Douglas E. Castle (the author of this blog, whom I like to address in the second or third person) publishes several excellent e-newspapers, some of which come out daily and some of which come out once weekly. Each one is free, and covers a different area of interest to readers of this blog. Below are links to each of these publications (each one gets its material from in excess of 25 independent reputable sources!), and I would suggest, rather than reading a long description here, that you click on each of the links below and choose the ones you like. Subscription is immediate, simple and free. These publications are truly information rich. I hope that you’ll enjoy them all!
US exports are still not either in positive balance against foreign imports, foreign domestic investment, or against GDP (Gross Domestic Product).
Not only are our exports inadequate in the aggregate, but we continue to show very limited progress in penetrating the emerging nations markets where the profitability per unit exported would be higher for reasons of lower tariffs (some of which could actually be negotiated directly with the appropriate agencies and individuals in those countries — especially in the Pacific Rim, Southeast Asia, parts of the African continent and parts of Latin America).
This represents a failure, on the part of the US (and on the part of many US-based companies) to exercise the powers of diplomacy and to invest in our domestic economy’s future due to an unwillingness to “pioneer” new territory and to learn about other cultures. And those territories are where the U.S. dollar is worth the most and the arbitrage advantage is the greatest.
Working in these parts of the world would not only serve the US economy well, but it would help us gain a competitive foothold politically in these nascent markets before they are completely beseiged by overtures (both friendly and hostile) from China and other countries which the US perceives as being adversaries in the conquest for [silly as it sounds] world domination.
Diplomatic visitation and courtship, combined with credit insurance and other insurance products would make these markets safe and profitable for some of the smaller to middle-sized US companies, which could use EXIM programs in combination with virtual export divisions (visit http://www.GetGlobalEdge.com, http://DouglasECastle.com and http://DouglasECastleConsultancy.com to learn more about the notion of virtual export and import divisions) to penetrate and dominate these smaller but growing markets.
In all of the time that we are not pursuing this course, we are missing out on 1) a higher percentage of profits per export dollar, and 2) gaining valuable political capital.
Leaders from the private and public sectors will discuss ways to boost U.S. exports and create American jobs
– The Export-Import Bank of the United States (Ex-Im Bank) will host
its Annual Conference April 24-25, 2014. The conference will focus on
the global business environment and prospects for growth. Business and
government leaders will address export opportunities and challenges for
American companies, the role of emerging markets, and the U.S. Trade
Agenda. The Bank will also celebrate 80 years of promoting American
jobs and exports.
Ex-Im Bank Chairman and President Fred Hochberg will kick off the conference with remarks Thursday morning at 9:00am EDT.
In addition, the two-day event will feature remarks, discussions, and
panels with some of the world’s leading economic voices, including Wells
Fargo Chairman and CEO John Stumpf; SpaceX CEO and Chief Designer Elon
Musk; Secretary of Commerce Penny Pritzker; Secretary of Energy Ernest
Moniz; Secretary of Agriculture Tom Vilsack; Pemex CEO Emilio Lozoya
Austin; Former Treasury Secretary and President Emeritus of Harvard
University Lawrence Summers; television host and bestselling author
Fareed Zakaria; Virginia Governor Terry McAuliffe; former U.S.
Ambassador to China Jon Huntsman; and others.
More than 1,000 lenders, insurance brokers, U.S. exporters, international
buyers, and government experts will also be in attendance. A more
detailed agenda is available at http://go.usa.gov/kXSF.
To RSVP for Ex-Im Bank’s Annual Conference, please email your name and media organization to email@example.com. On-site registration may be limited.
For coverage of morning sessions, we politely ask that all cameras arrive by 8:00am EDT.
Tags, Labels, Key Words, Categories And Search Terms For This Article: Export-Import Bank of the United States, Fred Hochberg, United States, Emilio Lozoya Austin, Terry McAuliffe, John Stumpf, Elon Musk, China, Douglas E. Castle, The Internationalist Page Blog,
Most leaders and commanders lead and make most of their important business decisions based upon an experienced “gut” — and only secondarily by a conscious analysis which is presented to them and processed by the rational mind. This “gut” is really intuition, which is the most powerful form of intelligence. It operates by analyzing multiple variables so rapidly we are not aware that the process is happening, and we just get a feeling — but this is not emotion. This “feeling” is not a feeling at all. It is our inclination based upon a rapid analysis of the facts and circumstances given a situation or presented with a choice.
Intuition becomes more powerful if it is acknowledged, respected, acted upon frequently and with greater experiences to draw from (i.e., maturity). As if it were a business decision muscle, exercise it more and it grows stronger, as will the likelihood our an increase in your ratio of good decisions to poor ones.
Emotion should be minimized in the business decision process. It is a function of desires, fears, dreams and past programming in your childlike subconscious or reactive mind. It masquerades as a “gut feeling” or a hunch, but it can be differentiated from intuition by the former’s speed and force (like a kick in the head) compared to evaluative lead time in emotional processing. With emotion, you are reacting to either an attachment to a certain outcome, or to a deep rooted desire or fear conjured forth from your subconscious. Emotions tend to come to you, and to wash over you, while intuition strikes like a hammer.
In sum, you can develop your business decision making skills by 1) learning to identify and distinguish intuition from emotion and by 2) maximizing your use of intuition and the rational mind (which consciously analyzes facts and figures), and minimizing your emotional attachment or leanings toward any outcomes.
OptumRx and its parent company think that they can merely pacify a few of the noisemakers and ignore the rest of the unspeakably abused herd. I don’t like when someone calls me stupid — Or worse, when they presume that I am… How about you? I’ve been assaulting them in the Court of Public Opinion, which means a great deal to me – It is marketplace justice — it is not bribed, bought or sold — and the sentence is carried out by the customers.
OptumRx has the worst customer service record of any of the firms within its industry in the entire United States! And since they do not care, we have to make them care.
