Corporation

Focus on what the is telling you. Focus on what the is telling you. Focus on what the is telling you. Make that advice work for your Mom and Dad. Make that advice work for your Mom and Dad. And then, 12-18 months from now, with them retired, safe and out from under, start over on your own. Actually, start starting over now, on the side, new company, in your garage, with some part of your reliable 'core' business, outright or subcontracted from your old (and ongoing for 12-18 months more) business. Looking for a Hail Mary pass in Michigan just puts you in the middle of 1000's of little guys there, all with their hands in the air, hoping to save their businesses. Focus on what the is telling you.

Len, VaSteve is the real deal and is the kind of person I've been telling you about. If he's willing to point you in the right direction, take him up on it. It is a very generous offer and can make a real difference to you.

Len, Sorry to hear of your business troubles. I admire what you are trying to do for your dad and applaud the selflessness it took to post this thread.

Smarter folks than I have already responded so I offer what I have in the spirit of "brainstorming". As a small business owner in a large industry, I have found the best survival tool was finding a niche. Sounded cliche when someone mentioned it to me back when I was struggling too, but it has saved my a$$. It sounds to me that your strength vs. a Chinese outfit would be your ability to adapt quickly - take smaller orders, respond quickly to new designs or design change and fluctuating production. If it were me, I would approach more non-traditional car manufacturers that are in the developement stage

http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9045 925

or currently produce cars such as Superformance.

Chances are you'll end up being a true "Mom and Pop" (with son) type business for awhile while the dust settles, but I think you realize that already. In the meantime, I would find ways to become very efficient. Lower monthly outlay. Try to maintain contracts. Get rid of anything resembling overhead and inefficiency. Sadly, that often means higher wage earners, insurance, etc. Operate with a skeleton crew - a low paid skeleton crew. Remember it's temporary.

Guys like you and your dad probably would never be happy working for someone else. I know I couldn't anymore. Try to stay positive and just do what you're good at. It will work out.

Haven't had a chance to read all of this thread (gotta run for now), but I can only offer "internet support". Some of these guys will help you figure this mess out, and YOU WILL...I'm sure of it!

I absolutely see what you're saying and I can't argue with the logic behind it. Thanks.

Hey man, I don't know squat about running a manufacturing business. So I can't offer any practical advice. But if there is anything I can do to be helpful, I'll do it.

Thanks Janus, hope you're doing well yourself.

Hey Len, Interesting story about the evolution of your business. Years ago I struck upon the idea of becoming more or less of an entrepeneur making furniture. I seemed to have a talent for creating design variations of an existing design trend that seemed to parlay into an early lucrative success. I remember one of the retailers that I did business with lamanted that soon the Koreans would copy my ideas and undercut my business. Within a few months there were cheap knockoffs of my idea everywhere. Of course I was able to survive, but by no means was I making the lucrative money I had previously. It just meant that I had to get more creative and work harder. In the long term I found the business to become even more fiercly competive with the influx of Hispanic run businesses and imports from Indonesia.

I think the moral of the story is, is that you have to continually adapt, evolve and rethink your gameplan constantly to survive. A hot money making product today can easily be copied and duplicated by your competetion or supplanted by some other trend. Success it seems can be fleeting, and not necessarily guaranteed in the long term.

It seems like our entire country is in a state of flux. We used to have an economy based on manufacturing. It seems that giant sucking sound we were warned about isn't coming from Mexico or Canada but from Asia. I think you have to look at the big picture. Look at the trend. Look what is happening to America auto manufacturers. What is the future for these companies and how is going to infuence yours?

I had a recent conversation with an aquintence who has a degree in economics ( from Oxford, Cambrige? some prestigious English University) He is an entrepenure (textile fashion import) with all the trappings of success, (nice house, Ferraries and Porsches) so I would be inclined to assign a fair amount of credence to any of his opinions. I was sort of querying about an idea to manufacture something. He abruptly shook his head and said "Oh no, stay away from manufacturing." I then asked him what a good sector of the economy was and he replied "The service sector." I've heard this said before, it seems to be the new mantra for success in the modern American economy.

Believe me I'm not going to tell you what you should do one way or another. You have to decide yourself what is good for you and your loved ones. I think you really need to step aside from your personal feelings about your business and be objective. Ask yourself what is the big picture, what is the trend? Upward or downward? Better to cut losses now or can I adjust or find some viable niche?

