Solving Difficult Problems | SBA Loan Default Experts

“Fair” and “Reasonable” In a Workout?

On May 5, 2010, in Business Workouts, Business debt workouts, Debt Workouts, SBA Loan Workouts, SBA debt forgiveness, Solving Difficult Business Problems, Solving Difficult Problems, debt forgiveness, by Don Todrin

I am frequently asked whether a particular Offer in Compromise (OIC) for a defaulted loan is reasonable. I am aware of the pain many borrowers feel when they determine the bank is not being “fair”. Along this path is also the anger that defaulted borrowers experience when they believe the bank is out to get them, liquidating assets rather than “working with” the borrower to help them recover, of course with the promise to pay them back more than if they were foreclosed upon now.

Let me explain what you already know but are not satisfied with: The bank is not your friend.

They are a business and they follow whatever path they deem most beneficial to themselves. They are uninterested in protecting or supporting your well-being, your assets, or your business and it has nothing to do with being fair. It has everything to do with how they do business and what their goals and objectives are. In short, they are doing what they believe is either in their best interest or what they believe they are required to do, whether or not it makes sense to you. Fairness is not an issue, not a consideration, not even a distant thought. Nor are they acting mean-spirited or “out to get” you. Get it out of your mind. You signed a note, posted collateral, guaranteed payment and in default you are asked—actually demanded—to perform as you promised.

The bank is not your friend—nor your advisor or your mentor—and is only interested in its own needs, not yours. Stop pretending the bank is giving you any advice that may be in your best interest. That is pure folly. They are only interested in their own self-interest.

Maybe you have to get real and appreciate the high stakes game you entered into when you borrowed far more than you could ever possibly repay if demanded. Once you are in default that is exactly what is expected of you—repay the debt or suffer the liquidation of your assets.

We at Second Wind understand this disconnect and have devised strategies to level the playing field and put the defaulted borrower in a much better position to successfully reduce the debt and payback requirements without sacrificing assets or your business. This, too, has nothing to do with fairness or being reasonable, it’s just a matter of smart business strategy and logic on our end, just as the bank is doing for itself.

“Fairness” is for the playground, not the real world. Unfortunate, but true.

About Don Todrin

Don Todrin is the CEO and Founder of Second Wind Consultants, Inc.. Don and his company specialize in SBA Loan Workouts, Offer in Compromise, business debt forgiveness and solving difficult business problems in general. Follow me on Twitter or become a fan of Second Wind Consultants on Facebook.

A New Twist in Outsourcing Jobs. Beware… This Will Spread.

On April 30, 2010, in Building Profitable Business Orgs., Business Turnarounds, Solving Difficult Business Problems, Solving Difficult Problems, the economy, by Don Todrin

IBM has been “discussing” the possibility of ”crowd sourcing” more than two-thirds of their workforce—over 200,000 jobs—in the next few years. While they refuse to acknowledge this, higher-ups in management have leaked this “discussion” so it appears to be very real.

The intent is to fire most of their engineers, developers—anyone they can—and then hire them back on a project-by-project basis. They will even encourage entire departments to spin-off into their own small business and contract for the same work they were paid to do as employees. This, of course, allows them to acquire other gainful work from other businesses—even competitors—but it appears this is OK with IBM. This is called “crowd sourcing”.

The cost savings would be very significant as IBM will have eliminated the cost of their benefit package, including insurance, vacations, sick days, office space, overhead, etc. and IBM will not be paying for in-between days like, downtime between projects, and will have fixed costs for certain applications, knowing exactly what the contract will cost. The savings will be huge. IBM wins while employees probably lose. Time will tell. Actually, the theory is that both sides win as the contractors can charge higher fees, although they must pick up their administrative and overhead costs, and of course, IBM will save in a huge way.

Here is the point: Small business owners can learn from the big guys what to do in this changing economy.

Outsourcing is a factor that all small business owners should be considering. Reducing payroll and controlling your overhead are great ideas. Unfortunately, small business owners tend to fall in love with their employees and feel loyal to them, thus, they carry them on their backs, really working for them instead of the other way around.

