Dec16

Reality is – sometimes it is just about the fee

(16 /12 /2015)

Many moons ago, when I was starting up in my turnaround management consultancy, I had a disturbing conversation with a retired receiver / administrator.   What got to me was the formula they put in place to assess the viability of the hospitality business trading itself out of trouble.

At the time the formula used was:
How much is the business worth?
How much debt is it currently carrying?
How much will the plant and equipment bring in when it is sold off?
Will we cover our fees in the process?

If the answer was yes, we will cover our fees, then happy days.  It was also noted that the banks usually unconcerned as they hold the bricks and mortar as security and generally they don’t lose out there.  So effectively, at the end of the day – business is business and the owner is on their own!

Now call me old fashioned or perhaps naïve but I was really eager to create relationships with these receivers/administrators so that I could be the next port of call before pulling the plug.  Give the business and its owners a last ditch effort to turn around their livelihood.

I was then told my intentions were noble but no one would be interested. I now was starting to see that the fee at the end of the day was more important than reaching out and try to make a difference. I then took a different direction and approached the accountant practices.  In this direction I was given the feedback that no one would refer to you as they, the accountants, wanted to have the answers, why would they need a third part to come in and help? And finally I went to the banks, however, there was the issue of privacy laws restricting the banks in disclosing any
information regarding clients.  I know attitudes have changed slightly within this sector now – some 15 years on but this is more around bad publicity then genuine ‘I actually care about your business’ mentality.

So what about the business owner?  What happens to YOU? As  we know, once a place is closed down the equipment becomes worthless and there is little chance of recouping costs, it also makes the business difficult to on sell and unfortunately it is better to walk into a defunct business as a new operator and just start the business as new.

So my question is how do we, as gifted problem solvers, reach out and make difference to those who need it, and focus on the problem and not wholly on the fee.  Can you imagine what that would mean to so many businesses???.


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