About 3 1/2 years ago, their part of the industry and some of their most profitable customers took a big hit. As it often goes, it was the worst time for this to happen.
They had borrowed significant dollars for an automated materials management system, a new computerized loading system and new trucks so they were highly leveraged at that time.
Roberta was really concerned.
As she and Joe get closer to retirement age, they worry about where the money is coming from if things don't straighten out."
Joe, the dad, was really not concerned at all, probably because he didn't know how bad it all actually was. His success to date had a lot more to do with being in the right place at the right time than from his extraordinary management skills.
Note: This is true for many senior level business owners, which explains in part why they don't succeed: They're not really trained professional managers. They just keep doing what they were doing that worked, which is fine as long as that moves the ball forward. But when things begin to change, they don't know what to do. This is where outside advisers (like you)play an important part to help in this movement toward professional management.
Bill and Tom were truly scared when everything happened 31/2 years ago.
Even though their wives worked and income was okay, they were thinking about utilizing the value of their stock to pay for their kids' college education. The stock had been growing faster and faster.
The fact is, however, that they didn't know how to turn that stock into cash, or even if they could. Yet, in their minds, they felt that if the company kept growing and doing better, then somehow they would miraculously be able to pay for their kids' college.
But what would they do if things continued to be as bad as they were? What would happen to them? How would they be able to face their neighbors?
Note: The perception that they were dealing with exemplifies an area where an outside party such as a coach without vested interest could help them to understand the current state of the business. He or she help them focus on what is important and how it can be achieved.
The drivers were nervous because they made been making fewer runs which meant smaller paychecks. If things didn't improve, they'd leave. With the way life seems to work, they would end up leaving at just about the time that things started to improve, unless something was done. The company wouldn't improve because it wouldn't have the necessary drivers.
It was a multiple series of catch-22s. And then of course, there were bank loans with the interest mounting daily.
It all came to a head during the week between Christmas and New Year's.
Ron and Becky, who no longer lived in the area, came back to down from their fancy, important jobs in the big city.
Ron was a CPA with a Masters degree in taxation. He worked for a most prestigious accounting firm and was certainly not shy about telling anyone just how important he was. Ron's wife, Becky, was pretty impressed with herself as well.
Becky's dad is the President of the bank that holds the notes for Smith Brothers Electronics. Her dad had told her that things were not going well at the company, obviously to make sure his daughter was in the loop. Becky then told Ron.
Ron blurted out his knowledge about the company status at the New Year's Eve party, at which the entire family was present. Needless to say, the entire get-together became an unpleasant affair.
Before Ron and Becky returned to their big city jobs, Ron agreed to look over the company's books. Nobody liked the idea since he and his brothers were not usually on the same page.
However, since they didn't trust anyone outside the family either, they decided to trust Ron.
After much discussion, Ron concluded that he and Becky would move back into the area. He would become the Controller and Treasurer of the company, giving up his job and his fancy apartment in the big city.
He would use his skills to restructure the finances and make badly needed financial changes in the company.
The Boiling Point Continues >>>
About 3 1/2 years ago, their part of the industry and some of their most profitable customers took a big hit. As it often goes, it was the worst time for this to happen.