As far as throwing more money at the problem, if the fundementals of the business are not there, then throwing money at the problem may only delay the inevitable. I've been there myself. Sometimes having money can get you in to more trouble that not.

I've known a lot of business owners and have witnessed first hand a fair number of business failures. The end is not pretty when they've thrown every monetary rescource only to have it ultimately fail. I have seen marrages and relationships break apart and behaviour more macabre than any story Hitchcock could pen. Truth is stanger than fiction, I have some stories!

Ultimately you have your health, your supportive family and ultimatey no amount of money can ever replace that! I hope this message doesn't come across a dreary or ominous. Just relaying some my observations and experiences. I have a few friends who tried and failed miserably at a few things ( More stories!) only to rise from the ashes to become spectaculary successful! May you and your familly enjoy the same. Good luck.

Not being a biz person, I can't offer much in that regard, but I do have experience with gov contracts. They can be a great source of income *but* the procurement process is long and slow. As was mentioned earlier, the way to go would be to be a sub on an existing project. eg we are doing work for a gov agency but the contract is running through SAIC (talk about a behemoth). While there have been challenges there as well, much quicker than if we'd gone direct to the beast.

Given all the great responses, here is where I'm at:

We cannot just shut the doors voluntarily, too much is secured and it would bury my father.

Use as much income as possible to pay down secured debt.

Sell, sell, sell...income must be highest priority in order to keep the doors open...if not to save the business at least to wear down the secured leases and erode some secured debt.


I know that's a gross simplification but it helps. It still sucks...but it helps.

From my experience, the ability to sell is most critical, and will make or break a business. You can have the greatest product in the world, but if you can't sell it you're going nowhere. Years ago I worked in pretty large auto dealership in Santa Monica. One thing I noticed is that out a considerably large staff, there were only two or three guys that could really make a good living at it. These guys were truly amazing. Even in "off months" or when the majority of the staff were suffering, they would consistently produce. How are your abilities? Are you one of those guys? If the answer is no, then maybe you could find someone with the talent, maybe and independent rep for example. An independent contractor who would work on a strict commission basis.

Secondly, in the big bad corporate world downsizing seems to be the name of the game to survive. If you decide quiting is not an option, that would the next best thing. You may want to investigate filing a Chapter thirteen bankruptcy to restructure your payment liabilities. You may want to inform your landlord and creditors of this action becoming imminent and use it as negotiation leverage to restructure your payments/ lease. (last ditch option as this tact could backfire)

Just some ideas.

Thanks Ed, selling is indeed the key. We are very good at what we do and our pricing is competitive but our marketing stinks (we never had to).

We're about to find out what my abilities in the area are.

For me, selling is problem solving. I try to understand what the customer really needs, and see if the stuff that my company can do can help solve this. It's not about pricing, or being a friend, or doing favors, or telling jokes, or talking about sports -- it's about truly understanding the need behind the need. "We need lower prices!" Why? "Because we are not making enough money!" Okay, why is that? "It's taking too much time to assemble tab A into slot B." Oh, if I could assemble those together for you, would that help...

Yes, it's a gross oversimplification. But it's what's worked for me over a career. A million years ago I went through the Xerox Professional Selling Skills (PSS 3) training through Honeywell. Stuff about the approach is available online.

So find the right folks to talk with, and help solve their problems. It moves you out of a price based discussion and into a conversation where your competitive advantages can help.

I've never been able to sell anything I didn't absolutely believe was of benefit for my customer. And I've walked away from a deal more than once saying, "you have a good relationship, good quality, great pricing - I really don't have anything better to offer." And more than once those have ended up as my best long-term customers.

Sounds like you believe in what your company can do - just go tell your story. I'm confident you'll be fine.

That's the hardest part. And once you find them, talking to them is a whole different challenge. Your job could be giving away gold ingots and you would still have a hard time getting in to see the person who makes the decisions.

Like you and Len, I believe in my business. I know we're the best and have been told as much by our customers. However, without connections and/or luck, how do you impress that upon prospective clients who won't even take your call?

Another frustrating problem I have had is that purchasing agents often don't care about money. I mean it, they just don't care. Switching the business to you would cause an upheaval in their lives and to them it's just not worth the hassle.

As a guy with a vested interest in my company I was blind to this possibility at first but now am convinced of it. I think a better sales approach is the simplification of their processes or absorbing their management burdens, in short getting the purchasing rep more golf course time. It's not their money but it is their peace of mind/relaxation time.

