lawyer

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Giving Back During Tough Economic Times, Part 5

Giving away your services pro bono – pending you’re in a service based profession like law or consulting – can be a particularly unsettling thought. You may fear that giving away your services devalues them, and I can absolutely appreciate you not wanting to do that. I also understand that your time is valuable – after all, you charge for it, and maybe even an arm and a leg – and there just aren’t enough hours in the day to start giving a chunk of them away for free.

I get that. Really I do. I am, after all, in the service industry. But fear not.

How and Why I Do It

As a turnaround manager, I bill by the hour, but you better believe that I give a ton of those hours away for free. Now, I’m not saying that I just don’t bill certain clients out of the goodness of my heart. However, I did recently use my skills to help guide a community center that is near to my heart through some challenging fiscal times (made even worse by the general economic climate), and I perform similar functions for the religious institution with which I affiliate.

These are both organizations that I donate to fiscally anyway, but I realized that I didn’t need them using my dollars to hire someone who does what I do, and not as well at that. I could give them my time pro bono, which is what they needed most anyways.

Pro Bono in the Service Industry

For some professions, doing pro bono work is easier than for others. For instance, it can be particularly easy if you’re a lawyer or accountant. Just ask your priest, minister, rabbi or imam (if you attend a religious institution) if you can be helpful with any paperwork or forms. Issues arise all the time that could use someone with a knowledgable eye to review a document or contract – and much better to do it yourself for free, knowing what it costs and how much time it takes, than for the institution to hire an outsider.

Just consider the many ways your skill set could contribute and where. The help and time mean much more to the institution than to you. And if you’re an accountant worried about helping with taxes during your busy season, encourage the institution to hand its books over in early January so that you can get it out of the way right away. Rather than devalue your services, if word spread that you were helping pro bono, it would probably generate more paying clients than it would create potential ones that want your services for free.

If you’re still concerned about doing pro bono work for the reflection it casts on the value of your time, make official criteria for the kinds of people and businesses you help for free, ensuring that whomever you help could truly never afford you otherwise and that they are really in need by some set of standards you establish.

Giving Back in Retail

And what if you’re not in a service industry, but you do retail?

If you sell goods or own a business, consider donating a portion of the proceeds bought by members of your congregation or community back to the community’s schools or church/synagogue/mosque. Create some kind of buyer’s card that can be used and monitored, and then every month or year, donate a portion of the proceeds of what the members have bought to their institution. I know that the Kroger near me always donated a portion of our bill to my kids’ school, and I know of a local yogurt shop that has three rival high schools signed up with proceeds going to their football teams.

You can do this with multiple institutions at the same time (there are programs that allow you to create and track spending), and as a bonus it makes for great publicity. Surely the institution will publicize to its members what you’re doing because it will want people to shop with you. I know those high schoolers buy a lot of yogurt.

Are there other good ways you know of or try to give back based on your industry?

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Update Your Plan: You May Need It Sooner Than You Think.

As managing partner of GGG and the Turnaround Authority, I get the pleasure of providing guest posts by our other partners. The following post is by our Partner, Vic Taglia.

My 93-year-old mother-in-law fell and broke her hip six weeks ago. Her surgery was successful, and she avoided most complications; now she is undergoing physical therapy in a rehab center in Atlanta. Until the accident my mother-in-law was mostly self-sufficient and protected her privacy, but this accident has forced my wife to get involved in my mother-in-law’s affairs.

We are now familiar with Medicare, supplemental Medicare, rehab time limits, rehab centers, assisted living facilities, skilled versus unskilled nursing homes, Veterans benefits, etc. We have discovered that my mother-in-law has 21 bank accounts at five different banks and doesn’t trust direct deposit for her Social Security check. We located what seems to be an operative will – from 1982.

Her family has had several changes in the past three decades (whose hasn’t?), and the old will doesn’t match what she has described as her current desires for at least the last decade. Fortunately, my mother-in-law has time to fix this: we have an appointment with an estate attorney next Thursday in the rehab center. Yes, I found an attorney who makes house calls.