THE CORRESPONDENCE RELATES TO MY POST “OPTUMRX MUST DIE”
NOTE 1: These people at OptumRx have all of the morality of monopolist-in-process Comcast (XFINITY) Cable, but in this mail in pharmaceutical racket, they are tampering directly with patient lives — literally. If you haven’t already done so, please take the Quick Survey by going to the hyperlink in the next paragraph.
NOTE 2: Been mistreated by OptumRx? Please help us by filling out a fast survey at the end of this article. http://douglasecastleblog.com/2014/01/05/optumrx-must-die-mailorder-pharmacy-monstrosity/ We need you! Thnx. #RF. If we receive enough compelling, emotion-packed responses to our Quick Survey, I will send a petition to the leaders of all of the Regulatory, Legal And Consumer Affairs bodies having influence in such matters, and we’ll either 1) Put OptumRx up to the light of intense scrutiny and possible punishment (including the loss of the ability to conduct their feeble excuse for a “business,”, or 2) We’ll get them to mend their incompetent, fraudulent and depraved ways, and win their long-suffering customers better care and cash compensation for the hardship which they (WE!) have had to endure.
Below is the Twitter exchange between the ignominious OptumRx (and their publicly-traded parent company, United Healthcare/ United Health Group). They certainly enjoy control, and love the idea of calling a country-wide problem an “isolated Consumer Matter.
Instead, what I received from the cowardly, guilty pukes at United this afternoon within only minutes of my sending my Twitter terms was simply a telephone voice mail from “Christine” (no last name, no title), from United Health Group’s Consumer Affairs Division indicating that she wanted to ‘help me resolve this issue‘, and that I could telephone her at 800-842-2656, press prompt 1, and then speak with her at her direct extension, which is 3042511. I’ll give her the opportunity to speak with me, but I smell a delaying tactic combined with a smokescreen. My suspicion is that I will have to speak with one of her titled superiors (with a last name, too), in order to settle this matter.
They are trying to insulate themselves from dealing with me directly.
I’ll not only keep you posted, but I’ll see to it that OptumRx, and its incredibly greedy, publicly-traded parent get their problems fixed an that things are made right — for all of us. And if you haven’t done it, take the Quick Survey (see the earlier part of this letter for the link) — if we get enough blood, bile and verifiable complaints — we will circulate a petition to all of the persons of influence at all of the agencies whose attention this may require.
Mail order pharmacies are supposed to be a more efficient way of getting medications to patients more easily, and at lower cost. They also allow the mail order firms (such as the notorious, odious, inept and malevolent OptumRx — formerly a loser called “Prescription Solutions” — later acquired by the much-maligned malignancy of a publicly-traded Healthcare Colossus known as United Healthcare) to use their best efforts to maximize their profits by sourcing all of the medicines through pharmacies located thoughout the United States which offer the lowest prices, and often the worst quality and service.
It is safe to say that OptumRx has the worst consumer satisfaction and service record of any mail order pharmacy (or for that matter, of virtually any service business) in the history of the United States. Listing things simply, the imbeciles at OptumRx, including the first line of “representatives,” two levels of supervisors and the invisible or permanently vacationing executives:
Cannot ever seem to get medications delivered on time, regardless of the threat to the patient’s life;
Are too stupid to understand basic requests and give straight answers to direct questions;
Threaten to hang up on customers who are irate because one of the unevolved cretins refuses (citing a non-existent law, or some cock-and-bull ‘company policy’ of convenience) to mail a refill of a controlled substance until the patient had run out of the medication totally, and then was told he’d have to wait for seven to ten days before he’d get his renewal in the mail!;
Tortured and tormented senior citizens who are helpless to deal for hours on the telephone between the flying monkeys operating OptumRX, their prescribing physicians, and the postal service;
Had people wind up hospitalized, at risk of permanent injury or death — these victimized people are primarily elderly or chronically ill and in need of constant, continuous medication, which OptumRx simply cannot or will not provide;
Send out the wrong medications, risking patient fatalities;
Fail to timely call patients when there are “difficulties” in filling their orders correctly, timely or in the necessary amounts;
Are never held accountable for the havoc that they wreak on the lives of the patients who must endure an endless series of phone waiting times, conversations with non-sentient creatures and their knuckle-dragging “supervisors.”;
Experience terribly inconvenient computer problems, outages, or upgrades when the volume of request traffic is at its peak — for example, at the beginning of the year… ;
Never show up as the demonic miasma that they are in the mainstream media, which is rumored to occasionally ‘bend a bit’ to accommodate Big Pharma, Big Oil, Governmental Institutions and Agencies, and [shockingly!] advertisers.
Why is nothing being done? Isn’t there an injustice that should be addressed by numerous consumer advocacy organizations, both private and government-funded (in all fairness, some are taking some action, albeit feeble), Insurance regulatory agencies (perhaps the Commissioner of Insurance), Health organizations, Eldercare advocacy groups….
Just Google search OptumRx and you’ll find a plethora of complaints, horror stories, and legal actions – one group, ConsumerWatchdog.org is sponsoring a class-action suit against OptumRx and perhaps its parent. Better still, Google (without the quotes) such goodies as “OptumRx + complaints,” “OptumRx + evaluations,” “OptumRx + customer service,” OptumRx + lawsuits,” “OptumRx + reviews,” or “OptumRx +fraud.” You’ll get names, telephone numbers and endless tales of woe. Following are some hints of the sentiment regarding this “wonderful, cost-saving, service-providing, polished turd bastard offspring of United Healthcare:
“This pharmacy is horrible and lies to customers. I ordered medication for my mother on 12/20/2013 and was promised it would be delivered by Jan 2nd, 1014. I had called them after noticing their website said the order was unprocessed. Instead it is now Jan 3rd and the website still shows the order as unprocessed. I called again and after being put on hold for 5 minutes, the rep claimed that the Dr.’s prescription fax had only arrived today. This was an emergency order and I had ordered a week’s worth of “intermediate” medication for her based on the arrival date promised by Optum Rx. Do I have any authority to sue them if their inability to get medication out on time affects her health adversely?” – Carol of Seattle, WA on Jan. 3, 2014
And how about this review from an insider at OptumRx?