Perhaps you should be looking at what the most successful businesses in the world are doing and take a lesson from it. Outsourcing is a factor. Buy the expertise when you need it. Subcontract your sporadic requirements, or even your major daily requirements. Have others manufacture, make sales calls, provide leads for you, service your clients, etc. Become a virtual company, hiring others to do the work on a contractual basis. Know exactly what your costs are and save the huge expense of doing everything yourself in-house. Consider doing what IBM plans to do.

It works; it is part of reinventing yourself in today’s complex and changing economy. It is the opposite of what small business like to do, but maybe it is time to change horses and regain control of your finances. Maybe IBM is correct and is leading the way with a clear demonstration of how to do business now. Some will say this is beating up the employee force, taking advantage of them and getting more while paying less. IBM would say this is a practical way of doing business and that it makes financial sense.

Think about it and try it. Become more virtual, subcontract, outsource… maybe even “crowd source” as IBM is doing. This is a new age; it requires new thinking. IBM may be amongst the best run businesses in the world and it is not a bad idea to follow their lead. They are willing to outsource 200,000 jobs, most to the same employees they have now. Maybe you can do the same.

About Don Todrin

Don Todrin is the CEO and Founder of Second Wind Consultants, Inc.. Don and his company specialize in SBA Loan Workouts, Offer in Compromise, business debt forgiveness and solving difficult business problems in general. Follow me on Twitter or become a fan of Second Wind Consultants on Facebook.

Let’s Talk Business: Successfully Navigating the Recession. The Book Is On the Way!

On April 28, 2010, in 941 payroll tax workout, Building Profitable Business Orgs., Business Turnarounds, Business Workouts, Business debt workouts, Debt Workouts, Employees, SBA Loan Workouts, SBA Loans, SBA debt forgiveness, Sales and Marketing, Solving Difficult Business Problems, Solving Difficult Problems, debt forgiveness, the economy, by Don Todrin

First the blog, now the books, then… the movie?

Yes, my blog has been very successful. It’s been viewed by hundreds of thousands of anxious business owners wondering how to survive the downturn and resolve crushing debt in view of plummeting revenues, wondering what to do about businesses that are no longer profitable and how to survive and succeed in this horrendous business decline. I have been writing for a few years about exactly what to do and how to do it. Many have paid close attention and have followed my strategies… and many have survived because of it.

But, as we can all agree, a blog is a slightly more disorganized and difficult medium to navigate than a book. No real contents or organization, just daily posts on relevant topics. A hodgepodge of ideas.

Given how important these subjects are—your business survival, your financial survival and the survival of your family and your employees and their families—I have converted this blog into my first book: Let’s Talk Business… Successfully Navigating the Recession. This book explores what one must do to survive the economic downturn, including chapters on debt workouts. These are lessons learned in the front lines of small business hand-to-hand combat, what works and what doesn’t work.

My second book (in the works), also based on my blog, is about SBA loan debt forgiveness and workouts. My third book (also in the works) is called: Now What? Explaining What the Business Owner Must Do to Survive and Emerge Successful and Profitable. Both will be out later this year. (Available soon in ebook and hard copy versions.)

I believe these books will become field guides for small business owners trapped in a downturned economy and looking for answers as to how a business owner can manage survival and emergence, and ultimately return to profitability.

My vision is to help save America, one business at a time. My goal is to help small business owners survive, protecting the jobs and commerce that their families—and the families of at-risk employees—depend upon.

About Don Todrin

Don Todrin is the CEO and Founder of Second Wind Consultants, Inc.. Don and his company specialize in SBA Loan Workouts, Offer in Compromise, business debt forgiveness and solving difficult business problems in general. Follow me on Twitter or become a fan of Second Wind Consultants on Facebook.

Force Revenue — It Is Your Lifeblood.

On April 23, 2010, in Building Profitable Business Orgs., Business Turnarounds, Employees, Sales and Marketing, Solving Difficult Problems, the economy, by Don Todrin

Revenues are down, the economy is terrible. What to do…? You must force revenue.

What does this mean? The answer comes in many styles and shapes, and depends heavily on the type of business you have. The important message here, however, is that lost revenue is what is tanking you and despite the awful environment, the terrible economy, widespread unemployment, no borrowing power, decline of credit card availability (and on the list goes) you must force revenues to increase, or die trying.

