it Less with Less?

Monday October 31st, 2016 at 10:00am
Written by Chuck Mouranie - Partner and Managing Director

Organizations are constantly challenged with increased market pressures and declining budgets. This is even more prevalent as we approach a slowing economy. In order to optimize staff efforts, tough decisions are required, potentially resulting in layoffs, elimination of benefits, reduced customer support, or closing facilities.

The result of this “more with less” philosophy ultimately causes increased stress on existing staffs. It tends to place more burden on the highest performers who remain from downsizing. Eventually, these performers become disenchanted with the organization, yielding reduced customer satisfaction and inevitable revenue reduction. Another downside of this decision is when valued employees give up on the company or organization and seek employment elsewhere.

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Eight Things You Must Do When Creating a Turnaround Plan

Friday September 9th, 2016 at 10:00am
Written by Jim Bitterle - Consulting Managing Partner

Is your company struggling financially?

If so, it may be time to create a turnaround plan. Turnaround plans assist companies in identifying the cause of underperformance; reverse it and return to profitability. There are a few essential elements to any financial turnaround business plan. Following are some basic actions and best practices to consider.

  1. Don’t waste time. If the company is performing poorly, don’t procrastinate. I’ve seen far too many financial disasters occur simply because managers and advisors are passive. If things are degrading, act now. Time can be your friend, or it can be your enemy. For turnarounds, unfortunately, it is too often the latter.

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Is Running a Business like a Sport?

Monday May 16th, 2016 at 10:10am
Written by Chuck Mouranie - Partner and Managing Director

I find it interesting that everyone knows who won the big game, but few people know how their business is truly performing. I am not sure if this is a lack of availability of information, devoid of individual ownership, or simply a lack of interest.

Every team must have a goal. It could be winning the Stanley Cup, World Series, or increasing sales. Strong teams and companies both agree on a goal and laser focus their attention to attain the objective. All decisions are made within the backdrop of this target. They are similar of focus and every team member is on-board, driving to the bottom line --- winning.

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Are We in a Recession?

Wednesday April 13th, 2016 at 8:16am
Written by Chuck Mouranie - Partner and Managing Director

I find the talking heads from Fox Business and Bloomberg to be quite entertaining. They appear to have vast business and economic backgrounds, yet can’t agree on whether we have entered into recession or are on a path of expanding growth. They both could be right.

Traditionally, a recession is deemed to have occurred if the gross domestic product (GDP) shrinks for three consecutive quarters. This theory may no longer apply to a world economy. China’s GDP has declined to approximately 6.5% growth from double-digit territory. This is suspect as the Chinese Government restricts data defining the economy. In addition, Japan, Russia and the European Union economies have been in the tank for years. These reductions impact the US, and commodity prices (raw metals, oil, consumer goods, etc.) fall as these major world producers demand for these goods drop.

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When to Use an Asset-Based Lender

Tuesday January 26th, 2016 at 7:30am
Written by Jim Bitterle - Consulting Managing Partner

Virtually every mature company has gone through rough financial times. If you’re around long enough, your company will go through rough times again. When this happens, you may get moved to your bank’s “Special Assets Group.” Many banks have different names for this group, but in generic terms, they are all “workout” groups. The purpose of a workout group is to reduce the bank’s risk. Typically, this is accomplished by getting rid of accounts that have become too risky. In some cases, the workout group will work with the company to remediate it, then return the company to the original lender. Unfortunately, this scenario occurs infrequently. Most workout scenarios require the company to find an alternative lender, then pay off the current bank.

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Why Your Business Cannot Survive without a Good Cash Forecast

Wednesday October 14th, 2015 at 8:00am

Written by Nehal Desai - Associate Consultant with EDSI

ndesai@edsisolutions.com

 

Cash availability is critical for any business. Whether to pay vendors, creditors, or staff, having cash on hand is essential. Why then, is a good cash forecast so often overlooked and underutilized?  Does your business maintain an accurate cash forecast? Are you using your forecast correctly to make the most effective and profitable business decisions? Having an accurate cash forecast can help identify potential future shortcomings and allow a business to take corrective actions to ensure their operations run smoothly! Read on to understand the basics of a cash forecast and how it can aid your decision-making process in times of low or high growth.