“Was a customer service advocate for OptumRx. The main concern in the company was numbers, not service. Doing additional work to make sure a member got his/her medicine in a timely manner was last on the list. You are not allowed to do additional follow up, which made members have to call back multiple times, which was unnecessary. I can totally relate to the irate callers and their situations.
I was terminated because of an irate caller with a situation beyond my control. Placed the member on hold after going back and forth with her about her order. Because she hung up and had to call back, complained and said I was rude. I was terminated, mind you I never had any problems with the service I provided, no attendance issues, always helping. None of that mattered. Two thumbs down for OptumRx.”– Jane of Artesia, CA on Jan. 3, 2014
Indeed, these people are receiving horrific reviews everywhere you turn. Do you enjoy charts, graphs, pictures and visual aids when it comes to ratings and performance? Sure you do! Here y’all go:
I personally believe that we, as customers of this institution of depraved indifference to human suffering, should issue a petition citing our grievances, and upon its completion (we’d need at least 1,000 names of actual victimized patients who are registered voters) which should go to all of the following persons at the following organizations:
President Barack Obama, The White House;
The President And Members Of The Board Of Directors Of OptumRx;
The President And Members Of The Board Of Directors Of United Healthcare;
The Respective Commissioners Of Insurance Of Every State;
The Chief Information Officer Of The Federal Trade Commission
The Attorney General Of The United States Department Of Justice
The Secretary Of The United States Department Of Commerce
The Chief Information Officer Of The Department Of Health And Human Services
The Director Of The Federal Bureau Of Investigation
The Chairperson Of AARP, and perhaps some other persons in positions of influence as well as widespread publication (via release) of the petition to the printed and televised media.
I would not propose this approach if I thought that there were any other means of obtaining relief from this uncontrolled and unconscionable abuse. It will not be resolved by hordes of abused and injured individuals putting their individual stories up on the Internet.
BEFORE WE PREPARE THE PETITION, PLEASE TAKE THE FIRST STEP AND FILL OUT THE FOLLOWING QUICK SURVEY.
Please take a few moments to answer this Quick Survey. We will be posting the results to this website and to the social media at regular intervals. It is our objective to get no less than a total of 1,000 responses ASAP. After that, if my Public wants that Petition, it will be drafted and sent all over the country.
People are still talking about Klout scores. In theory, the higher your Klout score (scores range from zero to 100), the greater your “influence” in networked society, and amongst your peers. I frankly think that it’s simply a measure of how good you are, or how much time you invest, in using social media for self-promotion, regardless of the quality of your words and their wisdom content. When I receive notices from Klout, I have mixed feelings. Here’s one for example:
Ironically, this happens whenever I am particularly active at “gaming” my social media. And the more time that I invest in gaming my social media, the less time that I am spending accomplishing other tasks which add value to my asset portfolio or profitability to my businesses. It’s an inverse relationship: the more time I spend raising my “social influence,” and my personal brand (which is, admittedly of some importance in obtaining client opportunities) the less time I spend working.
Here’s how I see it:
Yes. I may be a harsh, crude judge, but social influence is not exactly the same as true branding, name recognition, or visitor conversion. It is just another metric by which we attempt to quantify qualitative characteristics. We are a metrically-obsessive society.
I would rather invest more of my time on directly productive activities than on indirectly, remotely reputation-building activities. The higher my Klout score, the poorer my optimization of time. I would rather selectively influence a small group of important persons than spread my seed all over social media society.
Want to laugh? I’ll bet that my Klout score will go up a bit higher just because I spent some idle time composing this blog article. That’s ironic. I would rather see my profits go up, and hire a more effective publicist. In the unforgettable words of a forgettable Millennial philosopher, “Meh.” I think that there are far better ways to gauge meaningful (i.e., targeted) social influence than by elevating my Klout score.
I prefer polling and other more parametrically-defined methods of measuring opinion or sentiment. Nielsen ratings used to be hot stuff. The average number of times that your name is googled might be a better indicator of how much gravity and magnetism you have. I could go on, but I’d better get back to work — that means having meaningful conversations and interactions with other people.
To me (and I am neither opinionated nor sarcastic), bragging about my Klout score is rather like the fellow who used to clean my septic tanks bragging about his IQ and showing me his (somewhat cloudy-looking) MENSA ring. Heck — he probably did well on his SAT scores as well. How do you measure success? How do you quantify personality? Klout is a measure of your social Shout activity. Now get back to work, esteemed colleagues!
Douglas E. Castle
Klout scores tell far too little about an individual to use as a means of determining that person’s influence in the focus areas where Influence Matters.
I’m guilty! I am so backlogged with tasks that my Native American name (no offense to any member of any Native American tribe actually out there in Indian Country) should be “Running Behind.” Mismanaging my time and tasks is obviously a problem from which I suffer. Just imagine if a company were comprised of individuals, just like myself who were managing their time and tasks like a bunch of weasels on treadmills? Or like a one-armed paperhanger? Or like a glassblower with the hiccups? [Had enough? Well, I’ll stop now. But remember: My blog, My rules.]
Here are my mistakes in terms of time and tasks allotted:
1) I have failed to delegate those tasks that I could have given to others. I’ve clearly taken on too much for myself;
2) I am multitasking instead of rotational tasking – in the case of the former, I use a peripheral focus on a number of things and perform very poorly – in the case of the latter, I focus on one task for a limited time (using a timer on my computer desktop), then proceed to the next task….it’s an installment approach to keeping from burnout while accomplishing everything on my to-do list;
3) I have unrealistic expectations of myself;
4) I am obsessed with control and not even interacting with other persons around me — how could I ever be an effective manager;
5) I am so enmeshed in my own personal tornado that I can’t possibly be paying any attention to the larger picture of my position in the company or project and the changes in the environment around me (a fire, a meteor shower, an invasion by an “Occupy” group.
