We have factors like insufficient cash flow, lack of a well-developed business plan, failure to gauge product demand and determine their prices, getting overly optimistic about parameters like achievable sales and money required and the inability to identify the weak operational points, contributing to a business’ struggle or the worst case, demise.

And it’s not like businesses are immune to struggles. Many successful and established businesses of the 21st century have gone through periods where their sales have hit rock bottom and debt levels have gone high, almost inviting bankruptcy in the process. However, they have managed to perform the course corrections and come back in a rocking manner.

Why Do Businesses Face Headwinds?

An entrepreneur should think of the tough times as the “growing pains” he/she experienced as a child.

“You didn’t reach the height you’re at now without experiencing some pains in your joints as your body transformed from a toddler to a young boy or girl. The same logic or growing pains can apply to starting a new business. Take for example never having enough time or constantly putting out fires—you can probably relate to those pains, “Noted educational and business content writer Besma Bihnam commented.

These growing pains can be solved. If struggles start to take over the business, or business owner, they could lead to failure. All the business owners need to do is take a step back, look at the overall state of their business and identify the root cause of the problem.

Apart from the cash flow problems, some headwinds also stem from the fact that entrepreneurs sometimes fail to understand their market and customers. Starting a business without thoroughly researching and identifying the target market, ideal customer, customer buying habits and a clearly defined pricing strategy can lead to failure.

Assuming what worked in the past will always work is dangerous. Businesses that don’t factor in market changes, their competition, changing technology, or the value of experimenting with new ideas are likely to fail. Also, one of the biggest challenges for entrepreneurs is to let go of control and rely on others to finish the job. Yes, businesses, irrespective of their size, need decentralisation of roles and responsibilities to perform like a well-oiled machine, but having way too many hands-off approaches doesn’t help the business leader’s cause either.

While business growth is great, slow and steady wins every time. It’s hard to believe that too much business can lead to failure. While it’s tempting to go for it all, steady, predictable growth that’s properly managed is healthier than uncontrolled jumps and spurts in volume. Keep in mind the 80:20 rule: 80% of your business will come from 20% of your clients.

Successful small businesses have four common characteristics that we recommend all small business owners adopt. They can know their market better and make sure there is a demand for their product/service before they develop it. They can enter the market with a distinction that sets them apart from their competition. Most importantly, stay strong and don’t give up. If required, rely on a mentor while starting out your venture and throughout changing business climates.

How To Revive A Struggling Business?

Innovate

“Markets, people, and technology all change. What’s relevant or trendy today isn’t guaranteed to stay the same. Your business, too, should change in order to adapt to the ever-changing world. Choosing to focus on today’s marketplace without anticipating the future is what made known companies such as Eastman Kodak, Motorola, Sony, and Yahoo lose their edge. Experts call it the strategic trap,” says Robyn Howard, a video enthusiast and content manager over at VideoRemix.io.

There is a psychological trap, where business leaders focus exclusively on what made the business successful and fail to adapt to new changes. Also, not investing in the equipment/other systems that run their company is another way many businesses end up losing on new and relevant investments.

“Put simply, if a business doesn’t innovate or resists innovation, the chance of failure becomes high. At one point, all the companies on the list dominated the market in their respective fields; the great lesson any small business owner can learn here is to never make the same mistakes they made,” Howard stated.

Adapt to new changes, innovate your products and services, and also, rather than trying to deal with everything on your own, listen to your friends, family, employees, and business partners. Invite them to share any ideas that could help revive a failing small business.

Perform A SWOT analysis

A SWOT analysis is a strategic exercise a business owner needs to go through to identify his/her venture’s strengths, weaknesses, opportunities, and threats. It’s a helpful exercise the person can use to analyse your current performance, identify things that are going wrong (problem with product-market fit, pricing, operational processes, etc.), and discover areas where the business leader can make improvements.

