NEW YORK, NY--(Marketwire - April 28, 2010) - Thousands of private businesses start and grow in boom times.
Now, in the downturn, many of those businesses are struggling. Despite the changing landscape, their owners are reluctant to make hard choices -- instead remaining committed to the vision, plan and people that were there on the way up.
However, that commitment and dedication can be fatal, says an authority on private business turnarounds.
"The same qualities that enabled someone to build the business from nothing to $30 million in revenue can destroy it when the need is to shrink the infrastructure back to a revenue level of perhaps half of that amount," says Lawrence Cohen, CPA, executive consultant at New York accounting firm Marks Paneth & Shron and an authority on turnarounds for private businesses and high-net-worth individuals.
"The nature of the recession is that there's a smaller base of business," Mr. Cohen says. "If your business can only expect sales of $12 million, then it has to scale down and get its costs under control so that it can sustain itself at that level.
"Many entrepreneurs are too emotional to make those hard choices," he explains. "They stay committed to their vision and to the people who were with them at the start. That commitment can be admirable but it also destroys flexibility and keeps people from moving their business in a new direction that's better suited for the recession."
Mr. Cohen is available for interviews and can discuss:
- Why passionate commitment to the business can be fatal: "Private business owners get attached to their vision, their business plan and the people who were with them at the start and on the way up," Mr. Cohen says. "However the plan may no longer be right for the times. If the business only needs 150 people but employs 200, trying to keep them all means putting them all at risk. This can be hard, because an owner often knows all of those people personally, but under challenging economic conditions it's necessary to be objective and let the numbers tell you what you need to do."
- The warning signs for professionals that a private business is in trouble: "A business owner's personal banker is often the first to see that the business is in trouble," Mr. Cohen explains. "When a client starts to have difficulty making loan payments, or begins to borrow more, or, most seriously, begins to lend money to the business out of personal funds, it is often a sign that the business is sick and needs attention."
- The hard questions professionals need to ask to help the entrepreneur get back on track. Mr. Cohen adds, "A professional team -- including a personal banker or financial advisor, an accountant and an attorney experienced in turnarounds -- can ask the tough questions that help the client get an objective look at the situation. Is this just a temporary slowdown or has the business environment changed? If the environment has changed, how do the structure and size of the business have to change? Do you need to change product lines or distribution channels, or close locations, or shed entire lines of business? What's the right number of employees for a lower level of economic activity and what skills do those people need to have?
"The turnaround process is not easy. But the result will be a healthier business -- one that is tailored to these new, leaner times," Mr. Cohen says. "Entrepreneurs need to learn to turn the page. The right team of advisors can help make that happen."
About Marks Paneth & Shron
Marks Paneth & Shron LLP is an accounting firm with nearly 475 people, of whom 64 are partners and principals. The firm provides businesses with a full range of auditing, accounting, tax, bankruptcy and restructuring services as well as litigation and corporate financial advisory services to domestic and international clients. The firm also specializes in providing tax advisory and consulting for high-net-worth individuals and their families, as well as a wide range of services for international, real estate, media, entertainment, nonprofit, professional and financial services and energy clients. Visit www.markspaneth.com/ for more information.
About Lawrence Cohen
Lawrence Cohen is an Executive Consultant at Marks Paneth & Shron LLP. He rejoined the firm after having served for many years as the President and Chief Executive Officer of The Griffin Group, the investment and management company of the late Merv Griffin.
Drawing on his deep experience in the media, entertainment, hotel, casino, retail and real estate industries, Mr. Cohen provides counsel in the areas of mergers, acquisitions, financing and operational management. He is also well versed in the needs of high-net-worth individuals. Mr. Cohen has had business interests in the Los Angeles area for more than 25 years and shares responsibility for the firm's operations on the West Coast.
Contact Information:
For more information, or to schedule an interview, contact:
Itay Engelman
Sommerfield Communications
(212) 255-8386
itay@sommerfield.com