Do Your Workout At Your Weakest And Worst Moment
Business owners with catastrophic debt are being overwhelmed, forced into submission and prevented from forward motion. They’re being attacked from multiple sources, including secured creditors, IRS, banks, vendors, unsecured creditors, landlords, etc. all wanting to liquidate assets. There is not enough to go around and possibly nothing of value at all available, certainly no cash or liquidity of any kind. This is the best time to do your workout. You may feel you are at your weakest point and wonder how you will ever negotiate from strength in such a situation, but, your weakness is your ally.
Many business people in such predicaments believe that if they solve a few issues and get a little solvent they will be better able to work things out and thus they start dealing away their position and little remaining liquidity trying to solve one issue at a time. That’s a problem and a failing strategy. Simply stated, the worse your position, the better and more likely the chance that the workout will occur in your favor. After all, what is available at that precise moment? The situation may look so desperate the creditors will believe they have little to gain to focus on liquidation so they willingly accept your workout proposal.
What unfortunately happens as you cure your problems and get stronger with less debt and more liquidity is that you become more valuable, less encumbered, more ripe for a more expensive workout as you have more to offer. That’s not the best idea. In fact, if you take this strategy to its logical conclusion, when you have resolved the big ones, the smaller ones will have clear sailing as there are no more major obstacles or encumbrances preventing their success. Thus your success becomes a recipe for your undoing and downfall. A collector’s dream.
One may ask how you can do a workout when you have no cash at that point in time. Creatively, I respond, or without payment or with insignificant payment. It’s a challenge but one that is well worth the effort as the results will be the best possible. Once you begin to turn your business around and see the light, the price of the workout goes up accordingly.
Thus before you get a new job, or enter into a payment plan with the IRS, or resolve your bank debt, negotiate your workouts. You must do them all at the same time for the best possible results.