Not much experience in this area but have a few thoughts;

-a good 'cost accountant' would be helpful here. what machines are paying their way and what machines should go? does your pricing structure include all costs are are you missing something? things of this nature will help you determine if you SHOULD continue.

-an atty should be on hand for advice in re: to things like preferential payments, etc (as has been noted here).

-in re: to gov't contracts i just read an article on this last night and it is an area worth exploring. IIRC there are purchasing agents you may want to get in touch with. VA Steve should be on your 'to call' list as he appears to have experience with this. i've always understood gov't contracts to be the holy grail of small manufacturers; you should know everything there is to know in this area.

-be very careful of any refinancing schemes which may place you or your father in add'l/greater jeapordy for the sake of prolonging things. banks are hip to this and will give you any number of stories to get you to sign add'l paperwork if they think they can get even more out of you.

-consider what would happen if you shut the doors tomorrow. consider which creditors would go after which assets and plan accordingly. IOW don't pay down unsecured credit lines with suppliers if they are going to be last in line. Priority 1 here is your father's assets.

Good luck with it and don't forget to call VaSteve.

Well Len, sounds like you just need to get out there and sell. Just like a car dealership with new cars on the lot, you need to get more numbers on the board. There are some great selling/motivational books and CD's out there, you should really get your hands on some of those. The Art of Selling by Zig Ziegler comes to mind.

Seems like there's a fair mention of pricing as a selling point. One of the first things you learn is, never talk price before you've established value. The art consists of really making them desire what it is your selling.

While your concentrating on sales, in addition to streamlining your company, you may want to consider Chapter 13. This gives you a five year time frame to restructure your debt and buy more time and give you some breathing room.

As a final insurance should the worst happen, file a Declaration of Homestead with the County Recorder if you haven't done so already. This will partially exempt your personal residence from any judgment to satisfy unpaid debt. I know this to be true here in Ca., it's likely the law may vary from state to state. Ask your attorney about that.

Len,

I am in the same situation. Instead of 35 years though I have 12 years invested. The good times were very good after a rough start they were welcome. Not nothing but doom and gloom appears on the horizon and I have been struggling this past year really bad.

I have put myself in a huge financial hole that I am struggling to get out of.

My suggestion is to take this holiday weekend and get away, go far away and visit friends or family and find some alone time. This is what I did and it helped a lot. My best confidant is my wife, who is not in the day to day workings of the place and offers good insight from her point of view.

My decision about 2 months ago was to look at my original business plan from 12 years ago and try to get myself to that stage again. It was hard to do but I am 1/2 way there. I basically modeled my company now after my company 10-12 years ago and its working.

I have cut my overhead down as much as possible, the only overhead left now that is not the same is payroll and I am working on that. Do more with less people if what I had to set out to do. Now what few people I have left are all VERY busy even though we have little work.

My other ace in the hole was physical investments I had made, especially about 2-3 years ago. The 911 is just about sold, and now the vacation home is gone and then I personally am completely debt free, mortgage included. This gets me personally where I need to be and now I can work even harder to save my business.


Good luck, I hope my story helps you find an answer that may have been staring you in the face. Once you build up a business its easy to do it again. Remember that, there are some people in this world that cannot do what your dad did, he can do it again, even if he is older now, and it sounds like he has some good help in his corner.

Cash flow?

Wow, a hundred responses... you are really blessed to have this kind of support from some very knowledgeable people.

Len... its too late for you to start learning how to be a salesperson. The answer to your situation is to increase your sales. You need a heavy-hitter NOW to hit the ground running and starting busting down the doors. You need a FULL SCALE marketing ATTACK from all angles. It seems simple: go find a very successful salesperson who already has the contacts and knows your biz. Offer him a reason to come on board with your company. Let him do his thing, while you back him up with professional collateral and support. Seems like if you have the right person or people selling your products, and your customers are paying on time, your problems are solved.

I am extremely thankful for all the support and guidance.

Motion, I see where you're coming from and we're contemplating taking on a partner for this purpose. I can't afford to pay a salesman ( a good one anyway) so I need a different carrot.


PBH, in regard to cash flow, we are negative which is why the lines have been growing. Or are you looking for my monthly expenses vs my previously stated sales?

My break even is 65k-75k a month in sales and we're at 40k - 60k right now.

One more thing Motion,

I may have given the wrong impression on my experience. I have been selling for years, I've just never gone on the road. I know the two are very different, but I'm not completely green.