But how does one force revenue? Many ways:

1. Add sales people. Yes, it costs much, but utilize a top-heavy incentive plan, rewarding sales with large commissions and low base draw, churning the lust for earnings in your sales force. Reward sales people at a level above normal and reap the benefits. Many small business owners reduce their sales force and lower commissions—not the way to go.

2. Find different vertical ways to expand: internet, retail, wholesale, manufacture, import. Reinvent yourself. Force profits, force revenues.

3. Finance your sales and take risks. It may be worth it in the long run.

4. Joint venture: Lower cost, higher return.

5. Horizontal expansion. Add more locations.

6. Buy your competitors.

7. Specialize. Be an expert.

8. Expand public relations efforts, including press releases.

9. Use the internet more effectively, e.g. use social networking.

10. Go virtual. Lose the office and factory overhead and have sales reps work out of their own homes or offices.

11. Give seminars, engage in public speaking or presentations of any sort.

12. Do charitable work.

The list is endless but the point is clear: Force revenue. Figure out how to do this for your business and then do it. Remaining passive is the death knell. Force revenues.

About Don Todrin

Don Todrin is the CEO and Founder of Second Wind Consultants, Inc.. Don and his company specialize in SBA Loan Workouts, Offer in Compromise, business debt forgiveness and solving difficult business problems in general. Follow me on Twitter or become a fan of Second Wind Consultants on Facebook.

It Happened in Texas in the Late 80s: Bankruptcy Filings Spiked as the Economy Rebounded! What Can We Learn?

On April 21, 2010, in Building Profitable Business Orgs., Business Turnarounds, Business Workouts, Business debt workouts, SBA Loan Workouts, Solving Difficult Problems, debt forgiveness, the economy, by Don Todrin

I was involved in the “Savings and Loan Debacle” in the late 1980s when hundreds of banks were being closed by the FDIC and many notes were being called in. The economy was totally upside down with interest rates at upwards of 18% for normal bank loans and hard money was out of sight. An impossible economy. Different than the current business downturn, but much can be learned from what happened then.

One phenomenon that we observed and evaluated carefully was the unexpected spike in bankruptcies as the economy returned to health. Interest rates fell and business began to expand for everyone, yet bankruptcies spiked higher than ever! It should have been the other way around… but it wasn’t. It seemed that business was returning to normal, however, bankruptcies were simultaneously accelerating at a very rapid rate. It made no sense.

Why were so many small businesses filing for bankruptcy when the economy was returning to a healthy level?

Here is what we learned:

Yes, the economy was returning, but the small businesses were so damaged and had built up so much unpaid debt in arrears that even though they were all experiencing greater revenues and may have been able to once again to support their debt service requirements, the additional weight of the unpaid debt in arrears from all sources (including unpaid bank debt) was sinking their ships. They were too damaged to return to profitability.

Thus, there was a rush to the bankruptcy courts to clean up the historical build-up once everyone believed salvation and growth was again possible. It made greater sense to strip off the debt so the business could flourish in the reviving economy.

I see parallels now. As people begin to believe the recession is turning around, they will confront their debt with a different attitude, believing growth and new business will return, and realizing that the debt they are carrying will not be affordable. Thus, bankruptcies will increase as they’re considered a cleansing option, launching a return to better times.

My point being, the small business owners of the 80s intrinsically understood that there was no real opportunity for return to normal, for emergence and growth while carrying all of this bad debt baggage. There was no escaping the day of reckoning when you either had to pay or die.

Even if the economy does turn around, it will not turn around quickly and your business will not return to previous highs for many years. Therefore, the thought of dragging along the unaffordable debt because you believe the economy is returning, is, and will remain, an anchor around the throat of the small business owner, forcing your hand to either pay, or die.

Taking history into account, we can surmise you should DO THE WORKOUT NOW, rather than wait and file for bankruptcy in the face of emergence. Then, you can handle whatever happens with the economy—good or bad—as you will be set to operate and, yes, emerge successful whether or not the economy rebounds.

If you do the workout (whether or not you believe the economy is rebounding) you will be able to reap the benefits. Bankruptcy, on the other hand, will wipe your business out. A workout will support your emergence and free you to succeed no matter what happens.

Waiting for the trumpets to blow announcing the end of the recession and time to do business again as we once did, is also the sound of bankruptcy; you will never be able to afford the payback. Do the workout now and enjoy whatever happens as you will have cleaned up your business and will be ready for anything.

