Archive for July, 2010

The Value of Selling Your Story When Negotiating Commercial Debt

Tuesday, July 27th, 2010

When you are negotiating your commercial debt burden, it helps if you can “sell your story.” What I mean is that the other person you are negotiating with will likely only know you as a voice on the other end of the phone line. If you can inject story elements into the process, you will get the other person on your side to some degree. If you ever watch reality-TV shows, you will notice that those contestants with a grandparent in the hospital with a terminal disease always seem to garner more votes. It is because the viewers are rooting for them. They have successfully introduced story elements into their struggle. This is similar to the effect I am talking about.

After you set the stage, it is preferable to proceed with the process entirely in writing. You have planted the story seed and now you want to control the presentation with written communications.

By submitting a proposal in writing that appears to be a standard settlement letter, this reflects a financially desperate debtor who may not be able to keep his doors open, yet wants to try to “do the right thing” towards the creditor by paying as much as possible (as a matter of character).

These entities are not as motivated to put a lot of time into this particular collection account. Obviously, if the collection attorney or agency cannot realize a large fee, they will take a small fee and dispose of the case. It is clearly an issue of time management relative to the fee they earn.

In order to “sell the story” your position must present the personal side of your dilemma. This may seem contradictory to the preconceived notion that collection attorneys and agencies have no feelings and do not care about your problems. They are only interested in collecting the highest possible amount owed since their fee is going to be larger and that is how they make their money.

However, we know the power of story, so it should be used whenever possible.

André Larabie

www.andrelarabie.com

Posted in Business Management, Debt Negotiation, Debt Reduction | 1 Comment »

The Commercial Debt Reduction Process – Negotiating by Mail Versus Fax

Tuesday, July 27th, 2010

For many years, businesses have negotiated contracts and proposals using the telephone or mail or some combination. This is fine if there is no sense of urgency to reach a quick decision.

And while telephone negotiations are typically memorialized in writing for all parties concerned, it takes time to write up agreements, contracts, etc. It also takes time to make copies available to all of the parties by using US Mail.

That is why courier delivery services such as Fed-Ex, DHL and others have proliferated. They are a viable alternative to US Mail. Delivering documents through a courier service can be timelier, and the delivery times are often guaranteed.

However, faxing your offers is a better method for negotiating with your creditors and it allows for presenting the needed documents to the parties in a timely fashion. You might still want to call your creditors as mentioned in a previous chapter, but you now have an alternative method of communicating.

I have found the facsimile (fax) machine to be a very successful method of initiating the negotiation process. Fax machines have changed the landscape and the time required to effectively communicate information between people and businesses.

Some readers may ask, “What about email?”

My answer to you is that email is also a good method, but you might not have the email address of the business owner, and unless you have a scanner, you may find it difficult to send a signed settlement letter to your creditor or their representative. The logistics of digitizing documents, uploading them to the computer, accessing them with the email program and attaching them to the communications add another level of complexity that you should try to avoid. The negotiation process is difficult enough without introducing these additional procedures.

André Larabie

www.andrelarabie.com

Posted in Business Management, Debt Negotiation, Debt Reduction | 3 Comments »

“Successful Business Turnaround – A Definition”

Tuesday, July 27th, 2010

What does “successful business turnaround” mean?

At first this might seem to be a simple questions, but like many things in business, it is more difficult than it first appears when you get further into the details.

It turns out there are many ways to measure and define a “successful turnaround.“

You might say that keeping your business alive for at least one year means that you have executed a successful turnaround.

You might say that keeping it alive for five years is the definition.

You might say that converting your business from a nonprofitable to a profitable company is the definition.

Or you might say that it is something else.

I am going to define what I call a successful turnaround. A successful turnaround has two elements:

1) Your business has a positive cash flow
2) Your business is transformed to sustain a positive cash flow

I think you could reasonably add a third element to the above definition:

3) Your business has a well-defined plan to restructure and further stabilize

I think this last item reflects that it is not enough just to fix a few problems with the business and nudge your company back into positive cash flow territory. The fixes you implement to accomplish this may be only temporary; as a result, your company may inadvertently fall back into turnaround range. Therefore, further steps are necessary.

If—in addition to correcting your immediate problems and sustaining a short-term positive cash flow—you restructure your company SUCH THAT THE REVENUE STREAMS ARE MORE STABLE AND PREDICTABLE, then you will be on the right track to stabilizing your business and avoiding the need for a future turnaround.

