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Leadership Training - February Leadership Situation

THE LEADERSHIP TRAINING/MENTORING CORNER

In the August 2025 Newsletter we started a series called “The Leadership/Mentoring Corner” in which we posed a thought-provoking situation for you to think about and put yourself into asking yourself – “What are your next steps”. Below is the situation that was in the February 2026 Newsletter.

FEBRUARY LEADERSHIP SITUATION

Fred owns a machine shop which he started 30 years ago. The Company does $7.5 million a year in revenues. Fred has a Mechanical Engineering degree from Texas A & M. He also is a degreed metallurgist. Fred never had any interest in financial matters; in fact, he has never even balanced a checkbook. Fred has always relied on others to run the business office and accounting departments. 

Fred also doesn’t think the business is large enough to have degreed finance or accounting specialists on staff; thus, the business' accounting department is staffed with one bookkeeper, who has been with the Company since it started and a couple of individuals with high school educations who have been with the Company for 20 years.

One day, the bookkeeper lets Fred know she is leaving the Company, effective immediately, to move to Florida to be with her aging parents who need health-care assistance. Neither of the accounting department employees are interested in moving toa leadership role, nor do they have the capabilities to do so. Fred decides to seek someone with an accounting degree from a temp agency to replace the individual who is leaving.

After about 90 days the temporary accounting department head comes to Fred and discloses a number of issues in the accounting department that are being and have been done incorrectly for years, and the Company has not been as profitable as past financial statements have reported. Further, revenues have been off the past year. Sales have dropped to $5.0 million, and cash flow is very tight; several suppliers have closed down their open accounts and placed the Company on a cash basis. Further, several customers have stretched out paying the Company, and there are a number of accounts receivable over 90 days past due.

What should Fred’s next steps be?

Please provide us a brief write-up of what Fred’s next steps? Send your write-up to Lynn Rosado at [email protected]

In our March 2026 Newsletter, a team of Silver Fox Advisors will provide responses to what he or she would have recommended to Fred that he should do based on the situation detailed above.

If you need assistance in becoming a better leader, I recommend you start by contacting the Silver Fox Advisors. Silver Fox Advisors are former or present business owners themselves, and they have leadership experience in running a business, and in some cases several businesses, and have dealt with unforeseen and unplanned situations throughout their careers. We encourage you to visit our website at www.silverfox.org to select a Silver Fox Advisor and also to learn more about the Silver Fox Advisors, as well as our great programs and community outreach endeavors.