About Don Todrin

Don Todrin is the CEO and Founder of Second Wind Consultants, Inc.. Don and his company specialize in SBA Loan Workouts, Offer in Compromise, business debt forgiveness and solving difficult business problems in general. Follow me on Twitter or become a fan of Second Wind Consultants on Facebook.

Out of Capital? Running Below the Break-Even Point? Not Taking a Check? Admit It, It’s Dead. Bury It.

On April 5, 2010, in Building Profitable Business Orgs., Business Turnarounds, Business Workouts, Business debt workouts, Debt Workouts, Employees, SBA Loan Workouts, SBA Loans, SBA debt forgiveness, Sales and Marketing, Solving Difficult Business Problems, Solving Difficult Problems, debt forgiveness, the economy, by Don Todrin

There are many factors that can kill a business. Once initiated, the downturn is very difficult to reverse. One thing leads to another and soon you are operating below the break-even point, getting by juggling payable with receivables, exhausting lines of credit and credit cards, being put on COD terms, defaulting on bank loans and leases… and it becomes impossible to break the cycle. It’s impossible to emerge, escape, grow out of it; there’s no cash for sales expansion, marketing or introducing new items. No gasoline for the engine. You’re stuck below the break even point, resources exhausted, ripe for the vultures.

Your business will sputter to a standstill and perish––another statistic. Another business that ceased operations with its owners losing everything and being forced to declare bankruptcy, adding insult to injury.

Not taking a check? That doesn’t work. It is not even a noble idea. The point is simple: if the business cannot pay its way, kill the business. It does not deserve to exist and waste valuable resources and time. Why would you continue if the business isn’t able to provide you with a reasonable paycheck aside from retained earnings?

And yet, small business owners––be they men or women––hold on to their failing businesses way too long waiting for something to happen, staying loyal to the end, protecting jobs for one more minute, wasting precious resources and the time and effort of many people.

Make good business decisions. If the business is not working––if you are unable to provide what is needed to support its success––then the business model is wrong and it must be stopped before more valuable resources are wasted.

Out of capital? Running below the break-even point? Not taking a check? Kill it––it is dead already, you are just unwilling to admit it.

Too many people are depending upon you to make good business decisions. Do not let them down.

About Don Todrin

Don Todrin is the CEO and Founder of Second Wind Consultants, Inc.. Don and his company specialize in SBA Loan Workouts, Offer in Compromise, business debt forgiveness and solving difficult business problems in general. Follow me on Twitter or become a fan of Second Wind Consultants on Facebook.

Stop Pretending the Economy is Getting Better…do the debt workout.

On March 29, 2010, in Building Profitable Business Orgs., Business Turnarounds, Business Workouts, Business debt workouts, Debt Workouts, Employees, SBA Loan Workouts, SBA debt forgiveness, Sales and Marketing, Solving Difficult Business Problems, Solving Difficult Problems, debt forgiveness, the economy, by Don Todrin

It is not getting better.

Stop waiting to make the necessary adjustments required for your long-term survival. What we have now is what we will have for a very long time. You cannot simply “wait for the clouds to pass.” They are not going away. The economy is not going to get better for a long while.

Unemployment rates will remain the same, with modest adjustments up or down (probably down) meaning fewer people will be spending, and those that are employed are spending less.

The real estate market is showing little change, with foreclosures continuing and the commercial real estate bubble next in line to burst. In other words, more downward pressure on the economy and spending. The trades are devastated because of the huge downturn of demand for new homes.

Cities and states are broke and the public unions are sapping the lifeblood out of the cities remaining reduced revenues.

Taxes will continue to rise, increasing overhead for the already crippled small business owner.

Consumer purchasing attitudes are changing dramatically. People are buying less, wanting a good deal when purchasing and not squandering money on unnecessary wants.

Yet the newspapers are telling us we are gaining ground, that things are better, that we are turning the ship around. Please do not believe this wishful thinking. Things are not better. We are not turning this problem around and what we have now is what we will have for a long time to come.

The only prudent path to take–the only plan that makes sense–is to prepare for the worst and hope for the best. So, let us assume that the business conditions we have now are what we will have for a long while, and that they will possibly get even worse along the way in some areas and industries.

