Accounting consultant Eddie Senatore has specialised in insolvency for three decades, and still reckons it’s a great time to be alive and in business.
“In the age of technological advancement, businesses have evolved and you no longer have to wait for ages to get things done; businesses [especially those that are agile] can get ahead quickly,” he says.
Mr Senatore has a remarkably positive outlook for one who has dealt in doom and gloom for years in the business landscape.
The first step when assessing a business in trouble was to assess whether it could be restructured or repurposed.
“We ask the hard questions,” the consultant said. “Is the business operating efficiently? We have to ask if it’s salvageable.”
In asking that question, they needed to take a long-term view – what are the business’s future prospects? In other words, is the business able to be competitive in any shape or form in the future?
If the answer is no, then they advise the business owner to exit and the advice goes along the lines of, “It’s better to get out today, and live to fight another day.”
They try to maximise the value of whatever assets the owner may be sitting on, within the business. If it’s better to pull the plug, they can help the owner to minimise their losses and/or maximise the sale of their business.
We all know that many entrepreneurs have failed in more than one business before they succeeded. It’s almost as if it’s a traineeship, only with greater consequences. The emotional impact of failure inflicts wounds and leaves scars for life.
The highest price to pay for business failure is by far the emotional one. Status is a feature of our modern society and Mr Senatore shared examples of just how hard it is to step back from a failing enterprise when your ego is on the line.
One client had been in the military, where he was taught that failure was not an option, so when he had to quit his flailing retail outlet, it was really difficult for him to do.
Luckily, they could on-sell it into a larger store and that client managed to re-train for another profession and get over his “failure”. He even began to learn to accept it over time.
How we are brought up brings our values into alignment and we carry these over into our business, including our belief systems. So for many these values and belief systems are the very things that hold us back, according to Mr Senatore.
Another client had issues with his social status – he lived in a top suburb, drove a fancy car, and couldn’t face the fact that he would be seen as a failure if he didn’t have those trappings of success. So, with Eddie’s help, he quietly sold the house, rented in the same suburb and sold his fancy car, buying an older model. He stepped back from all of the boards he was on and withdrew from the limelight.
Then it was simply a matter of which skills he could transfer over to another industry. It’s in the social capital arena that the failed business person can move forward.
Mr Senatore says that the values you were brought up with affect how you manage your business and your business shortcomings too. If you were surrounded with bling and an environment which had many outward symbols of success, then closing the doors and giving up these trappings, the very symbols of success, will be difficult emotionally. Similarly, if you have been conditioned, as the former military client, to view failure as unacceptable, this will make exiting a floundering business more difficult.
Mr Senatore’s toughest job is to get these people through their personal emotional barriers that failure in business presents, and that’s why he welcomes the newest initiatives in the start-up space, where the government is putting in an effort to make business failure less onerous. To encourage entrepreneurs to take risks. It’s a matter of failing fast and moving on.
But Mr Senatore’s mission statement today is to help to reduce the number of business failures. That’s not an easy task, but he’s up to it and believes it’s worth it. It’s certainly a goal worth pursuing.
Next time we’ll delve into the main reasons why your business may be failing.