When Bankruptcy is Not the Answer

When a well-known media company previously worth roughly $250 to $300 million files bankruptcy, it makes news. Add in an outed revenge-seeking billionaire financing a lawsuit against the company brought by a pro wrestler/reality TV star over a published tape c of him enjoying some hanky-panky with his friend’s wife, well, now you’ve really got a thriller.

Gawker Media, an online media company and blog network owned by Nick Denton, filed for bankruptcy last Friday. The filing came after the company lost a $140 million lawsuit brought by the flamboyant former pro wrestler Hulk Hogan over excerpts of a tape of him and his friend’s wife Gawker posted on its site.

Peter Thiel, who made his fortune with PayPal and Facebook, funded the lawsuit, calling it one of his most philanthropic efforts, as well as many others in what is seen as an act of revenge over many Gawker posts about him, including one in 2007 with the headline “Peter Thiel is totally gay, people.”

In this instance, filing bankruptcy may have been the only option for Gawker, as insurance doesn’t cover the $140 million judgment, and the company wanted to protect its assets from seizure.

Odds are really good you won’t find yourself in this situation. But you may be considering filing bankruptcy. That is one option I discuss with clients when their companies are in dire straits.

However, there are several other avenues to explore first and many reasons not to take this step, as outlined in my post The Downsides of Bankruptcy. These include the expense, the damage to your company’s reputation and the loss of control.

While bankruptcy is one tool used to protect assets, it’s not the only one and requires careful consideration of the alternatives. At GlassRatner, we look beyond the obvious choices and consider the optimum strategies to help you and your business.

 

 

 

When An Entrepreneur Needs to Hire a Professional Manager

Every successful entrepreneur of a certain size company figured out at some point that he needed to hire a professional to run the company so he could do what he does best — create new products and services, explore new market niches and consider new ways to market existing products and services.

Every company needs a balance between the creative visionary and the person who can focus on the day-to-day activities of running the company. The skills and vision needed to start a business are not the same as those required to keep it running.

Walt Disney dreamed up ideas for Disney. But it was his brother Roy (right) who found the money to fund his big dreams.

Walt Disney dreamed up ideas for Disney. But it was his brother Roy (right) who found the money to fund his big dreams.

We are all familiar with Walt Disney, the creative genius behind Disney. How many people know that he actually started the business with his younger brother, Roy? Walt was the creative one, but Roy is the one who raised the money and kept it financially stable. In terms of revenue, it is now the largest media conglomerate in the world.

Mark Zuckerberg hired Sean Parker as the first president of Facebook in 2004, and although Sean was later ousted for his excessive partying, Zuckerberg has said, “Sean was pivotal in helping Facebook transform from a college project into a real company.”

Sometimes I am asked at what point an entrepreneur needs to hire a professional manager. There is no particular formula. It totally depends on the industry and the needs of the company. It could be at the $1 million level or one much higher, or even in some cases, lower.

As an indication, here are two signs that it may be time to hire a professional to help you run your company:

1. You are no longer doing what you do best

Rather than focusing on innovations to keep your company growing and increasing market share, you are spending more time on areas like accounting and managing a growing workforce. Getting help in those areas will allow you to focus on using your personal strengths to improve the company.

You may be one of those entrepreneurs who actually is a very good manager and things have been going well so far. But you can only handle so many jobs, and if you are spending a majority of your time managing the company, who is managing the innovation to make the company continue to grow?

2. Your company has outgrown your ability to handle it on your own

A professional manager will not only take over some of the workload, she can bring new skills to the company and instill best practices from experiences at other businesses. She can also analyze the strengths and weaknesses of your business in a way you are unable to as the founder of the business.

A successful entrepreneur is one that is able to recognize when he needs to hire professional help and is then able to make the transition to having someone else handle the day-to-day management.

For tips on how to hire the right professional, see my column “How to Search for Superstars.”

Look for me November 10 at 4:30 at the Book Festival of the Marcus Jewish Community Center of Atlanta. I’ll be discussing my book,  ”How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.” The event is free and open to the public. Click here for more information.

The Power & Pain of Social Media

When our clients call us, they’re in trouble and need help immediately; they call for triage, not plastic surgery.

If you’re taking the time to read this, I assume you aren’t in dire straights right now (and hopefully you never will be), and that’s exactly why this proactive message about avoiding huge headaches may also help strengthen your relationships with customers and reinforce your brand. I’m talking, of course, about social media.

Many businesses scoff at the notion of employing a “Community Manager” to set up and maintain LinkedIn, Twitter, Facebook and other social media, but if there’s anything we’re learned and understand, it’s that – no matter what business you’re in – your customers and employees are using these media – and you need to understand them.

Don’t believe me?

Over 35 million tweets are sent every day (a tweet is a message sent using Twitter). There are over 500 million Facebook profiles. If you don’t think social media are important or that your employees and customers aren’t using them, think again.

Have a Social Media Policy

Even if you don’t want to utilize social media for the good they can do, you definitely need to have internal policies in place to mitigate the potential havoc they can wreak when left unattended and unchecked. Make sure your employees all know the Social Media Rules of your business.

Ask yourself, are employees permitted to use social media at work? Can they mention your company on Twitter, Facebook, LinkedIn or anywhere else? If so, are they allowed to do anything more than list your business as their place of employment?

If they say anything else, your employees may be perceived publicly as official representatives. If employees say anything negative you could have a nasty situation on your hands. After all, if someone robs a bank in a Wal-Mart uniform, that’s bad for business, and it’s on the news. If employees can mention your business, make sure they do so in a consistent and positive way.

The Consequences of Ignoring Social Media

If you opt to ignore social media, that’s your prerogative, but know that your business may have profiles and pages on either LinkedIn or Facebook just by virtue of employees listing your business as their place of employment. Others who don’t work for you might be claiming they do if these pages go unregulated.

Having someone within your company monitor these pages may prevent problems from arising in the future – if they haven’t already.

Granted, these issues may seem minor, but none of us wants the hassle. Monitoring social media and implementing policies is part of being proactive rather than reactive. As you start to see their power and value – especially when harnessed together – you may even want to use them to your advantage.

Have you had any unfortunate social media challenges? Which social media do you use and how do they affect your business?