I hear far too many small business owners telling me that they are “hoping” things will get better. Hoping is fine, but acting as if things are going to get better, making that part of your plan, is not the way to go… at all.

If I am wrong, no harm done. You will be ready to take advantage of the upswing. If I am correct, you had best heed my advice and make the necessary adjustments now, before it is too late.

Downsize, re-invent your business model and DO THE DEBT WORKOUTS!
Debt kills… quickly.

Stop deluding yourself, believing your wishes will come true. Be practical and pragmatic. Do the work now, before it is too late.

What if I am right?

Call us for help and direction. Norm will arrange a no obligation teleconference for us to review the strategies you need for survival. 413-584-2581

About Don Todrin

Don Todrin is the CEO and Founder of Second Wind Consultants, Inc.. Don and his company specialize in SBA Loan Workouts, Offer in Compromise, business debt forgiveness and solving difficult business problems in general. Follow me on Twitter or become a fan of Second Wind Consultants on Facebook.

Divorce May Be a Great Asset… in a Workout.

On March 23, 2010, in Business Workouts, Business debt workouts, Debt Workouts, SBA Loan Workouts, SBA debt forgiveness, Solving Difficult Problems, debt forgiveness, by Don Todrin

Personally, I am not a fan of divorce. However, it happens, and all too frequently. Also all too frequently, it either causes the breakdown of a business, or accelerates the downfall, or simply supports a workout because of the very nature of a divorce––the splitting up of assets––and thus, must be considered in the light of a workout.

The key point is that Probate Court will take control of the assets waiting to award the appropriate split between husband and wife. Most important is the Probate Court’s position in securing the well-being of the children, thus taking control of marital assets for the benefit of the children. Often, there are court orders preventing the sale of assets or the withdrawal of capital, or simply protecting certain assets for the use, enjoyment and security of the children (and possibly, the custodial parent).

This is potentially good for the defaulted borrower. Once Probate Court gets involved, the banks and the SBA must take their position into consideration and redefine which assets are reachable and can be liquidated. Frequently, important and valuable assets are locked up by the court, a situation which supports a weaker payoff for the lenders, diminishing the net worth of the guarantors.

There are a number of strategies that work with these issues which have the effect of reducing the workout payoffs.

I say again, I am not a fan of divorce, and am not in any way suggesting that it is a good idea. I am, however, stating clearly that once in divorce, one’s financial condition drastically changes. With the power of the Probate Court issuing protective orders, the business debt guarantor is in a worse financial condition than he/she may believe or understand in regards to a debt workout which will ultimately benefit the guarantor in the long run (or benefit his/her family), leaving the bank with fewer reachable assets.

Divorce is not typically a good financial planning tool; quite the opposite is true. However, if it occurs, it is a meaningful factor in workout strategy and the conclusions reached.

About Don Todrin

Don Todrin is the CEO and Founder of Second Wind Consultants, Inc.. Don and his company specialize in SBA Loan Workouts, Offer in Compromise, business debt forgiveness and solving difficult business problems in general. Follow me on Twitter or become a fan of Second Wind Consultants on Facebook.

Post #700: It’s Time For a New Plan and Action. You Have Waited Long Enough.

On March 14, 2010, in Building Profitable Business Orgs., Business Turnarounds, Business Workouts, Business debt workouts, Employees, SBA Loan Workouts, SBA debt forgiveness, Sales and Marketing, Solving Difficult Problems, debt forgiveness, the economy, by Don Todrin

Yes, this downturn is tough to navigate. It is difficult to know exactly what to do, but you have waited long enough. It is time to act, meaningfully, decisively, with commitment, focus and a clear plan of attack.

Here are ten guidelines you must adhere to:

You may have dabbled with downsizing, complaining that everyone who remains is crucial to your operation and you can get no smaller. Not true. It is all about productivity–increased productivity with fewer employees. It can be done. Do it now. Downsize drastically and then rebuild, go deeper than you have gone, more than you think you need to. That is the mission.

You are waiting for the economy to repair itself and return to the economy of yesterday. IT WILL NOT RETURN. Stop dreaming, stop wasting time or using it as an excuse. You are wasting assets and resources. The economy will not return in the next five to ten years. Make good with what we have now. Learn to be profitable in today’s market conditions. Make appropriate changes NOW.

