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What do you do when you can't pay your bills?

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OR What do you do when you are paying your bills late most of the time?
As bad as those two scenarios might be, there are even worse conditions. Such as paying your bills with your credit cards and carrying large balances so that you are being charged 18% interest (or even more from some of these money hungry banks that are trying to cover their losses from other areas). Hardly any retailer earns 18% profit out of their business so what makes them think this concept is going to work? I know-it's because the payments are smaller at the beginning but it's just a delayed agony.

I started to write this piece with the title "The Dark Side of The Recession", BUT that would have been the worst thing I could ever do. Why? Because managing your debt is just part of running your business.

Sure that's easy to say until you have received a collection call from a vendor or collection agency who are the subtle masters in intimidation (many times not so subtle.) We can say to ourselves, "It's just business." However, we know it eats us up inside. It ruins our self-esteem, we feel like failures, and try to avoid taking these calls. And when we do take the call, we make promises for payment that are nothing more than wishful thinking.

Many times the financial condition you find yourself in might not be your fault at all. I once owned a very successful (and extremely profitable) apparel store in New Hampshire that had a great team of people running it and a wonderful customer base. It was a 2200 square foot store with sales between $400,000 to $450,000 annually. Everything was going great for 9 years until two things happened. First, a new mall opened up across the street. We knew it was coming so that was no big deal. What I never took into account was the automobile traffic that a new mall can generate. What made matters worse was the roads getting to the mall were just NOT equipped to handle this traffic increase, so bumper to bumper grid lock would occur during busy days making it almost impossible for customers to get into my parking lot.

Our Saturday sales which averaged around $3000 dropped to a staggering $300 to $400 per day. That was only for about 6 months but of course it occurred at Christmas time as well.

Then when you think things can't get worse... they did. My landlord rented out the store beside us to an Eastern Food Mart/convenience store. Shortly after they opened they had delivered 5000 pounds of curry powder. The problem was that we shared the same air conditioning system. Needless to say the odor made it impossible for customers to shop and employees to work. After lots of efforts to correct the problems, I was forced to just close the business. Did I do anything wrong? Not really, but it created late payments and lots of sleepless nights.

So what should a business owner do when unexpected events occur? Where do you turn to? Since October I have received a number of calls and emails seeking advice. So I wrote up a piece about retailer options when events like this occur and I am including these ideas in this article. There is an old Chinese proverb that says, "When the student is ready, the teacher will appear." My teacher has appeared and my eyes were opened wide to a part of an industry I knew very little about.

I work for many associations representing all kinds of industries. There is an association for every job type or type of business you can think of, but I had never heard of The Turnaround Management Association. A group of (here comes another new phrase) Payable Management Specialists. These people are NOT debt consolidators or credit counselors. Some consumer credit consolidators don't have the best of reputations--they go under the guise of a non-profit organization thinking they are there to help you and some do. However, some of these companies are not always the most ethical companies you can work with and their needs are served first.

On January 20th I will be interviewing Mr. Jim Herst, one of the pioneers of the Turnaround Management Association and the Winner of the Turn Around Specialist of the Year in 2008. He is regarded as this country's leading authority in Payable Management.

So what do they do? Why should you know what they do?

First, understand the signs of retailers in need of a turn around specialist:

1. Sales off or less than anticipated
2. Selling, general, and administrative expenses are rising
3. Gross margins declining
4. Decreasing inventories because you can't get credit or don't have the money to replace the sold merchandise
5. You are writing and holding checks
6. Receiving collection calls from Vendors
7. Increase in employee turnover
8. Larger customers not buying

What YOU can do, what are your choices when you start to experience these symptoms:

1. Start extreme cost cutting
2. Refinance all of your debt
3. Seek new money to invest or find new partners (with money)
4. Debt resolution-Settle your debt with vendors
5. Sell the business
6. Liquidate
7. Hire a professional Payable Management company to start your turn around

So what does the professional Payables Management actually do? "It is the process whereby a debtor in financial CRISIS retains the services of an authoritative third party to professionally represent that debtor's relationship with its selected creditors." You turn your problems over to an experienced pro.

They perform the following services:

1. Stop all the calls and demands from vendors, collection firms and attorneys
2. Perform all creditor contact so you can focus on running your business
3. Eliminate court appearances
4. Protects the retailer's assets from lawsuits
5. Satisfies the creditors within your financial need
6. Works to rebuild your credit rating
7. Creates strategies for long term profitability
8. Facilitates profitable sales of inventory

How do Payable Management people get paid? They are paid on performance only. They receive a percentage of the money they save the retailer.

This is more than just about saving a business. It's more than just savings jobs. It's more than just helping to save a community. It's about saving someone's self-respect and takes a horrible burden off the retailer's back.

I believe this is such an important topic that on January 20th I will hosting Jim Herst to discuss this topic in detail and have open lines for you to ask the pro. This will be a FREE teleseminar for everyone. (It is free if you listen in during the live event but we will be charging $19.95 to download the event for people who are not members of The Retailer's Advantage.) We are doing that so that we can have as many of you ask Jim as many questions as you like. It is a rare opportunity--not to be missed!

Actually I am looking forward to hearing about the success stories that this program generates. Have a great week.