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Posted by Jeff Sands on March 10, 2010
We’ve all felt the resurgence in specialty retail and now the results are showing. Leading Investment Bankers for our industry; Tully and Holland, report that many specialty retailers are getting more financing, higher valuations and investor backing like we haven’t seen in many years. There has been a spike in merger and acquisition activity with many deep-pocketed retailers on the hunt for well positioned businesses.&...Read More
Posted by Jeff Sands on January 13, 2010
Lately I have been working with a US manufacturing company that has been crushed by another large Fortune 500 sized company. This was a talented manufacturer with a specialty in high-end, high-margin products. The owner will tell you today that he knew they were courting trouble by letting one customer become such a huge part of his business. And he’ll also admit that he got addicted to the revenue and didn’t manage the business properly. But the sales took off, every year was bigger and more exciting than the last and every year held the promise of a huge payday. On and on they went until the music stopped. And when it did they were left without a chair. Sales to that #1 customer fell 90% in 10 months. A severe cash crisis followed...Read More
Posted by Jeff Sands on November 25, 2009
There used to be six ways for a business to get out of trouble - and fixing it was only one. Think about that, you can get out of a major jam six different ways. That was very good for American businesses and the economy. These days there are only about 1½ways to get out of trouble in a distressed business. And the one solid way is the worst; liquidation. Quickly; here are the six ways in order of preference (reverse order of woe):
Posted by Jeff Sands on November 6, 2009
There is no longer any doubt in my mind that the American Consumer is coming back strong - and the Gift Business will do just fine. I say this because I read a survey that might seem pessimistic on the surface; According to Hart Research Associates; "63% of U.S. Consumers say the way they spend and save has changed permanately". My first thought is; What the heck are the other 37% thinking? My second thought is; I know this is phoney. In 1990, during some transient Green movement (remember those global Earth Day celebrations?), 80% of Americans said they would dramatically alter their consumption to benefit the environment. That year Ford introduced the first SUV, the Explorer. The Hummer followed soon after, as did larger homes, higher fuel bills, bottle...Read More
Posted by Jeff Sands on October 22, 2009
Yesterday's New York Times has a column by Thomas Friedman discussing the widening gap between the Haves and Have-Nots of the new economic order. Not the same old rich/poor divide but the future split of who will find work and opportunities in the future and who won’t. I quote Friedman for two reasons; one he’s a lot smarter than me and also because he draws an interesting parallel to the Gift/Décor business. Remember the last 10 years when our economy was “normal”? Well, actually it wasn’t. The world had caught up to (or passed) us in education, training and skills. And at the same time, technology eliminated many borders. We all know about the Indian x-ray technician working for 5% of her American counterpart and doing it al...Read More
Posted by Jeff Sands on October 10, 2009
I met an old childhood friend at the NY Gift Show as I was walking the aisles. Actually, I sought him out in order to say hello and to see how his business is doing. He was probably average of executives at any of the shows this summer; optimistic on the outside and scared on the inside. He took me through the stream of consciousness that has been playing in his head over the last year; “I missed my chance to sell my business… This industry is doomed … I’ve got to get out … I can’t get out … I really like what I do and my company… I don’t want to get a J.O.B. … I can probably live on 30% less sales … Dang, I could have made a ton of money if I’d always run my business this lean…OK, I’m making a ...Read More
Posted by Jeff Sands on September 23, 2009
According to the TMA; Only 20% of distressed businesses recover. You can imagine what that means for the other 80%; they limp along a shadow of their former self or they disappear into another firm or into the bankruptcy process. That high number goes to one thing – not acting soon enough. A recent client of ours (outside the gift business) waved the white flag while the last few dollars were headed out the door. We went straight from health issues into cardiac arrest. Apparently their previous two internally lead turnaround efforts didn’t work. 33% of all distressed companies are immediately classified as hopeless. Can you imagine that; one day you finally get religion, call in the medics and they leave you for dead after a quick diagnosis. ...Read More
Posted by Jeff Sands on August 28, 2009
Everyone knows the axiom about the risk of having too much business with too few customers. And most of us try to avoid it. Even the few companies who are greatly imbalanced know this and have plans to fix it. Most often, they never really fix this problem and it never really becomes an issue. Recently I worked with a firm that had most of their business with one customer. Well, that customer stopped ordering and this year the business is down 60%. Now picture this; nine months ago they had a healthy business with very nice profits. Now the CEO is liquidating his retirement savings to keep the business afloat. I won’t share the numbers, but trust me, it would make you cringe just like it did for me. And the bank is definit...Read More
Posted by Jeff Sands on August 21, 2009
This is a true story about three companies I’ve worked with; David’s, John’s and Jack’s. David had bank debt while Jack and John each had investors. Over the course of time each business stumbled and got into trouble. John and Jack continued on their merry way. They spent the first 6 months hoping sales would pick up, the second six months were spent making what felt like deep cuts and the third six months losing control of their business through the court system. David – he got called downtown for a “Come to Jesus” meeting with his banker. He spent the next six months restructuring his way to profits. The second six months were spent regaining his footing and investing in new products. The third six months were spent with growing ...Read More
Posted by Jeff Sands on August 18, 2009
I recently worked with a company (a great company) who hired a fancy-pants marketing guy and sold a huge big-box program. Sounds good right? Well they fumbled on the execution and got ALL the product back. This killed their cashflow, clobbered their credibility with their bank and forced them into a turnaround. Talk about Hero-to-Zero. The turnaround was highly successful and 10 months later they are posting healthy profits with solid cashflow. Selling, developing, marketing, designing – that’s the fun part of this business. Big plans, big PO’s and big notches in our belt are stuff our dreams are made of. Execution, project management, accountability, dotting I’s and crossing T’s – BORING! And missi...Read More
Posted by Jeff Sands on August 14, 2009
Yesterday I visited an old friend and former customer of mine. She was accepting 13 pallets (yes, 13 pallets) of new product from a Gift manufacturer that afternoon. This company is now her primary vendor while I know very well who used to be. So what happened? The original vendor who put her into this category was sold and new management has since lost its way. Well, maybe that’s not the best way to describe it. What really happened is that they never developed a passion for their core products and spent their energies doing other things. And the results are; weak designs, poor (and costly) representation and neglected customers. So who took the business – a company who is passionate about their products, devotes themselves to good design and has stuck to what works...Read More
Posted by Jeff Sands on August 7, 2009
I recently worked with a gentleman who was running his family’s 3rd generation business. Actually, he was running it right into the ground. Losses in 2008 were $500,000 and he had changed exactly nothing for 2009. So under the very best conditions he would lose another $500,000 – probably more. At some point, I suspect, that starts to hurt. A quick review of his financials spelled out the horror in clear detail and I stumbled into our conversation with something as subtle as… “You’re going to be out of cash in five months, miss payroll that week and have the doors padlocked soon after. The good news is that your business is extremely fixable and we can get you cash positive and profitable long before anything bad happens. You are a wise man to have reached out for...Read More
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