by Ellen Gerl
A client of the Friendship EDZ Business Development Center in New York assured business counselors from the rural incubator without walls that he had everything under control. But staff suspected otherwise. During a follow-up visit, staff learned the firm still hadn't paid its sales tax and quarterlies were due, recalls Russell Combs, the former Friendship Center manager who is now director of technology ventures at the Appalachian Center for Economic Networks in Athens, Ohio.
It was time for incubator staff to step in. First, the counselors looked closely at the firm's inventory and accounts receivable to create a realistic analysis of cash flow. "We discovered their accounts receivable were totally out of control. The owner didn't feel comfortable calling people and saying, 'You've owed us for six months and we need the cash,'" Combs says. In the short term, incubator staff helped the client make the phone calls and bring in cash to pay the bills. The long-term solution was to "help him regroup and reflect on his management," Combs says.
Savvy incubator managers spot the warning signals of a client company in distress before it's too late. Whether it's a no-brainer like a missed rent payment or something not so obvious like rumors of infighting among investors, take it seriously. Incubator managers and other industry pros shared with NBIA Review these SOS signals to look for and action steps to put an ailing firm back on track.
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Keywords: accounting/financial management -- client, benchmarking clients, company failure and dissolution, company turnaround
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