The business leader should also know his/her target market and ideal clientele. Performing the task will help the person to understand where he/she should focus the efforts, the market needs and pain points the company’s product/service can solve for clients, apart from targeting clients’ buying behaviour, and develop a strategy that’s the right fit for the business.

Set SMART Objectives And Create A Plan

Make a list of your (addressing business leaders) SMART objectives for your business. This will give you clarity and make it easier for you to stay focused and work towards achieving them.

“SMART stands for: Specific: Clear enough to fully understand. Measurable: Can determine when it’s complete. Achievable: Can be accomplished. Relevant: Is connected to your overall game plan. Time-bound: Has a deadline with specific dates,” stated Bihnam.

Next, create a plan that will put your SMART objectives into action. As you create a plan, think about the steps you’ll need to take, how long it will take, and who will help you.

Put A Solid Financial Roadmap

To keep the business open, cut discretionary or unnecessary expenses. Look at areas where you can cut costs like travel expenses/reduce your utility usage to lower your monthly bills. If you are renting office space, talk to your landlord to see if they will be willing to reduce rent/renegotiate your lease. The last place you will want to cut costs is people. If you find yourself in a tough spot, try reducing employee hours and compensation before laying them off.

“Create a cash flow forecast so you have insight into what’s coming in and what’s going out. Use the forecast to project likely sales and expenses, so you know how much money you’re likely to have in your bank account. You’ll also want to manage your cash flow more efficiently by sending invoices out on time and following up with customers who haven’t paid. You can streamline this tedious process with a payment and invoicing tool like Keap payments to save you time and help you get paid faster,” Bihnam said.

“If you’re like most small business owners, you probably have debt to pay. Many business owners see debt as a sign of failure, but in reality, small businesses who have debt have higher credit scores. Try not to feel too overwhelmed by outstanding debt or avoid creditors. That only makes matters worse. Instead, talk to your creditors and explain your situation and your plans to pay your debt. Most creditors understand and willing to work with you if they’re confident you’ll eventually pay what you owe,” she commented.

Put A Client First Attitude In Place

“Keeping clients satisfied and happy has never been more important than it is today. We live in a world where people demand more, and if business owners don’t meet increasing expectations, people will voice their opinions on social media and go elsewhere. It’s a hard fact, but that comes with running a business nowadays. Tools like Keap make it possible for small businesses to deliver personalised service and create happy clients,” Bihnam remarked.

Aggressive marketing is the best option to gather new customers/clients. Did your previous marketing strategy deliver good results? If not, then it needs to be refreshed.

Small business expert Melinda Emerson lists these essentials of a good marketing plan: market research, target market, positioning, competitive analysis, market strategy, budget, and metrics.

“Each one of these items matters in turning around a failing company, but I think knowing your target audience is one of the biggest factors. Try to understand them by obtaining all the essential information you can about them. You can speak to them directly through email or social platforms, and request them to share feedback on your services or products, plus any other suggestions they may have. Also, try creative and productive ways such as personalised video marketing to convert them,” Binham noted.

The post Looking to revive your struggling business? Here are the tips appeared first on International Finance.

The married couple were joined in the management of the company by Paul’s brother Mark Rossi (51), also known as Marco Rossi, and Daniel Michael Goldberg (42).

Independent Derivative Traders was incorporated in March 1995 but 11 years later in February 2016, the company was insolvent due to difficult trading conditions and increased running costs, which meant it could not meet all of its liabilities.

The four directors received professional advice that all of Independent Derivative Traders’ creditors should be treated equally and the directors had an obligation to look after its creditors’ interests and not to worsen their position.

However, despite Independent Derivative Traders being insolvent, the company obtained deposits from two new traders totalling £75,000, which were then used in general trading, while also paying-out over £79,000 to Paul and Claire Rossi and an associated company. This was contrary to the advice given and detrimental to their creditors.

The company went into liquidation in November 2016 and the Secretary of State has since accepted disqualifications undertakings from Mark Rossi (eight years), Paul Rossi (six years), Daniel Goldberg (three and a half years) and Claire Rossi (two years) for their various roles in causing or allowing the company to take money from clients and make self-serving payments while being insolvent.