The Solution? I’ll Sum It Up:
Rotate tasks – don’t multitask;
Switch tasks at regular intervals;
Take frequent brief breaks — walk around and see what is happening;
Stop beating yourself up if you don’t finish everything on time, or if you fail to complete all of your tasks — in industrial and behavioral psychology, we know that your general mood, your work environment, and your feelings about your own perceived “shortcomings” are more damaging to you and to the company.
If you’re not managing yourself, emotionally, physiologically and in terms of time and tasks, you will damage a precious Human Asset and Reduce the Collective Creativity and synergy that make a company’s output far greater than the sum of the respective outputs of the individuals who comprise its employees and contractors.
Douglas E. Castle
Some more material, courtesy of REPOST (I would, in particular, take a long, hard look at the last entry; I wonder if there might be some confusion between cause and effect:
Husbands With More Masculine Chores Have More Sex NewsLook — Jan 31 2013
Video News by NewsLook A study shows married men who spend more time doing traditionally female chores have less sex than men that don’t do as many of those chores. Jen Markham explores if the…[Author’s Note: I’d better finish up here so that I can kill a bison and drag it home to my cave so that I can share it with my wife. Red or white wine with bison? Anyone know?]
Horizontal Integration not only can save an overly cost-burdened business, but it can be a means to rapid growth for each and all of the participants in the transaction.
Horizontal integration is simply a process where competitors (though they might not be selling the exact same product or selling into the same exact marketplace) or sellers of complementary or non-conflictory products (or services) at the same stage in their corporate development join forces through a merger or acquisition (a combination transaction) in order to collaborate and produce synergy for their mutual benefit. Horizontal integration is not only an efficiency engine, but it is also a means by which smaller companies can grow rapidly, in a sort of modular fashion, and increase their portfolio of products (or services) and greatly increase and diversify their aggregate customer base.
The analogy that I’ve heard regarding horizontal integration combination transactions (sometimes actually in either a series or a free-for-all “come together”) is that smaller, more competitive but under-evolved companies “circle their wagons to ward off the effects of recession, too high a fixed-cost hurdle, or a one-product non-diversified model.”
An explanatory picture follows, which sums up the benefits of combination versus competition quite nicely. The ironic fact is that through the process of horizontal integration, two or more marginally profitable (and barely self-sustaining) companies can combine and become a winner, not unlike connecting all of the pieces of a once-scattered jigsaw puzzle.
The one clarification required here is that the firms involved in a combination don’t have to be in the exact same business, or even in competitive positions — the key is that these combination usually involve firms at the same same stage of development and with the same areas of vulnerability….and many of the same needs.
In sum, the two principal reasons for competitors to combine and become one larger “combination” entity (aside from the economies of scale in dealing with suppliers and in pricing goods or services out to customers to snatch up even more of the marketplace and possibly achieve a greater dollar size per combination customer order) are:
1) To increase and diversify revenues – uniting instead of fighting; and, 2) Reducing fixed costs by eliminating redundant expenditures on personnel and processes.
The tighter that credit becomes, and the more price-sensitive customers become (as in a recession), the more conducive the marketplace economy is to this combination strategy. Competition gives way (in atomistic struggling firms) to combination, and combination ultimately can lead, if unchecked, to monopolies. But that is a subject for another day.
Horizontal integration is one of the simplest and most effective non-organic growth strategies for every company brought into the transaction.
Sunk costs are wasted, and often recurring expenditures on a purchase, program, idea or business campaign which, by all rational means is either dead (unproductive) or doomed to failure, Yet we persist in throwing good money after bad either because our emotions or egos want so badly too prove our initial ideas right, or because we have invested such a significant sum that we are irrationally thinking that a few more dollars might “turn it around” – or, as my British friends call it, the “in for a penny, in for a pound,” mindset.
Sunk costs are emotionally unaccepted losses. They represent the triumph of Human psyche over sound business policy. If you have some of theses fiscal black holes embedded in your budget you are going to compromise your subsistence, and possibly miss out on opportunities (the Opportunity Cost is the “if only we could have”: cousin of the Sunk Cost); you will need an objective outsider to identify them for you, and to help you to allow logic to triumph over fragile sentiment. In my practice I’ve disliked having to undertake this repair the most — I invariably have to be as much of a psychologist as a restructuring or strategic planning consultant.
The best way to avoid these anchors to business failure is to learn to draw two lines:
1) What is the absolute maximum you’ll spend, without exception. Limit your fiscal exposure by a rule established early in the game; and,
2) What is the maximum time that you are willing to wait to see a definable, quantifiable result.
If you can establish and live by these two parameters, you and your business will have a far better chance to survive and thrive. I would much rather establish these policy guidelines for a growing company than to have to walk blindfolded through a minefield of voracious pet projects.
Evaluating a business’ situation and what should be done to further its best interests requires dedicated time, objectivity, emotional detachment (those latter two are different — objectivity comes from clear vision, and a grand, experienced perspective while emotional detachment comes from not being emotionally constrained from sacrificing any sacred cows, or offending anyone), and the experience and expertise of someone who has lived through a large number of these types of situations previously.
You need a tactical and strategic specialist upon whom you can truly rely. And you are already frightened that a stranger will compromise or destroy things which you have emotionally invested in.Interestingly, this very fear and attachment are the factors that keep leaders from leading the great businesses which they’ve built in moments of either crisis or critical decision.
Your business is in dire straits. You don’t know quite when it happened but your business is hurting: cash flow is very then, both fixed and variable costs seem to be on the rise, and your regional managers no longer seem motivated beyond their biweekly paycheck. You wish that you could stop everything that you’re doing and spend a few weeks examining the business in detail, but you are 1) too busy and involved in the business process and 2) not at all objective. You lack time and objectivity — and to top it off you are too emotionally involved with the business to make the changes that might have to be made. You and your attorney conferred with me, and came to the conclusion that you needed a Turnaround Consultant, and asked if I had an interest in the engagement. I am at your offices this morning, because as good a visionary, leader and hands-on manager as you are, you lack time, objectivity and the emotional detachment necessary to be effective in doing what must be done.