We often see businesses show increased sales and positive profits, yet, they still run out of cash. Simply stated, cash flow is the lifeblood of a business.

A cash forecast can accurately express a firm’s cash position in future periods. Commonly, a 13-Week Cash Forecast and an Annual Operating Plan (AOP) are preferred forecasting methods. The 13-Week Cash Forecast outlines the cash position for the upcoming 13 weeks, while the Annual Operating Plan (AOP) shows the monthly cash needs and surpluses for each month in a fiscal year. Most firms create an AOP at the start of the year and update on a regular basis. The 13-Week Cash Forecast is often used when cash is becoming (or has already become) a concern. It is a great way to manage cash in the short-term and make strategic changes to manage the cash position.

So how can cash forecasts be utilized in business decisions?  Cash forecasts help companies manage their growth, working capital and lines of credit with lenders. 

Imagine business is booming. Customer orders are rolling in faster than you can handle. You are ecstatic as profits are going through the roof. Soon, you realize that although profits are soaring, more cash is leaving your bank account than coming in. Now cash is not available to pay key vendors, and orders need to be put on hold. Sadly, despite the increased sales orders, the company is stuck without inventory and unable to fulfill demand. A 13-Week Cash Forecast, coupled with the right strategies, could have prevented this.  Cash needs would have been estimated and preventive measures to avoid cash shortages executed.  

Now imagine an opposite scenario. The sales forecast is down. There is hope on the horizon, but you are unsure of what your cash needs are for the next month. The cash forecast can help determine when collections and payments occur using the predictive nature of both sides of the transactions. Utilizing the forecast, firms can be aggressive in their collections when they foresee an upcoming cash shortage, or use the forecast to negotiate an increased line of credit with creditors. A cash forecast helps your company get ahead of the situation and take appropriate action to lessen or eliminate negative impacts associated with cash constraints. 

A lack of positive cash flow and insufficient credit to finance the business is a common issue for underperforming businesses. A well-formulated cash forecast is the perfect solution to help manage a company’s cash and credit, and equip it with the right tools for long-term success


What steps are you taking to ensure that your company has the necessary cash available to ensure success? Please let us know how we can assist you in your efforts.

If you are interested in gaining more information regarding our financial consulting services, please contact me at ndesai@edsisolutions.com

Click here for more info about our consulting solutions on our website. 

 

4 Basics When Assessing the Level of Stress in a Company

Wednesday September 23rd, 2015 at 10:09am

Written by Chuck Mouranie - Partner and Managing Director with EDSI 

cmouranie@edsisolutions.com

 

What stresses a company? When a company is stressed, several variables, both external and internal, may be at play. Examples of external forces include governmental regulations, legal issues or market changes. These external issues are mostly beyond the control of the company’s leadership. However, our experience suggests the vast majority of reasons companies become distressed are self-induced.  Quality, delivery, workforce issues, process control (or lack thereof), cash management and ill-timed expansion are just a few examples of these pain producers.

There are really four basic ways to assess a company’s level of stress.  If a company performs well in three of the four, they have time and resources to improve the lone issue. Should the company perform poorly in two of the four areas, they need to put comprehensive plans in place to quickly fix the underperforming areas. Should the company only perform well in one of the four areas, they are teetering on collapse and need immediate action to save the very foundation of their organization. Finally, if a company is performing poorly in all four areas, they are a restructuring candidate and will most likely end up with a poor conclusion. 

When assessing a company, grade each of the four items. If you can’t count at least two areas that are “good,” then you need help - quickly.

 

  1. Relationship with Lender: Does the bank want the company out; is the bank concerned for the company’s financial health? Is the firm starved for working capital?
  2. On Time Delivery: Does the company have difficulty consistently delivering products or services to either internal or external customers? Does this issue drive up operational cost?
  3. Deficient Quality of Service and/or Product: Does the company have inferior quality of product or service, either reported internally or by external customers?
  4. Employee Turnover or Demand: Does the company have a difficult time recruiting or retaining employees?

 

If you are interested in learning more about our restructuring services, please contact me at cmouranie@edsisolutions.com or visit our website at www.edsisolutions.com/restructuring

Founded in 1979, EDSI is a national leader in workforce development, customized training and consulting.

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