April’s Challenge: What Would You Do?
Six decades ago, an advertising expert and a printer created the million dollar concept of selling brand loyalty, via coupons compiled in a book, that provided savings for an entire year. These books were sold to the public from local schools, charities, and places of worship by a dedicated sales force that pledged a percentage of the profits back to the communities for positive social programs. That was the era of the Green Stamps collection for product redemption… Just like airline mileage today!
Now, I am certain many of you are thinking this puzzle will be about the second generation curse but you would be wrong. Now here is the challenge —
The Printer’s invoices were always paid, on average, between 45-60 days which suddenly and dramatically changed to NEVER. The customer made promises that failed to materialize even though the Printer continued to provide additional books for sale. The on-going, unpaid production which represented approximately 60% of the Printer’s business created a cash flow melt down. The sudden loss of cash flow, while carrying sizable unpaid accounts receivables, is the perfect recipe for a catastrophic collapse in any business.
When the Printer called PICB for advice the mid-six figure debt was 6 months past due -He was rightfully worried about the future of his company. The public records revealed that the Book business had been sold to a venture capital group at about the same time as invoice payments stopped, and as we were discussing his options the Mailman delivered the bankruptcy notice.
The timeline and records clearly revealed that the VC’s agenda was to steal profits while they could. Leaving all the creditors as collateral damage is simply a calculated risk as most creditors would not spend substantial money suing an inactive, asset-less company in order to prove fraud in a post-bankruptcy case. What would be gained from doing so?
So what would you do to avoid this scenario?
Just a quick happy ending – the Printer survived the turmoil and thrives again today while operating in the black – he directed his passion and perseverance to gaining new customers, focusing on new commodities, and diversification. He rebuilt the family business – and he, like his father, is a success!
SO… WHAT WOULD YOU DO TO SOLVE THIS FISHY TALE?
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