How about taking on the right person for a reduced monthly salary, but a small percentage of the company?

This is absolutely a possibility. I have a guy in mind but it would take some convincing.

Any updates? How are you holding up?

Thanks for your concern. I'm not great but it could always be worse.

I have three potential big deals up in the air that could really save us but time is not exactly on our side. That's really the difficult part, know when to hold em..know when to fold em. How far do you go chasing the out?

It's a ballet of conflicting emotions and rationale. I can make perfectly good arguments for the path I'm on and equally powerful arguments that I'm a fool. Imagine a situation where you know you have to make a move but you feel stuck in glue. I know that sounds cheesy as hell but it's a pretty accurate description of my mental state.

not cheesy at all. that was G9Girl for a year. we always had small grand moments, but couldn't carry the momentum, but could justify continuing with great arguments. the big deals (Macy's) never came through. problem is there was always another savior on the horizon.

Lost over 6 figures doing that because I never set limits.

Set a hard limit.

Indeed. For those that never get the privilege of going through this it's quite surreal. You reach mental "places" you never would have imagined you could live in/with. The stress gets so strong it almost fades into the background, it's weird.

Regarding limits...as I'm sure you know you reach a point where part of you feels you've potentially lost so much that there's no sense in not going all the way. I'm not saying that's always the case but the thoughts get to you.

Joel, I've been ALL the way down this road, and I mean to the hard bitter end where you are literally left with nothing but a ton of debt and a 69E in a 1,000 pieces that is your own personal version of an addiction. Surreal is the only way to describe what is impossible to translate in terms of mental places.

Set a rationale hard limit with someone outside of the situation. you really don't want to see what's at the end of the road.

Wish I could share a bottle of JW to really fill you in.

Thanks Shaun, I spend as much time as I can just thinking. The time that I'm here is decompression and thought.

George Eastman, when starting his company (KODAK) could not pay good help. He promised everyone a stake in the company. Ever wonder where all the millionaires in upstate New York came from? Also...look up and see if you have a SCORE office in your area. It is comprised of retired executives who assist companies having troubles.....

Moneyguy's right. Also call your local colleges for their small business centers. Most have business studebts who take on projects like this for credit.

getting better
 

A little good news
http://www.pbs.org/newshour/bb/business/july-dec07/globalization_11-29.html

Hang in there! We are seeing things coming back to us at last. The weak $ and continuous eff-ups, big and small on outsourced jobs are helping. SmileWavy

Where is your website?

If you do not have a website, then please send me a PM.

Thanks guys, I was busy last night so I apologize for the delayed response.

I am already working with an adviser from a local college. He is a retired business owner himself and is working fotr the MIBTDC (Michigan Small Business & Technology Development Center).

In addition we have been working with two Congressmen and a Senator (two of whom met with us here at my plant on Friday). They have been pretty helpful but they don't have magic wands either.

Our website exists but it's not...how you say..."good?" :)

Ain't that the truth, man what a trap that is. Putting out fires gives instant feedback so it feels like you're being productive when in reality you're ignoring the inferno behind them. I struggle with this a lot.

Anyway you can shorten those receivables to 30 days and lengthen the payable to 60 days? that might give you a little more breathing room - and it's basically "free money".

Sorry if this has been mentioned before - I did not read the whole thread... but as motion said - your fixed costs are pretty fixed - If I were you I'd alot 3 undisturbed hours a day to focus on sales efforts. flyers, mail outs, phone calls - smiling and dialing - bid out any job you can, no matter how small - they can lead to bigger jobs....

don't get into a pissing match on price - push quality and quick turn around - your job is just to find those jobs that need those two qualities...

OK - just read through the whole thing -

And a couple more observations - #1 as a few others have mentioned - try to keep the business going as long as possible -

#2 - Try and get your father retired - and secured out.

#3 - Anyway you can change the ownership without tax obligations? The reason I say that is because if you can put the business 51% in your wife's name - then you qualify as a women owned business. If not, maybe you can get a partner on board that is a minority, woman, whatever - and now those purchasing folks have some motivation for dealing with you (especially if they have government contracts).

Then start targeting some of these buinesses that are building ethanol plants and get a piece of those. :)

Just wanted to update a little good news. I just landed a $200k annual deal! This may not sound like a lot, but we're small so one more of these and we're back in business. This project will not require any additional costs on my end and there are no materials required.

This is the first positive thing to happen here in a long time and it really hasn't sunk in yet.