Daniel Goldberg’s ban started on 11 September 2018, while Mark, Paul and Claire’s disqualifications are effective in February 2019 and their disqualifications mean the four directors are banned from directly or indirectly becoming involved, without the permission of the court, in the promotion, formation or management of a company.

David Brooks, Chief Investigator of at the Insolvency Service, said: “When the company became insolvent, the directors were specifically instructed not to do anything that was detrimental to creditors. However, they decided to completely disregard that advice, putting their creditors at risk.

“These disqualifications should serve to further underline that such behaviour is unacceptable and we will seek disqualifications against those directors that do not uphold their duties.”

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Kamilia Lahrichi

January 12, 2015: There will be no truce between the Argentine government and its foreign creditors, despite the expiration of a provision on December 31, 2014 that could have paved the way for a settlement, hence leaving the economy in limbo and cut off from global financial markets.

In 2001, Latin America’s third largest economy defaulted on its debt. Since then, it has been entangled in a legal battle with hedge funds that bought its debt on the cheap during the crisis that year. In 2014, the South American nation again burned its bridges with creditors.

Argentina was keen to pay a part of its debt – $539 million – to its “hold-out” bondholders but a US judge ruled that the country could not pay the restructured bonds unless it also paid about $1.5 billion to two hedge funds – Aurelius Capital Management LP and Elliott Management Corp.’s NML Capital Ltd.

These were coined “vulture funds” because a chunk of their profits comes from buying the debt of distressed companies or countries like Argentina. NML Capital, for example, is expected to get $800 million for the South American country’s debt securities that initially cost $50 million.

Foreign creditors demand today that Argentina pay back defaulted bonds at 100 cents on the dollar.

The “Rights Upon Future Offers” (RUFO) clause stipulated that if Argentina “voluntarily” made a better offer to some creditors before December 31, 2014, other bondholders would be entitled to the same treatment. This includes those who have restructured their debt in 2005 and 2010.

Notwithstanding the expiration of this provision, Argentina spurned an opportunity to settle the dispute.

Deadlock

On January 5, 2015, Economy Minister Axel Kicillof asked foreign creditors to accept a haircut of 65% on the bond principal – an offer that fell short of their demand.

He then stressed that it would be too costly for Argentina to fully repay its debt to the “vulture funds” in a Twitter blast on January 8, 2015. “Argentina wants to pay 100% of the creditors, but with fair, legal, equitable and sustainable conditions,” he wrote.

Technically speaking, the impasse with foreign creditors does not dramatically change Argentina’s gloomy economic outlook.

The South American economy still suffers from sky-high inflation. It slipped into recession the last quarter of 2014 and its gross domestic product fell 0.8% the third quarter of 2014 from the same period in 2013.

Prices for soybeans – its main commodity – are plummeting. Besides, the administration is crimping imports, amid depleting US dollars reserves, and heavily controlling the peso to keep US dollars on Argentine soil.

Juan Pablo Ronderos, Business Development Manager at abeceb.com, an economic consultancy in Buenos Aires, forecasts a contraction of the economy of 1% in 2015.

How long talks with foreign creditors will take “depends on the need for currency of the [Argentine] government,” he explains.

“At the moment, the authorities have a stock of international reserves higher than what they expected a few months ago, hence the possibility of an immediate agreement is diluted,” he says.

President Cristina Fernandez de Kirchner was proud to announce that central bank reserves amount to US$31.4 billion – a 2.7% increase during 2014.

“The country needs dollars but the situation is not as critical as it may sound,” adds Luciano Cohan, Chief economist at Elypsis, a Buenos Aires-based market and political consultancy.

Besides, Argentina is relying on a $11 billion loan from China to slow the depletion of its currency reserves.

A way out?

“It is clearly necessary to find an agreement with the holdouts in order to completely solve the issue and be a more predictable market for investors,” Mr. Ronderos notes.

