We don’t need no stinkin’ help!
At the time, we referred to a quote that we had seen that stated: “If you think it’s expensive to hire a professional, wait until you hire an amateur“.
We recently been hearing, on a few occasions, a variation on that theme; companies that don’t believe they need any help.
And yet, we know that the people who referred us to those companies are smart, perceptive and trying to help the companies they have relationships with. And, as we looked at the companies and their business situations it was fairly obvious that they needed help.
In One Case …
In one case, we were contacted by a professional investment group that had made an investment in a start-up technology company. The company was pretty much out of money and the investor wanted to know if there was a way to save the company and, of course, their investment.
Unfortunately, the capital and debt structure of this company was, for a very small company, more complicated than many public corporations. They had several classes and even subclasses of equity, convertible debt and a large number of equipment leases. They also had some other large, but unsophisticated, lenders/investors.
They Had Some Prestigious Clients …
But, they also had some prestigious large customers and were in the process of gaining market share. While they had built the company too fast, and over expanded in both people and facilities, it was clear to us and the CEO we spoke with, that with a bit of patience from the investors, a successful restructuring could be accomplished. Failing that, a strategic sale seemed possible, given their technology and the customer base.
The board of directors decided that they really didn’t need any help. They fired the CEO, put in place an interim board member as CEO, and agreed to loan the company a small bit of money. A few months later, we learned that the company had “abruptly” closed.
150 People & $50 Million Of Capital …
The lender/investor that had pushed the decision not to get help had foreclosed on his loan. The result was that 150 people lost their jobs, $50 million of capital was lost and while the lender hopes to sell the assets, selling a going concern with solid customers will always result in a better result than trying to sell dead assets. Since the equipment and plant were leased, those items will be returned to the lessors prior to any sale.
We have recently talked with several other companies that “didn’t need help”. One of these is in Special Assets at his bank and is on his third forbearance agreement which expires in 120 days. He is certain that despite a history of losses and debt problems, some other bank will find his loan desirable. Who knows? In today’s time of easy, cheap money, he may be right. But if he happens to be wrong, he loses the company and is responsible for the personal guarantees.
Weak, Dependent and Unsure …
For so many of us, the idea of needing help means that we are weak, dependent, uncertain or unsure of what to do. It somehow, in our own minds, means that we are not smart or good enough. Throughout our childhoods, our parents pushed and advised us to be confident, strong and independent.
Yet the great coach, John Wooden said: “We’re all imperfect and we all have needs. The weak usually do not ask for help so they stay weak. If we recognize that we are imperfect, we will ask for help and we will pray for the guidance necessary to bring a positive result to whatever we are doing.“
One of the things we see all too often relates to the quote in our very first paragraph. There are business people who did ask for help and unfortunately asked the “amateur”. As a result of the money wasted and the poor results, they are convinced that obtaining assistance doesn’t work in their case.
Some of the thoughts from that original blog bear repeating here:
So, with all of those claiming to be experts, how can you be certain that you are getting a professional rather than an educated amateur. Invest the time to discuss the background of the people you’re considering working with.
The Most Important Credentials …
Experience and proven track record is the most important credential. A candidate for the assignment you have in mind should be able to produce a portfolio of success stories and satisfied clients.
And make certain that the qualifications match the task. A company providing software as a service recently considered retaining an interim CEO, but later changed their mind. The company interviewed two candidates, both of whom the thought were excellent.
One had not been a CEO, instead focusing on the financial side of business as a CFO and had no software experience. The other had been CEO of a software services business and had run the software division of a very large technology company. You can see how the results of that selection might produce differing results.
Ask around. Most successful professional service providers are well known to bankers, attorneys, accountants and financial advisors. It’s not only having references, but the quality of those references that’s important.
Strategic and Management Skills…
In addition to being a successful services provider, do the people you’re considering have both strategic AND management skills. In the restructuring profession there are a lot of people who have experience “crunching the numbers”.
But do they have the management background to temporarily lead the organization where it needs to go and at the rate it needs to go there. When improving the performance of a company, time really is money. Listen for the background stories that outline real “hands on” experience, interviewing and negotiating skills.
After He Finally Asked For Help …
In summary, the following are the direct comments of a business owner after he finally asked for help. It says it all:
1. I had financial issues.
2. I created the issues.
3. I believed I could fix the issues myself.
4. I couldn’t fix the issues myself.
5. I hired financial professionals.
6. They did their job and solved the problems.
“That’s the way things work. Professionals produce results”