So what does this mean for you?

Obviously, you should review your estate plan periodically: every five years is a good idea and more frequently if your life situation changes. In business, however, you have many other plans that need periodic review.

When was the last time you tested your off site computer backups? Not just to see if the data is backed up, but have you tried to use the back up data to see if it really works? I bet there are some businesses in the northeast that wish they had tested the water resistance of their backups before hurricane Irene. Really, who in Vermont would think that a hurricane would cause them a problem – and that is exactly the point.

You need to think about the unthinkable.

When did you last review your succession plan? Who could take over for you if you broke your hip and couldn’t go to your business for a month or more? What is your plan if your VP of Operations is hit by a bus? (In my It’s always the president’s fault blog, I described how this led to the firing of a company president.)

What about your financing plans? How stable is your bank? Can you rely on it for continuing financing in these tumultuous times? Will you find out one day that your bank has all the real estate/manufacturing/service business they need and they would love to see you take your business elsewhere? Nothing bad about you – they just want to move in a different direction.

What about your professional advisors? Have you met your lawyer’s partners? Your CPA’s? Your financial advisor’s? Are you comfortable with them? Do you have confidence in them? I have seen several cases in which the unexpected death of a lawyer or CPA caused significant disruptions in a client’s business.

So think about the what ifs and prepare a plan to counter the unexpected. You may not be as fortunate as my mother-in-law.

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De Nile – A River in Egypt or a CEO’s Final Resting Place?

As managing partner of GGG and the Turnaround Authority, I get the pleasure of providing guest posts by our other partners. The following post is by our newest Partner, Vic Taglia.

In my post a few weeks ago about how to treat your bankers, creditors and vendors, I advocated telling the truth. As important as it is to tell all of these people the truth, it is even more important to tell yourself the truth.

I recently came across a company whose bankers have expressed some discomfort in their situation (no names here obviously). The loan balance has declined, and the bank wants to continue to reduce its exposure. In recent memory, the company has not satisfied its debt service coverage covenants, but the loan document has been extended on a short term basis. Since the principal owner describes his industry as “declining” the only growth will be through consolidation. Moreover, the company has exhausted its balance sheet reserves, even to the extent of taking some tax positions that will improve its book equity, but cost it millions of dollars in CASH over the next several years.

See the warning signs?

  1. Declining industry
  2. Nervous bank
  3. Bad operating performance
  4. No focus on Cash, which we all know is king

The principal owner/CEO stated that he had made some significant spending cuts, and that this year will be better than last. His projections show a slight decline in revenue with increasing EBITDA, but still not enough to cover its interest expense.

When I looked through the financial statements I noticed that payroll in some operating areas had indeed fallen by about the amount revenues had fallen, but payroll in the sales and executive departments had increased. I also noticed a monthly payment for a luxury sports car’s financing company that matched the make in the CEO’s reserved parking spot. The CEO said he had a new, more expensive model on order for summer delivery. The CEO said everything was fine; he had his business under control, and he had a wonderful, long-term relationship with his lender, even though his new loan officer needed some more time to understand his business.

I contend that the CEO is in denial about the true state of his business. As my favorite coffee mug is fond of saying, “De Nile is Not Just a River in Egypt.”

Without significant changes in his mindset and the business’s operations, the bank will continue to ratchet down its exposure. There will be fewer operating accommodations, more reporting requirements, more onerous covenants and certainly no financing for acquisitions. He will be the acquiree, not the acquirer. It’s quite likely that he will find himself out of the business and out of a job within 18 months.

While it is important to maintain a positive attitude for your family, employees, vendors and creditors – after all, hope is extremely important – it is also important to face your reality, especially when the chips are down.

You can talk to your trusted advisors — lawyer, accountant, even a banker — to share your concerns and fears and more importantly to chart a course of action to rehabilitate your business. But when your advisors can’t help, call us, and face the harsh reality rather than board De Nial River Boat Cruise to self-destruction.