He explains that such an “agreement is necessary but not sufficient” to alleviate the country’s economic woes. The Argentine government needs to tackle macroeconomic imbalances, upgrade its regulatory framework and create a competitive economic environment.

In the end, Argentina’s economic salvation lies in the October 25, 2015 presidential election as President Fernandez de Kirchner is constitutionally barred from running a third term.

“I think that the three candidates most likely to succeed Cristina [Sergio Massa, Mauricio Macri and Daniel Scioli] have an economic policy that will be very different from the current government’s,” says Mr. Cohan.

Even Mr. Scioli, the current administration’s official candidate, is likely to have a more market-oriented policy.

Also Read:

Argentina: Russia’s new market

Poverty keeps growing in Buenos Aires as Argentina wakes up in default

WTO rules against Argentina’s protectionism

The post An unhappy New Year for Argentina appeared first on International Finance.

6th September 2013

A mechanic’s lien is a debt collection method used in the court for guaranteeing payment for services which is either contracted or carried out by an external agency such as contractors, sub contractors and other outsourced agencies. Depending on the laws of a particular state, contractors, sub contractors and suppliers can file this lien within a certain amount of time after the work has been carried out and payment is still due. Until the debt is paid, the land owner will not have clear title on his property.

Investopedia defines Mechanic’s Lien as a guarantee of payment to builders, contractors and construction firms that build or repair structures. It also extends to suppliers or sub contractors and cover building repairs as well. The lien ensures that the workmen are paid before anyone else in the event of liquidation, for example: a contractor and a Bank are owed money by a homeowner; due to non payment of money within the stipulated period even after repeated remainders they sue the homeowner in the court. Both the parties file the suit and obtain judgements in their favour, however, the Bank obtains its judgement first and therefore has a better lien position and priority on payment, however,  the mechanic’s lien changes this scenario and allows the contractor to obtain a lien and priority of payment over bank even before the contractor has obtained a judgement.

Exemptions

A bankrupt debtor can avoid certain types of lien in a process known as “lien stripping”, it is a practice permitted by the courts under which wholly under secured liens against real estate property may be removed or stripped, and the debt to which they relate treated as unsecured in a Chapter 13 plan of Reorganisation, however, liens cannot be stripped under Chapter 7 bankruptcy.

A Mechanic’s Lien cannot be used for labour or materials provided for a public purpose, such as schools, government buildings and other government projects. A Mechanic’s Lien can be used against the owner of a building if there is something in writing between the contractor and the owner.

The most common mistakes while filing a mechanic’s lien are:

1. Failure by the contractor to properly identify the completion of work within the stipulated time- Mechanic’s lien statute requires a claimant to record its mechanic’s lien within 60 days of work on residential projects and 90 days for commercial and industrial projects.
2. Failure to initiate Lien Foreclosure Litigation on time: The lawsuit to foreclose the lien should be filed with one year of recordation
3. Overstating the amount of Lien: While recording a mechanic’s lien, a contractor shall not over state the amount of lien, a deliberate attempt to overstate the lien or a negligent overstatement of figures would invalidate the lien.
4. Failure to identify the property to which Lien is attached: The creditor shall properly identify the property which has to be liened; a mechanic’s lien should include the legal description of the property along with name of the street, locality and other details of the property.
5. Failure to identify the owner of the real property: A lien must list the exact legal name of  the property owner, the mechanic’s lien statute requires the mechanic’s lien notice to include the name of the owner and his/her latest address as show in the county’s property tax records.
6. Failure to give a proper pre-lien notice to the owner:   The mechanic’s lien statute imposes requirements on residential properties, before liening a residential property, a subcontractor shall notify the owner in writing within 30 days of providing material or labour in case of an existing building and 60 days of providing materials or labour in case of a new building.
7. Wrong party to stake claim: It must be note here that only the actual party can enforce a mechanic’s lien, in one case a contractor lost his lien as the court overruled the decision because he signed the contract as an individual rather than a corporate representative.

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