Rand Wall

New Member Rand Wall

HOUSTON, TX (April 11, 2019) – Today the Silver Fox Advisors announced its newest Silver Fox Advisor. Rand Wall was elected a Silver Fox Advisor at the organization’s April 11, 2019 Business Meeting”, announced Bill Herman, President of the Silver Fox Advisors. Herman added. “Rand has anextensive background in the business world and specifically in …

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Electrical manufacturing

Case Study: Manufacturer Reaches $10.0 Million Revenue Objective

COMPANY

The Company is a five million dollar Houston-based manufacturer of toroidal transformers for specialized electrical equipment applications. Their markets are medical, telecommunications, audio-video, computer and lighting industries (300 customers). The higher price ($85 average) and manufacturing complexity of toroidal transformers dictated that the Company work with their OEM customers in the custom design and manufacture of these components. The Company was profitable but wanted to grow to $10.0 million in revenue in three years. 

PROBLEM ENCOUNTERED

The problem was that attaining this $10.0 million revenue objective rested with the President and a senior sales manager, both lacking the experience and time to “run the business” and to grow it. The marketing problem was that the Company could not effectively identify, sell and service new applications. 

SILVER FOX ADVISOR INVOLVEMENT

The Silver Fox Advisor convinced the President to shift responsibility and accountability for profitable sales growth to the sales manager. The sales manager then hired and trained more Company sales engineers and independent field representatives. In addition, the Silver Fox Advisor recommended an outside (research, marketing, planning and advertising) firm to define, quantify and communicate with new target markets. 

CONCLUSIONS

The result has been that with new prospect industries, product applications, and a successful sales organization, the Company has reached its $10.0 million revenue goal. An economic side benefit has been a simplified product mix with far better manufacturing productivity. 

Case Study: The Business Start That Didn’t

Advice from an experienced Silver Fox Advisor concerning what not to do is as valuable as guidance and suggestions on what should be done!!

COMPANY START-UP

Four people who knew each other well (a saleswoman, a commercial artist, a copywriter, and a physical fitness instructor) shared a common interest in their own physical fitness. They wanted to capitalize on the current trend toward health and fitness by building and operating a facility to function as a Ropes Course. They were located in a large city with many companies and people as prospective customers. A very favorable location was available but satisfactory terms were not yet worked out. All were to be equal partners. Adequate capital was available from outside investors. A general division of responsibility for operating functions was agreed to between the four potential Owners. 

PROBLEM ENCOUNTERED

The challenge was to initiate a business plan and begin operations as quickly as practicable. 

SILVER FOX ADVISOR INVOLVEMENT 

As planning and negotiations for location and equipment continued, two Silver Fox Advisors were called in. Although there was much discussion, no practical or complete business plan ever came together. It soon became apparent that none of the individuals, other than the fitness instructor, was planning to quit their other job to devote full time to this venture. And to him, it was just another job, not an entrepreneurial opportunity. 

CONCLUSIONS

The Silver Fox Advisors were able to convince the four potential Owners of the new Start-up Company that, on the basis of their overall commitment, the operation would never succeed. Although much time was spent in arriving at this conclusion, very little of the potential Owners’ money was spent, and no investor money was accepted or wasted. A business disaster was avoided!

Manufacturing & Costs

COMPANY

A well-known Company in enamel-on-steel cookware was the first to bring color, tempered glass lids, stay cool stainless steel handles and high quality non-stick em1 to the market. Their customers include quality retailers and mail-orders who require dependable, timely shipments and service. The assembly and warehousing of the Company’s cookware line is accomplished in their 40,000 square foot facility. 

PROBLEM ENCOUNTERED

The problem was that the assembly and warehousing costs were increasing and “expedited’ orders were causing high labor costs. Finished goods production was not responsive to delivery needs. The market for the Company’s cookware was highly seasonal causing variable manpower demands. The Company had little information on assembly production output or projected production needs. They just knew that their costs were out of control!

