Business Consulting Questions Answered

Business consulting can be a viable avenue to increased organizational performance. Yet, some managers have a reluctance to contact outside expert help. To illuminate the business consulting process we have answered here a number of questions brought to us by new clients.

Q: What do you mean by 'business renewal?
A: All businesses go through an ebb and flow. Some go through an almost visible "S" curve of rapid growth, peaking out, and decline. Some simply get into overleveraged positions. Or others lose their underlying marketplace. When a business hits a downturn, it is the setting for business renewal. Perhaps it is a matter of evaluating the economy (macro or micro). Perhaps it is a matter of changing the business model. Perhaps it is a matter of adding further equity, selling the company, or restructuring the debt. Perhaps it is a matter of seeking a new market. All of these approaches - and more - constitute business renewal.

Q: When is the best time for me to engage the services of a 'turnaround' firm? How much will it cost me?
A. You may not need a turnaround firm. But it is best to find out if you think you have difficulties that are getting worse, not better. For that, we can provide you with an evaluation of your circumstances and potential approaches to it. That will cost you nothing. Should you decide to retain Ironwood to assist you the cost will vary depending on the time it takes or the type of services you wish to use. Our fees are fairly standard for the industry. Furthermore, the value added is substantial. And the fees are small compared to the potential for further deterioration of your business.

Q: Tell me more about the 'zone of insolvency'.
A: The "zone of insolvency" is a term without an exact definition. It has arisen out of court cases in which it was determined that a company can reach a situation in which it either (a) cannot pay its bills on a current basis, or (b) it has an "upside down" balance sheet, that is, greater liabilities than assets. Or both (a) and (b).

Q: Are there some tools available to help me determine if my company is in real trouble?
A: See our section on Dr. Edward Altman's Z Score. The Z Score is one of the most accurate bankruptcy predictors in use today. Also see our list of "Enterprise At-Risk Factors" which is a catalog of symptoms experienced by companies in financial distress and decline. Many of these symptoms are recognizable before the advent of financial crisis. When approached early, the problems of financial decline can be addressed via a wide range of solutions. If neglected, these problems often become acute, leaving little time and fewer options for resolution.

Q: You mention the possibility of a half-day of 'free' consulting. What can you possibly do for me in four hours?
A: If you are willing to talk freely with us, we can likely focus well on one or more of the major issues facing your company. We can't solve it in a few hours, of course. (For that, we'd have to use the Marines saying that, "Miracles we do right now; the impossible takes a little longer.") What we can do is begin to understand what the parameters of your company condition is and outline what some of the probable courses of action.

Q: I'm pretty sure the market has passed me by, but I don't have the time or resources to figure this out - and my sales people tell me they are having more and more difficulty closing business. How can you help me?
A: We'll help you get back on top of your (former) market or we'll help you find a new market and restructure to service it.

Q: My big problem is finances - it looks like I expanded my business too quickly as I tried to take advantage of the market in the late 1990's and early 2000's. I am over capacity for what my customers tell me they need. Do you have experienced financial experts to help me get though this?
A: Yes . Our staff of Senior Consultants include practicing CPAs and business analysts with significant real world business with financial restructuring experience.

Q: I have a big problem with my executive staff. They have become complacent, and are slow to adapt to the current economic situation. As a result, I find I am unable to make the changes in my business I know need to be done, because I cannot get the input I need from my staff. What can I do?
A: Our experience tells us the best solution is often to replace that layer of management with new, more forward thinking senior managers. We can help you evaluate your needs and fill them , and can take direct interim management roles until the right people are on board.

Q: My CFO just resigned over a difference of opinion on how to handle new purchases and our existing supplier debt. Can you help me?
A: We can help you restructure your debt, if that is what required by the situation, and we can negotiate with your suppliers for more favorable terms. One advantage of the Ironwood approach is that we have no political constraints with your business, and can be very successful with making and implementing the hard decisions.

Q: I think it may be time to sell my company. Because I am a fairly small business - I did about $11M in sales last year - I'm not sure who I need to enlist to help me sell my business. I know I'm too small for the 'M&A' firms, and I don't trust 'business brokers'. What can you suggest?
A: Ironwood Advisory has expertise and experience in merger and acquisition processes, without the overhead of a large M&A firm. There are a variety of possibilities: a strict sale, an earn-out, an ESOP and others.

Q: I am in a hostile political situation; my board keeps telling me I need to increase revenue and reduce expenses, my suppliers are sending collection agencies after me, my customers are very late in payments, and my employees and managers are constantly bickering about 'whose fault this is'. Where do I start?
A: Your start with an outside evaluation of where you are and where the root causes of your difficulties are. We may also bring in professional facilitators to work with you, your Board and your officers and employees. Let's discuss this further.

Q: My Company's culture is stagnant, largely due to some 'old line' managers who have demonstrated a lack of interest or ability to change with the times. I know I need to make some dramatic and positive changes, but 'I'm too close to the action'. How can you help me?
A: Cultural change is one of the most difficult things to implement on your own. A successful 'change agent' most often is an external resource who can perform an independent evaluation of the situation, and recommend both short term and long term actions for change. Often times this means a senior management change-out, since your senior management team is usually the primary reason for a stagnant culture. Ironwood has experienced change management professionals who can help you make the tough decisions - and implement them if needed. We often find 'champions' in the ranks of your professional staff. These managers have been stymied in their attempts to effect change. We can help to remove these shackles, and let your existing talent shine through.

Q: My specialty auto parts manufacturing company has way too much inventory of parts that have not sold well, and yet my production managers continue to manufacture a wide variety of items, believing we can saturate our market. This is costing my company far too much in excess capacity, unsold inventory, and a sales force that seems to be ineffective in selling what we have. Help!
A: First we'd take a look at your market, what has changed (if anything), then at your sales force, and finally at your production facilities and business model. The situation is solvable.

If your business consulting question is not answered here, please send it to us via . We will give it our full consideration and get you a speedy and valuable response. If you want an immediate answer, you may call us at 866-692-1600.