Page 14 - How To Avoid Going Bust In Business

Here it is.

Bob Stannard was an insolvency expert. When a company got into terminal trouble
he would be called in to take over the finances and perform the last rites on the
business.

His job was to sell whatever assets were left and to distribute the money to the
company’s creditors.

He was one of the top corporate funeral directors. He was, however, also a
corporate “Mr Fixit”, very successful in salvaging businesses that were fundamentally
sound. In a number of high profile company crashes, he took over the business and
restored it to full strength.

I had the good fortune to sit next to him at an official dinner one night so I asked him
“How do I avoid having you knock on my door?” His

reply amazed me.

“It’s dead simple,” he said. And he gave me a formula that has helped me survive
several business crises since.

About 30 years ago I was flat broke. A disastrous marital property settlement saw me
get just $8000 from the family assets. Problem was I had $250,000 in loans and
other debts in my business and only about $80,000 in other assets. My business was
on its beam ends. I was technically insolvent.

My accountant and my lawyer advised me to go straight to the court and file for
bankruptcy.

I rejected that advice and decided to slog my way out of the financial mire.

I did it, and along the way I learned some valuable lessons.

Since then, as in any business, there have been bleak periods but the advice that
Bob Stannard gave me that night and things I learned salvaging a dead-duck
business have meant I could ride out the storm and come out smiling.

SO HERE’S THE SECOND PIECE OF CRITICAL ADVICE:

Use The Bob Stannard Cash Test

The system that he gave me is the “cash test”.

Each month, on the 19th of the month, the day before you have to pay your bills, you
should list all the money you owe to people. Then you add up the money owed to
you by your customers, plus any available cash in bank accounts.