Staring as a Sign of Financial Distress

Staring as a Sign of Financial Distress

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flagThe company had been in financial distress for some time.  The accounting staff was overwhelmed with vendor calls, and had gone so far as to print piles and piles of unsent checks in anticipation of some day, some how, being able to pay.  The salespeople, normally out on appointments, pleaded the plant manager to use scarce inventory for favored customers’ orders.  But, with little cash going into production, sales were going down, down, down. The bank was obviously concerned, and everybody in the building knew when the next creditor meeting was to occur.  It was widely assumed that the company would be told to close.

At this late hour, the investors had called me in to help.  I had studied the figures, inventory, sales reports, profit and loss.  I had a sense of what needed to be done—I believed the company had embarked on a disastrous new business venture.  I needed the CEO’s time and attention to discuss saving the company.

I finally found him behind a series of closed doors in a palatial suite that spoke of better days.  He looked awful.  He obviously hadn’t slept in some time.

“You’re pretty young for a hatchet man,” he said, then leaned back in his leather chair and ignored me.  Just looked out the window.

“I’d like to discuss the new business venture,” I said.  “I think…”

He interrupted me with a wave.

“Too late for me.  Too late for the company,” he said.  “There are no more expenses to be cut.” He sat back and stared some more.

I guess I was young.  My voice rose an octave.

“Don’t you want to do something?”
He pointed out the window to the flag flying in front of the entrance.

“I have been staring at that flag for over a year,” he said.  “And I don’t intend to stop now.”

That conversation has stayed with me for over twenty-five years.

After all, that gentleman had once been a hard charging CEO.  Admittedly, CEO’s do not easily ask for help.  But what made him so hopeless?

Part of it was the sleeplessness, which I have since learned is perhaps the most common symptom of financial distress in a company.

But part of it was that he had expected that expense cutting would be a worthwhile exercise.  And since he could not find expenses to cut, he lost faith.  He simply didn’t know what to do, and he got used to feeling like a failure.

I have seen the syndrome a number of times.  CEO’s who substitute playing Solitaire—or reading, or gambling—for getting stuff done.  Because they were in uncharted territory, and just didn’t know what to do.

Well, I have made a career of saving companies by working with CEO’s, and the first thing we do is agree that it is not about expense cutting.  It’s about finding the company’s core products and core customers.  Once I’ve shown them how to use the company information productively, the CEO’s become their busy, engaged selves.  Who sleep at night.

And the flags become symbols of patriotism, and not of hopelessness.

 

March 15, 2016

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