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Leadership Training/Mentoring Corner - March 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?” 

MARCH LEADERSHIP SITUATION

Sam is the Executive Director of a non-profit public charity organization that provides support to the homeless community in a large metropolitan city. The organization has been in continual operation for more than 30 years and its founder (Harold) treats the organization like it is his own personal charity, in that his name is part of the name of the non-profit, he is only available to meet when he is not running his electrical business or traveling and he demands to part of every meeting and every decision that is made.

The organization has primarily been funded over the years by monies received from an annual sporting event. This event has become less popular over the years because fewer major nationally famous sports figures attend and support the annual event for a variety of reasons. 

Last year, this sporting event raised the least amount of money ever, and the organization was forced to discontinue one of its benefactor’s programs. 

Sam has been attempting to rebuild the board of trustees, which could bring in some new ideas, direction, and potential donors. But Harold has been resisting for fear of losing control over “his charity”. 

What should Sam’s next steps be?

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

In our April 2026 Newsletter, a team of Silver Fox Advisors will respond to what they would have recommended Sam do based on the situation detailed above. 

The Leadership Training/Mentoring Corner - February Responses

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.

We polled several Silver Fox Advisors, and below are some recommendations on what Fred's possible strategies should be:

1.     Fred needs to consider taking a more active in role in the company’s financial position. This company is his livelihood and possibly his retirement income source. Having good numbers and control of the company’s finances is generally something that should not be delegated to someone else.  Knowing how to make a widget and how to sell are critic functions in a business; however, the financial function is probably the most important piece because without cash and financing, the business is at great risk.

2.     Fred should hire an experienced controller who has a good working knowledge and understanding of accounting. In addition, he should contract with a good outside accountant who can assist the controller in closing the books monthly and provide Fred some financial direction for the business.

3.     Fred and the controller should look at every expense item on the company’s profit and loss statement and determine which items are actually needed to run the business and eliminate and/or reduce those that are not needed, including personal expenses that are or have been run through the company’s books. The intent here is to stop the bleeding by reducing the company’s expenses, hopefully returning the company to profitability.

4.     Fred needs to meet with the controller and accountant to get a good understanding on where the company is financially, to set some goals to improve the situation. Monthly follow-up must be done to assure that everyone is on the same page, and progress is being made to get the situation under control.

5.     If the company did report losses in prior years, Fred should ask the outside accountant to look at taking advantage of any tax benefits that might be available to the company.

6.     Fred and his financial team need to get a good working handle on cash flow and profitability and work diligently to get the situation under control.

7.     Once Fred and the new financial team get a handle on the financial situation, they should focus on the various revenue sources to determine individual profitability on the lines of business and/or individual projects.