André Larabie

www.andrelarabie.com

Posted in Business Growth, Business Management, Business Turnaround | 2 Comments »

Reducing Commercial Debt Burden – Developing Your Story

Tuesday, July 27th, 2010

Suppose you have a prioritized (based upon how critical each is to our business) list of 20 creditors, and number one the list is a $50,000 debt that you owe to a supplier who provides you with raw material that you need to create whatever it is that you produce in your business.

Since this creditor is number one on your list, without that supplier you cannot run the business. You must satisfy this debt or negotiate with them if you are to continue operating. If you don’t address this issue, then that creditor is not going to advance you any more credit and may even ask you to pay the balance before any more goods are delivered.

Some creditors may have a policy requiring you to pay 100% of the delivered invoice amount plus 10% of the total outstanding account balance. If your current balance with that creditor is $50,000 and the delivered invoice amount is $6,000 you would have to pay $11,000 ($6,000 for today’s delivery plus $5,000 against the overall debt) to get the delivery and keep operating.

But suppose for the sake of argument that you do not have the extra ten percent to give because you are really deeply in trouble.

What can you do?

You can negotiate with the creditor. But before you contact them, I can assure you—and I have learned this from 20 years of experience—that unless you have a deep understanding of your current financial situation and the particular approach required for this particular creditor, you really don’t know what to tell them and you do not want to call them until you do.

If you call them now, you will probably end up saying exactly the same thing that all of their other creditors say, and this will get you nowhere. So before you contact them, put together all the reasons you are in financial trouble, all the reasons you are in this turnaround situation—it might be that sales are down, or you might be delinquent with some bank loans and the bank is threatening repossession of assets, or a creditor is threatening with a lawsuit.

Write all of these reasons down.
- Does the business owe money to the IRS?
- How much does it owe to all the creditors?
- Does it owe money to the bank?
- Is it in default now and what is the status of the business?

Contacting your creditor and talking with them is the best approach, and here is why: there are many debtors out there like you who owe them money, and these debtors usually ignore the problem rather than being up front with the creditor. They are silent while you are contacting them directly. For this reason, they will view you in a more positive light. If you introduce you “story element” into the conversation, you will likely gain some sympathy from this creditor and this sympathy may help you in your negotiations later in the process.

André Larabie

www.andrelarabie.com

Posted in Uncategorized | 1 Comment »

Using Article Marketing To Market And Grow Your Business

Friday, July 2nd, 2010

The Internet is increasingly the method of choice for consumers to research products, and this is why it is important to have some type of connection to this form of marketing. Traditionally, if you are a writer about a subject, you are viewed as an expert because in order to write about the subject, you must know something. If you can write an article on boat propellers, then you will have some credibility on the subject, and if you make a suggestion or recommendation about certain boat propellers—the ones you sell—you can increase your revenue dollars. Simply put: Write articles about the products you sell, and in each article, have a link to your website. A basic equation is at work with article marketing, and it can be verbalized as this: the more articles (with backlinks and/or hyperlinks that point to your website) you write, the greater your sales revenues. Specific Internet sites focus entirely on publishing articles for this very reason. Traditionally, getting an article published in a glossy magazine is very difficult and a large amount of vetting takes place before you get published. That is not true on the Internet, and almost anyone can publish an article on any subject using one of these article websites. Some people have taken this to the extreme and published thousands of articles on hundreds of subjects. Some Internet marketing gurus have made thousands of dollars (or millions) with article marketing techniques, and if you read their how to material, you will find that they are able to generate 10 or 20 articles per day, all with backlinks to their money sites. Some of them have taken it one step further and hired writers in 3rd world countries to generate articles for them. This increases their output. Companies exist in cyberspace that sell software to generate articles. You input 1 article and the software mixes all the words around so you get 5 or ten articles from the original article, all saying about the same thing (as you can imagine). Why use such software? Because the search engines know about this type of thing and if they find a bunch of these “gibberish” articles on the Internet with backlinks pointing to your site, they will LOWER you in the search rankings. This is the opposite of what you are trying to accomplish with search engine optimization, so you don’t want to do this sort of thing. In any case, at a minimum, you should author a few good articles (or hire a good ghostwriter to do so) on the subject area of your business products, and get them published on these article sites.

Posted in Business Growth | No Comments »