It requires time, objectivity and emotional detachment to do what has to be done for a business at any critical point in its evolution: whether that is averting financial disaster; contemplating adding a new product or service; thinking about outsourcing or using virtual office services to cut your staffing requirements (and the expense which comes along with having a full-time employee — now close to 37% on average of the employee’s base salary in most corporate cases); contemplating developing a virtual export or import division; evaluating a merger opportunity with a competitor in your industry who is significantly larger than you are; evaluating combining your business with you largest supplier; thinking of recapitalizing through either a private placement of equity interests, a public offering of securities, a deal with a private equity firm; a “guaranteed” public offering of your company‘s common shares through an investment banking firm; or, signing on for a large line of credit at seemingly good terms with an overseas firm out of the Middle East which only wants a 7% equity stake in your company.
When a business is at a critical inflection point in its evolution, life cycle or critical path, the key individual cannot necessarily trust or confide in anybody except for his or her lawyer or his or her accountants — but these professionals are limited in their scope of practice and expertise. The person whom you seek is usually referred to you by your legal counsel or perhaps by your independent accounting and auditing firm — and he will have those attributes necessary to guide you past that inflection point that we spoke of earlier:
It’s at these times, whether the decision involves avoiding a disaster or acquiring another firm in order to make a giant step in your business volume and diversification (not to mention the increase) in revenue sources that I feel delighted to be needed.
Thank you for reading me, and for circulating my posts through your ever-growing social media channels.
Why does BPM matter? (ebizq.net) – They Invent New Acronyms Every Week. And When They’re Not Doing That, They’re Finding New Uses For Existing Acronyms Just To Create Confusion – I Thought That “BPM” Stood For “Beats Per Minute”. That’s Why I’m One Of Those SOBs Who Avoids Acronyms.
Economic Times Main Syracuse ambulance company files for bankruptcy; change won’t likely …
Douglas E. Castle‘s insight:
After reading the article, it struck me as fascinating how the Economic Times was callng this Chapter 13 abankruptcy (as if it were a death knell for the ambulance company), and that the ambulance company spokesman, out of political training, or out of ignorance, called the proceeding "a routine reorganization….the company’s service will not be affected." The reason for the publication taking a more fatalistic view is that most companies of small to medium size ultimately wind up transitioning [atrophying] into Chapter 7 (a liquidation of asets, usually by auction), with a complete cessation of activities, The "reorganization" is basically a court intervention which just forestall (in most cases) a liquidation.
This fatalistic perception has permeated all of society because of the sad fact that those companies which are not "too big to fail" do not do anything constructive during the Chapter 13 reorganization period in terms of formulating and implementing an Emergence Plan to leave Chapter 13 and emerge as a streamlined, smarter, better-run enterprise. It takes an expert with a great deal of knowlege to get into the company, correct its trajectory objectively and candidly, in order to navigate through the "reorganization" into a newer, better way of doing business.
Lamentably, most businesses tend to just use Chapter 13 as an excuse to continue making the mistakes that brought them to the courthouse in the first place. That’s very foolish. They need to be turned around by a visionary from the outside with an objective view and a firm hand regarding suggestions and implementation.
Business is war: Jack Tramiel’s secret to conquering Silicon Valley StartupSmart Vertical integration is where you grow your company by buying or starting a number of businesses along the same supply chain in one industry at different stages of…
Douglas E. Castle‘s insight:
Business might indeed be war, but in many cases bridge-building assists in the process of the ultimate conquest.
As a firm believer in vertical integration (a company buyer its customer or its supplier) and in thereby becoming a combined and more self-sufficient entity, both larger, and more powerful with certain expenses redundancies to be eliminated to assist in boosting combined profitability, I have found that it’s much more important to befriend and negotiate [sometimes that feels like war] with a prospective acquiree company and its management, usually on several levels, in order to "educate" it regarding the advantages to its best longer-term interests, such that it comes along as a willing and smiling captive instead of utilizing any other, more hostile strategy, which would be a secondary choice.
The idea is to conduct the war utilizing intelligence (informational), diplomacy, education and negotiation in such a manner that your target never even knows that any war was occurring.
As the late lawyer (for the famous O.J. Simpson murder trial) Johnny Cochran might have said: "If you want to agressively integrate, you must educate and negotiate."
A temporary cash crunch situation is something that occurs in the ordinary course of business in most every organization, especially when the business is of a seasonal nature or when the businesses is in a rapid stage of growth, i.e., inundated with purchase orders but without sufficient cash to fill them and to also pay recurring expenses. But if a cash crunch situation is chronic, a diagnosis of the reason must be made, and appropriate actions must be taken. This article will give you the ability to do both.
Bear in mind that when I speak of revenues, I mean total sales, both as computed on the cash basis and the accrual basis, but when I speak of expenses, I actually mean cash outflows of every nature. Throw away the accounting and auditing textbooks for just a bit so that we can deal with bare bones economic reality. Also by current, I mean as either generated or paid in the ordinary course of operations.
Most every enterprise experiences a period or periods of cash crunch, especially if those businesses are either seasonal or rapidly-growing companies which are generating purchase orders, but do not have adequate cash to fill them while still meeting their obligations, such as payroll, occupancy and the like. There are remedies for both of these situations because they are either predictable or can be financed with short-term debt to enable them to either withstand the “tight season” or to let their cash flow catch up with their market demand.
If cash crunch is chronic, and is an ongoing problem, there is something wrong with the business on a fundamental level. Either revenues are too low, or current expenses (outflows — remember that we’re using lose terminology here) are too high.