SILVER FOX ADVISOR INVOLVEMENT

The Silver Fox Advisor was asked by the President to study the problem and to make a recommendation for improvement. In a short time, the Silver Fox Advisor analyzed the problem and set a course of action with a timetable and related costs.

Working with department heads, the inventory plan was revised to be responsive to customer needs. Forecasts were made to recognize seasonality; item bookings were measured against forecasts; and production levels were set to meet overall sales forecasts. Selected time studies were made on the assembly lines with recommended changes to improve the output per hour. Utilization of contract manpower was improved.

CONCLUSIONS

Responsiveness improved. Key factory managers were trained in the new system. The Company was very pleased with the results. Cost improvement was 24.5% within the first six months, significantly increasing the overall profitability.

Commercial Interiors

Commercial Interior Build-Out Business

COMPANY

A Silver Fox Advisor had been mentoring for about a year. The new Client was in the commercial interior build-out business. 

PROBLEM ENCOUNTERED

For three years, the Company:

  • Had been stuck on about $7 million in annual sales with profits diminishing each year, 
  • Had a good reputation, good people, good potential and good sales contacts, 
  • Needed to start growing again to stay ahead of its expanding overhead costs, and 
  • Was light in both project management personnel and the organization to handle much of an increase in work. 

In spite of the noted weaknesses, the Company more than doubled to $17 million the next year. Management then chose to target $35 done in the third year to maintain the momentum.

SILVER FOX ADVISOR INVOLVEMENT

Since the Company was already stretched thin it was at this point that the Silver Fox Advisor began talking about the Company acquiring or merging with another Company that could shore up the thinly stretched areas, thus allowing the Client to concentrate on sales, where it excelled.

A former employee had started a competitive construction firm and was doing extremely well with annual sales of about $40 million and strong profits. The Owners admired and respected each other and believed that the combined Companies would be a good, synergistic fit. They were. Nevertheless, they expressed a full list of integration problems in bringing the two cultures together.

The Companies’ sales and profits; however, never showed a problem. This year they will do some $150 million-plus in revenues and the cultures have now merged very well. The Owners are making money and having fun. 

CONCLUSIONS

Lest it sound like the Silver Fox Advisor played the only key role in this success, it must be emphasized:

That as a Mentor, the Silver Fox Advisor only coached and cheered. It took winning players and their hard work to make the coach look good.  

Nooshin Yazhari

New Member – Nooshin Yazhari

HOUSTON, TX (August 9, 2018) – Today the Silver Fox Advisors announced its newest Silver Fox Advisor. Nooshin Yazhari was elected a Silver Fox Advisor at the organization’s August 9, 2018 Business Meeting”, announced Richard T. Hendee, President of the Silver Fox Advisors. Hendee added. “Nooshin is a strategic business and technology leader with well-rounded …

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Restaurant management

Restaurant Management

COMPANY

A Silver Fox Advisor Client has been the Owner of several restaurants in the Houston area for the last 25 years. The return on investment, pre-tax net, has been approximately 100%. The Owner’s business assumptions had been that the Owner should be involved 100% in the business, or else the business should be sold and the Owner should retire. 

PROBLEM ENCOUNTERED

Retirement might have been feasible except for the fact that the Owner’s wife, 20 years younger than he, had just earned her PhD and was now ready to begin her own career, not in the restaurant business. The Silver Fox Advisor pointed out that the Owner could retire but if he wanted to stay married, he would not be able to travel very far with his new found freedom. She would be busy building her new business. 

SILVER FOX ADVISOR INVOLVEMENT

The Owner and the Silver Fox Advisor agreed that the restaurants were providing them with a very good living. In meetings with the Owner, the Silver Fox Advisor pointed out that with personnel adjustment, the Owner’s direct involvement could be reduced to a couple of days per week.

After several meetings, with a lot of analysis and study, the Owner agreed that restructuring management might be the answer. 