Do your debt workout. The debt you took on when your revenues were higher is now unaffordable with reduced revenue. Debt forgiveness is the only cure. Lose the debt and win, keep the debt and die. There is little in between. No excuses, do it now.

Reinvent your business. Reexamine every aspect of how you do business and with whom. Make changes to suit the current economy. Rethink your entire business model. Make it better. Be radical. Make changes that will work now, in the new economy. Change how you produce, distribute, serve, price, collect, etc.

Use the internet–it is a must-do–and use it well. This includes blogs and videos, social networks and Web 2.0.

Understand that the consumer vision and mission have changed drastically. Get in front of these changes and succeed; reflect these changes in your marketing and business model. If you remain the same, you will lose.

Renegotiate everything. Everything.

Remain attached to nothing.

Force profitability.

Remember, nothing is sacred.

Most important is your understanding and acceptance of the notion that action is critical. You cannot ignore what is happening and neglect to make the adjustments required to support success in this new economy. Failure to make changes will be fatal.

The times, they are a-changin’. ~Bob Dylan

Get on the bus or be left behind. It’s your call.

About Don Todrin

Don Todrin is the CEO and Founder of Second Wind Consultants, Inc.. Don and his company specialize in SBA Loan Workouts, Offer in Compromise, business debt forgiveness and solving difficult business problems in general. Follow me on Twitter or become a fan of Second Wind Consultants on Facebook.

Beware of irrational behavior. There is no defense against it.

On February 28, 2010, in Business Workouts, Business debt workouts, SBA Loan Workouts, SBA debt forgiveness, Solving Difficult Business Problems, Solving Difficult Problems, debt forgiveness, by Don Todrin

Yes, it does happen. People can act totally irrational; against their own best self interests and those of the best interests of the deal, unwilling to compromise or do business because they are acting irrationally. It does happen; we just witnessed such a meltdown. Such irrational behavior is steeped in emotion and comes from pure ego. It is impossible to deal with …rationally. There are no predictable, reliable, dependable strategies, offensive or defensive against an irrational being. It is like negotiating with a suicide bomber… what’s the point?

There is no place for this in BUSINESS dispute resolution but it pops its ugly head up more frequently than one would ever imagine. It typically ends in disaster and frequently in legal proceeding. Unfortunately, it results in a winner and a loser; frequently, the lawyers are the winners and the litigants are the losers, both of them, as irrational behavior produces bad results.

Most often the litigants end up being the losers as nothing is ever gained from irrational dispute. But people get into their emotion and ego and victory is all that counts.

When this happens the best advice I can give is execute a rapid and orderly retreat, find an exit, withdraw, all that will be gained is a huge legal bill and no sound resolution, it will be a war of attrition, and no one ever wins.

It no longer is a case of right vs. wrong. It is a case of ego vs. ego, irrational behavior and no one ever wins this battle, other than the lawyers.

Retreat is a valuable option, a viable strategy. Live to fight another day. Live to fight only honorable and righteous battles — battles worthy of fighting for.

About Don Todrin

Don Todrin is the CEO and Founder of Second Wind Consultants, Inc.. Don and his company specialize in SBA Loan Workouts, Offer in Compromise, business debt forgiveness and solving difficult business problems in general. Follow me on Twitter or become a fan of Second Wind Consultants on Facebook.

“Fair” and “Reasonable” In a Workout?

About Don Todrin

A New Twist in Outsourcing Jobs. Beware… This Will Spread.

About Don Todrin

Let’s Talk Business: Successfully Navigating the Recession. The Book Is On the Way!

About Don Todrin

Force Revenue — It Is Your Lifeblood.

About Don Todrin

It Happened in Texas in the Late 80s: Bankruptcy Filings Spiked as the Economy Rebounded! What Can We Learn?

About Don Todrin

Out of Capital? Running Below the Break-Even Point? Not Taking a Check? Admit It, It’s Dead. Bury It.

About Don Todrin

Stop Pretending the Economy is Getting Better…do the debt workout.

About Don Todrin

Divorce May Be a Great Asset… in a Workout.

About Don Todrin

Post #700: It’s Time For a New Plan and Action. You Have Waited Long Enough.

About Don Todrin

Beware of irrational behavior. There is no defense against it.

About Don Todrin

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