If the expenses or outflows are not truly for operations but payable to a lender in the form of , for example, a short-term self-amortizing debt where the payments are large and swollen with principal, the lender may be negotiated with to arrive at an interest-only loan with a provision for a rollover of the principal at the end of its term (optimal for maximizing utilizable cash flow), or possibly a longer amortization period where the payments are lower, conserving more cash flow for operations.
Sometimes a business is improperly capitalized and it requires equity to be infused in order to retire debt. Many businesses which have good fundamentals need to de-leverage themselves by retiring existing debt with equity. This is appropriate unless the equity is used to cover current expenses.
The test is this: If you deduct the debt payments from the total current outflows, and you subtract the number obtained thereby from the revenues, the resulting number should be positive. This means that the business is not properly capitalized, but is probably fundamentally sound. These companies are good candidates for refinancing.
If the number obtained is still negative, then it is highly likely that the business is fundamentally unsound, either due to its core purpose, mismanagement or some improper assumptions which have gone uncorrected for too long. Revenues can be increased by increasing sales through better marketing and sales, or by increasing prices if the market will tolerate this.
When certain food or beverage prices are suddenly increased, a restaurant may hike up its prices and say, for example that “due to the increase in the cost to us of coffee, we are sorry to have to raise the price per cup to $2.25. If the market tolerates this it is a wonderful strategy, especially if done in steps, or if accompanied by a re-packaging or the product or service to somehow differentiate it from what it was previously. The perception of added-value tends to justify an increase in price.
The other possibility is more difficult, and the prospects less pleasant: You may have to negotiate with your employees (or terminate some of their positions), cut back on the use of your contractors, or re-negotiate costs with your vendors. Vendors can often be persuaded to reduce their charges by 1) indicating that the situation is temporary, and that they’ll receive a premium after you’ve reached a certain sales level or after a certain amount of time has passed or 2) an incentive wherein the vendor participates in either your revenue when you’ve reached a certain threshold, or in you company’s ownership (this is an example of a partial vertical integration strategy).
The acid test of the fundamental soundness of any simple business model is this: If debt service is eliminated, do revenues exceed current expenses. Put more realistically, without considering debt, do your revenues (where the earnings process is complete and they are either in the form of cash or accounts receivable) consistently exceed your ordinary current operating outflows including product (inventory purchases as required) or service purchases? If not, can they be restructured to fit the aforementioned parameters? If the answer to both questions is “no,” your business model is fatally flawed, and that must be dealt with — we’ll discuss this at another time.
If you increased your sales volume, increased your prices to customers, eliminated any idle personnel, negotiated with your suppliers, and gotten your bank loan replaced with equity, then you still may be suffering because your customers are not paying you on a timely basis, while you’re paying your vendors promptly.
If your average days to payment on your accounts receivable is 55, and your average days to payment of your current expenses is 35, that 20-day discrepancy can be killing your business, depending upon your profit margins. Sadly, you can’t pay your vendors with your receivables. There are two things to be done to eliminate that 20-day discrepancy:
1) Collect the receivables faster; and
2) Pay your vendors more slowly.
That gap between average days that your business waits to collect its receivables, and the average days its takes to pay its vendors must be reduced to zero, or to a negative number.
You can collect your receivables faster by offering some of your less creditworthy customers less credit, and giving some of your better, faster-paying customers more credit. You can offer early payment incentives or cash payment discounts. You can collect partial payments in cash. Use some imagination. Any of these approaches alone or in combination will cut that 55 days significantly if you focus on achieving this.
You might even get a line of credit up to some percentage of your “acceptable” accounts receivable, factor your receivables, or utilize single invoice financing in order to get that number down a great deal further. Often the real cost of factoring or similar arrangements is about equal to what you might sacrifice if all of your customers took advantage of a discount for paying in less than 30 days.
To eliminate turning a simple article into a doctoral dissertation, suffice it to say that slowing down payments to your vendors requires some diplomacy, some negotiation, and some creativity — but then, if you are in business in these times, you must have an abundance of creativity.
Quick, Easy Metrics:
1) Your average collection days on your receivables (it’s a weighted average) should equal or exceed your average payment days on your current bills;
2) Your average collections days on your receivables divided by your average payment days on your current bills should be equal to or (hopefully) greater than 1.0;
3) The value of all of your cash and all of your receivables divided by the amount of your current bills should always be significantly greater than 1.0 (i.e., no contribution margin). While this is not a measure of cash availability, it is a measure of your gross profit on sales. The bigger the dividend produced by this computation, the greater your basic profit margin and the greater the contribution of your sales to ultimately cover fixed overhead.
The idea is to avoid a cash crunch (assuming that your basic business concept is fundamentally sound) by collecting and hoarding as much cash as you can, and holding off on the payment of bills as long as you can. Remember: If you business is sound, a cash crunch crisis is a phenomenon only created by bad timing. And it’s quite curable.
As part of the Action Plan in any business turnaround, or in any plan of emergence from Chapter 13, reduction and restructuring of debt will play a key role, provided that the business involved in the emergence or “rescue” effort is inherently profitable by its nature — in other words — has an otherwise viable business model which was just mishandled or mismanaged in its execution. If debt can be reduced or eliminated, that is optimal; however, the second alternative which is more palatable to most lenders involves debt restructuring.
You have two restructuring objectives in dealing with lenders or bondholders – one is to defer the payment of the principal (the “balloon”) of the debt and to try to pay it on an interest-only basis for a business recovery period; the other, which is far more popular and easier to negotiate is to restructure the debt amortization or payment schedule. This second alternative permits you, as the acting Chief BusinessRestructuring Officer, to offer your creditors an option where the debt can be paid in a self-liquidating schedule, but simply over a longer time. In fact, if the length of the loan payoff schedule is sufficiently lengthened, you may even offer the creditors a small sweetener, such as a slightly higher interest rate on the loan or bond principal amount as a risk premium for their patience. Even after doing this, your payments to retire the debt in full may still be substantially lower than they would have been at a shorter (i.e., more rapid) amortization schedule.