CONCLUSIONS

Several months later a management structure along the following lines was implemented: 

  1. Each restaurant will have a kitchen manager and a front room manager.
  2. Two regional managers are in place. Each is responsible for three restaurants. These managers have options for some equity based on performance and report directly to the Owner.
  3. Performance competition has been set-up for each restaurant as well as regional competition.
  4. Morale is high. Each employee feels that he/she has some input as to how the restaurant is run.
  5. The Owner is delighted with the results to date. He continues to make a good return on his investment. He has more free time and his wife agrees that the new arrangement is working out very well.
  6. The Silver Fox Advisor and Owner will continue with regular meetings to work and resolve new challenges (opportunities) as they arise.
  7. A new restaurant has been opened and it is integrated into the overall organization.

Importing Business

COMPANY

The Silver Fox Advisor Client is the Owner of an importing business which is supplying brass, aluminum and garden products that are made in Turkey, Germany, the Philippines and other countries to domestic outlets. The Owner was recently divorced. 

PROBLEM ENCOUNTERED

The major problems included: over bought inventory; too much capital tied up in security deposits for foreign shipments; an SBA loan was in default; and many payments in warehouse notes were in default with no plan of recovery. The Owner had contacted a bankruptcy attorney and planned to file within the week. 

SILVER FOX ADVISOR INVOLVEMENT

The first item of business was to create some working capital by discounting sales for immediate cash and placing the receivables on a more current basis. After several meetings with the bank and the SBA, it was agreed to restructure the loan. The Owner then went to the lien holder on the warehouse and explained the plan and paid interest only for six months.

The next step was to buy out the $400,000 of payables for about 30 cents on the dollar. The Silver Fox Advisor took over the spending and payables. At this point, the ordering of any goods that required cash deposits for delivery were stopped. The warehouse was cleaned up and made ready for sale and placed on the market. The sale of the warehouse and the sell-down of the inventory cleared the SBA loan. At this point the Owner moved into a much smaller leased warehouse and took only orders that could be shipped in direct container lots. Presently, the Owner has a stock/saving account of about $500,000 dollars and is conducting business with adequate working capital. 

CONCLUSIONS

Silver Fox Advisors were used successfully in the negotiations with the SBA and the buyout of the payables without which the Owner would not have been able to recover. Some hard decisions had to be made with the Owner resisting on some of the items. The basic problem with this type of situation is in changing the mind-set of the Company Owners. In most cases, the Silver Fox Advisor finds that it takes several meetings to get all of the problems out in the open and sometimes the Silver Fox Advisor is hit with some real surprises because the Owner(s) are in denial or so embarrassed that they have made bad decisions and do not want to talk about them.

Owners must understand that Silver Fox Advisors are trusted friends as well as advisors and confidants.

A Tale of Two Companies

Company 1

The main line of business is the repair and service of large centrifuges for use in the maritime and oil industries. This Company is owned by two individuals who have been business partners for a number of years. To protect each other and assure the Company would be able to remain in business if either individual became disabled or passed away, a buy/sell agreement is in place where by each partner could buy the other partner’s shares in the business. There is insurance in place to assist in this event when and if it occurs. 

Company 2

Company two operates as a furnace rebuilding business. It has been in business a number of years. It has a good client base and has enjoyed much success. However, the Company’s owner has been diagnosed with Multiple Sclerosis. 

Problems Encountered 

In Company number one the insurance that was in place to help with the buy/sale event was in the name of the Company; if the policy paid out, it would create an Alternative Minimum Tax issue for the Business as well as a personal tax for the individuals, should if the policy payout be used for the intended purpose. 

The problem in Company number two was twofold. One, the Owner could not get any new insurance; two and the policy that he had in place had large premiums which were becoming difficult to pay due to his medical condition. 

Silver Fox Advisor Involvement 

A Silver Fox Advisor member who has years of experience in the insurance business was able to help both of these Companies with their respective issues.

In Company number one this Silver Fox Advisor did an in-depth complete review of the buy/sell agreement and the insurance policy; he was able to make suggestions to correct the problem at very little cost to the Business Partners. 

