10 Problem Areas That erode Your Business Value…and how we’ll fix them
Our team has invested in hundreds of companies. We have observed countless problems which slowly (then quickly) erode the value you worked so hard to create.
These are our Top 10…
Crippling customer contracts: Most managements get excited about signing new customer contracts. Rightly so. Growth is the engine that creates value and keeps the team motivated. However, the devil lurks in the details. For example, how long does the customer have to pay you? If the term is long, you might not get the cash into your bank account fast enough to pay your own bills. Is there recourse if the customer doesn’t pay you on time? We can help review, revise, and negotiate contract terms for a win-win outcome.
Dusty A/R: Sometimes we consider customer receivables “uncollectible.” But are they? Maybe the customer is going through a rough patch, or a personnel change, or a personal life change. Can you work out a payment plan? What about swapping that asset for some equity in the customer? We can help you get the money or other value you already earned.
Neglected A/P: We’ve all been here…paying some vendors while selectively ignoring others, hoping the neglected ones don’t call. But, 99% of the time, they will call you. If you’re very late, you receive threats of demand letters or worse. So, do you have a counterproposal that you can live with? We can help craft that counter so both parties can re-start the relationship productively.
Creeping G&A: Your business was growing. Maybe even rapidly. So, you hired and then hired more. What was once a team you could manage directly soon required other managers. Lots of delegation to others and wondering what some team members did all day. You negotiated a new lease for more space to accommodate the growth. New expenses seem to pop-up on your bank statements – consultants, meals, travel, legal. We can develop a plan to reign in redundant costs and establish accountability across your company.
A big supplier: You finally secured that critical supply contract. Maybe a component, maybe a service. Definitely critical. The relationship was smooth. Until you notice that the vendor is a little less responsive than 6 months ago. Is it me (“I’m now just a small customer”) or is it them (“they probably have their own financial problems). “What if this trend continues,” you wonder. We can get to the bottom of this so you don’t have to initiate uncomfortable conversations, and then we can come-up with a plan to fix it.
A really big customer: I once worked at a company with any 80%+ customer. And that customer was a very large public company. We were small and private. Our sales team tried to sign new large customers…for growth and diversification. But, it takes a long time to successfully hunt big game. It’s a delicate balancing act to keep that big guy in love with you and simultaneously play the field. But, it is an absolute necessity. The ultimate risks to your company are too great…retaining talent, attracting capital, getting a good night’s sleep. We can help diversify your customer base to mitigate that looming risk.
Negative culture: This one is hard to quantify but you know it when you live it. And it can be fatal. Hidden agendas, misaligned incentives, undermining behaviors, unwelcome extracurricular activities, low expectations, miscommunication or lack of communication. I’m sure you could expand this list based on your own experiences. For now, let’s just agree that a hard stop is needed to prevent the toxic culture from spreading. Then, you must assertively establish the rules of the road for the new (or once great) culture. We can help with the entire re-set process.
Strained lender relations: Our bank fired us. It started slowly, but picked up steam with our eroding credit ratios, weekly meetings, and mutual frustration. Then they (it was a committee) fired us and I had to find a new, more expensive, credit solution. The thing with lenders (and bond investors) is that they are almost always right when it comes to assessing creditworthiness. Conservatism (and default risk) is in their DNA. Since you can’t change DNA, you probably should have proactively kept the lines of communication wide open. That way borrower and lender can collaborate on solutions to fit the hopefully temporary challenges. We’ve been there and can help you work with your current lender, find another one, or resolve this issue by other means so that you can focus on growing your business.
Deficient shareholder communications: This one is a corollary to #8 above. Except often times, the investors are friends, family, and other high net worth individuals. Initially, you get them excited about your business idea. Then they became even more excited about the prospect for big returns via cash distributions and/or an exit. The financial model you confidently shared with them showed revenues and profits sloping steeply up and to the right. All models do. I’ve seen and created hundreds. Then, it happens. The economy downshifts, a competitor acts “irrationally,” cost of goods or services expanded faster than expected. Then it happened again. Tell your investors the good, the bad, and the ugly. Do not wait. We can help you craft he right messaging for your investors and also fix your problems to mitigate a repeat.
Undercapitalization: I saved the best for last. Fact: Most companies like yours don’t have enough capital to ride-out the unexpected twists and turns of running a business. It’s not your fault. You raise what you need (or what you can) and not more. That way you prevent diluting investors (and yourself) down too much. The challenge is in defining “what you need.” The hard truth is you should add “and then some” to that statement. Dilution is just a simple calculation…once you issue the shares, you can’t change the math. But, you can affect the value per share owned by growing your business and operating it efficiently. We can help structure the right funding and let you focus on creating that value for all investors.
Most business problems don’t show up overnight. They erode value quietly in the background until one day they break big. At Charlton Bleecker, we partner with business owners like you to take on these issues and create value. Schedule a free call with us by clicking here.
About Us
Charlton Bleecker Group LLC acquires and grows scalable businesses. We partner with owners and managers to unlock value, fix hidden risks, and position companies for long-term success.
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