Let’s see how this rescheduling of amortization works, Mr. Turnaround Expert:
Firstly, we’ll assume that the remaining principal amount of debt on one of our client’s loans is $80,000,000, and that at present, the client is paying off the loan at an interest rate of 8% over a five-year amortization period, fully self-liquidating. This means that the client’s monthly debt service due on the loan is approximately $162,211.
Going further, let’s assume that the client’s Chief Restructuring/ Turnaround Officer has projected (conservatively) that the cash flow available to service the loan will be approximately $175,000. This gives us a narrow margin for error. If we calculate the debt service ratio [divide the available cash flow by the the monthly loan payment obligation], it comes out to be a very, very uncomfortable 1.07884. As a lender, I would much rather see a debt service ratio that approaches 1.50000… that would make me quite comfortable, assuming that the available cash flow projections are reasonable.
If our Chief Restructuring/Turnaround Officer is a very good negotiator, and convinces the lender to reschedule the amortization of the remaining balance over a nine-year term, with a rate of 9% (our turnaround expert has given the lender an extra 1% as a risk premium for lengthening the amortization timeline), the monthly debt payments would now be $108,343.27 — we’ve cut $53,867.73 from our monthly fixed debt payment by doing this. Our new debt service ratio (assuming the $175,000 cash flow available to service the debt is the same, as it should be) will be 1.615236 instead of 1.07884. I now have a debt service ratio which exceeds the 1.50000 standard.
Amortization gives you the opportunity to stay alive longer, but yet to generate sufficient cash flows to pay off this debt, simply by changing its associated amortization schedule. We have restructured the debt brilliantly, assuming no other changes in terms on the part of the creditor, and no additional concessions to the creditor (with the exception of the 1% risk premium) on the part of our turnaround advocate, The Chief Restructuring Officer. Note that he might have chosen to cal himself the Chief Turnaround Officer, but that is too obvious and is on the edge of being Politically Incorrect. “Restructuring” sounds more positive than “Turnaround,” which conjures up images of the grim reaper following the client company’s president around.
This has given us additional cash flow margin (for coverage of other expenses of more than $53,000 per month.
Why would the creditor (a bank, represented by the officer who approved the original loan and who is responsible for handling the relationship with the client) agree to this?
Our negotiator simply took the bank officer aside and apprised him of the following facts and conclusions, gently but firmly:
1. If the client company were to go out of business and liquidate (Chapter 7, perhaps), the proceeds left to pay the bank would be less than 50% of the remaining loan principal. That would mean a substantial loss to the bank attributable directly to the officer’s decision to extend credit;
2. The foregoing could be very injurious for the officer’s career objectives, or perhaps the ability to remain employed by the bank at all;
3. If the client company remained in business, there would be no write-down or loss relating to the loan (the principal would be paid in full), and the officer would have made a good financial and career decision. His decision to allow the rescheduling of the loan has made it possible for the client company to stay in business and pay off the loan in full. Plus, the officer can speak about how “good a deal maker he was” by adding a loan premium of 1%, increasing the bank’s yield on the loan;
4. The client company keeps its deposits, its payroll account, all of its 100 or so employees have consumer loan, credit card, car loan or lease, deposits, checking or other business with the bank, all of which will now will definitely stay intact due to the officer’s “goodwill gesture to keep the company in business and everyone employed”. Interestingly, the officer also gets a credit for funds supplied to the bank (i.e., deposits — especially to demand deposit accounts (i.e., business checking), and this client has kept an average total balance in the bank of close to $1.5 million, all of which the bank earns interest on (this is called in the banking trade “playing the float”) while the client, who receives no interest waits for funds to “clear” and the bank puts this money out on overnight interest-bearing transactions with its under-reserved or slightly illiquid brethren;
5. It becomes apparent that the Chief Restructuring Officer can make the bank officer (with his own stationery, business cards, lapel pin and pens) look like a clever, prudent potentially promotable businessperson in the eyes of the client and his superiors in the bank, whom the Chief Restructuring Officer has promised to speak with (in laudatory terms) in his behalf.
The theme is not only that amortization is like fiscal alchemy — it is also that if a focal point of a turnaround Action Plan can be addressed with everyone emerging benefited (or at least not damaged as much), it can be negotiated.
Debt restructuring is a crucial part of most turnaround operations. Now you’ve gained a better insight.
If only Detroit were one of my Turnaround Business Clients (sigh), either the bankruptcy might have been avoided, or its method of conducting its “Municipal Business” might have been radically changed some time ago. There should have been much more oversight, checks and balances in all aspects of management, and operation, financial and forensic audits by a competent independent third party firm on a short notice basis. But then, the sad aspect of the public sector is that is by no means as accountable, or as interested in its investors (the taxpayers), as would be a simple medium-sized company.
When you combine poor accounting (and a lack of individual accountability), a lack of variance analysis, a lack of integrity in leadership, the absence of a formalized budgetary review process, the informality of fiduciary authority and a plethora of useless contracts for services and purchases that were not of benefit to the client [in a business they either call that “Other People’s Money” (OPM), which doesn’t really have to be accounted for directly if there’s enough of it (and who is keeping count as the nectar pours through the sieve? And more importantly, who knows what the total available capital for expenses and expenditures actually is?), or, in the worst case breach of fiduciary duty, fraud and embezzlement.
Goodness, if taxpayers realized that they were really shareholders, with the right to demand an accounting, a reconciliation, and an explanation of any ‘treasury leakage’ either through negligence or through political favors paid for at the expense of the populace. — DEC at 1Turnaround.
What follows is my curating and rather extensive and opinionated commentary regarding an article which I found in my inbox from Scoop.It!, a wonderful source of excellent articles and opportunities to really get a grand view of the topics which interest me, and are of crucial importance to my clients.