In Company number two this Silver Fox Advisor reviewed the insurance policy that was in place and discovered that the policy had a Waiver of Premium clause. Several years of past premiums were able to be covered. In addition, the Business Owner did not have to pay additional premiums’ and the policy remained in force. With these savings, the Business Owner was able to buy insurance to ensure his key employee could keep the business going for his family until they could learn to operate the business or it could be sold.

Conclusions 

When it seems as if the best of times have been turned into the worst of times there just may be a silver lining that achieves a happy ending. Silver Fox Advisors and are available to put their expertise and years of real-world business experiences to help you work through your problems.

Financial Restructuring

Financial Restructuring

COMPANY

Two partners (“Owners”) of a small Houston Company, with $2.0 Million of annual sales and well respected in their trade, found themselves with a severe Internal Revenue Service Problem. 

PROBLEM ENCOUNTERED

Company sales had been stable for several years while overhead continued to grow. Benefits for employees were consistently increased even though margins were narrowing and other overhead costs were increasing. The Owners drew out almost all remaining earnings for their personal salaries. Rising costs and some economic downturn aggravated the cash flow problem and the equity portion of the balance sheet was negative.

Serious problems occurred when the Owners decided to defer the deposit of employee withholding tax for several quarters. The IRS promptly advised them that it was not the Company’s money and that the IRS wanted it now (plus interest and penalties).The payroll tax problem was some $125,000 and growing substantially. 

SILVER FOX ADVISOR INVOLVEMENT

The Owners decided to seek help and called on their local bank for expansion of their line of credit. Due to earnings history, minimal capital, lack of collateral cushion & the IRS problem, the bank was not willing to help. They visited a second bank, then another, and another. Each time, they went away “empty-handed.” The bankers proclaimed their commitment to the local business; however, none was willing to make a loan. The cause seemed hopeless. 

Then, someone advised the Owners to call the Silver Fox Advisors to assist them in resolving the financial dilemma. All too often, small companies “knock” themselves out trying to get bank financing. Bankers play it by the book, and even healthy and promising companies can fail to measure up to a bank’s financial tests, such as a strong debt-to-worth ratio. The point is – If you don’t have the numbers, you don’t get the money!

Not having the “numbers” is precisely the predicament the Owners faced. Because most of the Company’s assets were encumbered by existing loans, the business was not financially attractive on paper. However, this situation belied the fact that it was a first-class facility with a strong clientele in a growing and affluent economic environment.

The objective was to translate the Company’s strength and potential into current financing. The Silver Fox Advisors are skilled at matching cash-starved companies with the appropriate loan sources and they can “tap” a network of financial institutions willing to fund small businesses.

CONCLUSIONS

The first priority was to get “breathing room” from the IRS pressure. A second Silver Fox Advisor, with extended experience in dealing with the IRS, was brought in. The Silver Fox Advisor was able to convince the IRS to accept a new payment plan, buying some time for outside resolution. 

A Silver Fox Advisor prepared and presented a business and funding plan to several banks with, as expected, no success. The Silver Fox Advisor then turned to a branch office of a national Factoring Company active in small business lending. To complete the “puzzle,” the Silver Fox Advisor applied to the Company’s bank for a restructure of existing debt, with no collateral dilution to the bank.

The Factoring Company approved a $400,000 line of credit that provided enough availability for the Company to pay off the IRS. Bank debt was restructured and a four party (Bank, IRS, Factoring Company and Company) understanding was reached. It should be noted that factoring is a very expensive way to fund a small operation but may be required in certain circumstances.

In Summary, the Silver Fox Advisor:

  • Know where the money is, who controls it and how to get it;
  • Have access to a wide range of cost sources, can speed the loan “shopping” process and provide the business plan with better odds of succeeding; and
  • Can identify not only the kind of loan the company may need but also the right institution along with the officer at the institution most likely to approve the financing

The Company was able to get out of its financial predicament, prosper and move out of the Factoring Company arrangement with its related expensive costs and paperwork.

UPCOMING EVENTS
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