I am in full accord with the writer’s point of view as it concerns Detroit, specifically, and as it concerns all businesses and organizations which have fiduciary responsibilities. Sadly. election politics as well as organizational office politics tend to bring out some unsupported or unsupportable promises which ultimately will become perceived as lies. In any business or organizational structure (For-Profit and Not-For-Profit) you cannot make empty promises, as they will cost you all of your negotiating power (based largely in credibility), and possibly your career when the truth comes out.
Let’s assume that we are following a sensible business protocol, and that we are responsible to the Board, our colleagues, our employees, our customers (or constituents), our creditors and our investors. A methodical approach must be undertaken — it is sad that these politically-oriented individuals don’t examine the financial position and projections of the governments or businesses which they are trying to get the opportunity to lead prior to embarking on their campaigns.
A general rule to start with is that you cannot ever make a promise which is unconditional, especially if it is dependent upon the promises of others (grants, investments, lots of new business revenues, a technological breakthrough and the like). Make fewer promises of good and plenty, and more commitments to fixing problems at their source to ensure safety, stability and success.
Aside: Not to ridicule anyone at the federal government level, but you can’t make inferences to “getting out of debt by increasing borrowing,’ or balancing the budget and helping businesses by increasing taxes on the poorer and middle classes and reducing services to them as well!
Never make a commitment that you do not intend to keep, and that you do not have a plan (a method) to keep. Exaggerate costs and the length of estimated completion or delivery time frames – it makes it easier to be a hero.
In terms of examining, monitoring, course-correcting and maintaining or improving the enterprise (whether it is government or non-government, For-Profit or Not-For-Profit), the protocols are universal.
Of course, in the case of all-too-many governmental subdivisions and entities, there is tremendous complexity, inadequate supervision, and labyrinthine accounting, authorization and record keeping. There’s too much capital, and too many persons with access to it, without proper oversight. A large number of seemingly trivial expenses and expenditures can eventually accumulate into a cavernous loss. This waste (being kind with my choice of terminology) is taxpayer money — in private enterprise, the shareholders would be taking the company’s management to court for this type of abuse. They would be speaking of breach of trust, breach of fiduciary duty, diversion of funds, fraud and possibly embezzlement.
I believe that Detroit is the first host organism to fall victim to an epidemic , and that municipal bankruptcies will be hooping up like crocuses in early springtime. And we’ll get closer to the truth about the extent of the federal deficit and the value of the U.S. dollar, fresh off of the press. That’s a scenario for The Global Futurist Blog to paint.
But then, I’ve gotten off of my focus. Let’s return to a standard fiduciary management protocol where each individual in the chain of command or hierarchy structure is responsible — truly responsible — at every level:
1) If a responsible individual sees or suspects a problem, it must be reported immediately to the appropriate persons of supervisory authority;
2) That person of supervisory authority should follow through with vigilance and persistence to see to it that the problem is solved before it wastes any more money and before it worsens;
3) The problem must be expediently fixed, and noted as such – after all, every minute of loss is a drain on profitability and solvency;
4) If there are too many systemic problems, and the organization’s current financials as well as its proformas (always have worst-case, realistic-case forecasts handy; they should be created frequently as assumptions and conditions change; they are a powerful management tool, and an early warning system) are not looking good, senior management must gather the right experts, both from inside of the organization and from senior management’s “A” list of outside professionals, and;
5) Re-examine the organization’s entire business model in terms of S.W.O.T. analysis, critical path dependencies analysis, and possible displacement (or antiquated assumptions) analysis. Look to prune your sunk costs and nonproductive recurring costs;
Note: From this point forward in my discussion, I’ll address this issue as if the business (even if it is the business of running a municipality) were yours, and that you were the executive ultimately in charge.
6) Reconstruct the organization’s business model with the help of the assembled expert committee, create a realistic, turnaround reconstruction plan, promulgate it to all of the involved and affected individuals, as well as to all other parties doing business or trade with the organization. Let them know of the changes, what the time frames really are, what sacrifices or compromises they will have to make lest the team effort fail (Note: If you’re a charismatic, credible, strongly committed leader, you will convince every individual, from the board room down to the janitorial staff that they are each, and all, partners in the the success of the business, and that necessary sacrifices may have to made to bring stability and better results for the benefit of all). Take a serious tone, especially when asking for sacrifices and compromises. Make everyone feel like a stakeholder and an employee or an agent of help;
7) Work the new plan to the letter, diligently, faithfully and without deviation. Report to all of your “partners” frequently as results come in and new forecasts are made. Your diligence, conscientiousness and candor in terms of reporting frequency and transparency will be appreciated and might make potentially hostile parties feel more like allies in a group project and a united effort. That latter is the effect for which you should strive – it justifies the sacrifices and compromises…and to make it even more potent, be certain that the C-Suite occupants, senior executives and the directors make visible meaningful sacrifices as well. You don’t want to look like a “too-big-to-fail” company that the U.S. government just bailed out [grin];
8) Demonstrate by variance analysis (projected versus actual results) how you are actually achieving the goals set forth in your turnaround business plan, and how you have converted waste and losses to a positive, potentially distributable fund balance;
9) From that positive pool of hard-won cash, reward all of the parties who have cooperated in the effort (at a sensible level,and not just to the senior most executives and directors, but to all of the participants, sacrificers and compromisers who have made it possible. Everyone enjoys a participatory celebration of success and a feeling of having participated in a victory…everyone! The object:
Demonstrate in distributable dollars and cents that the tough cuts have paid off in terms of solvency, stability and a positive cash flow. A great leader (as opposed to a basically attired career politician) rallies his forces for a job successfully done, reminds them that their efforts need to continue, and also reviews the victorious results of the variance analysis — show them how inflows have increased and how outflows have decreased. Make them all feel like stakeholders.
10) Promise to continue on course, and to remain vigilant and practical, as well as honest and tough. Continue to restructure and turnaround the business periodically with a “no sacred cows” and a zero-based budgeting approach. These techniques and tools work.