The 90 Day Reorganization with Hunter Johnson
Hunter Johnson is a veteran of business strategy and management consulting who in the middle of the pandemic founded Tophill Advisors and his marque program The 90 Day Reorganization.
He grew up in a family business that his grandparents founded over four decades ago and that his father and brother continue to run today. He can empathize with the stresses and pressures of operating a small business.
Hunter has a progressive track record at academy consulting companies like IBM Global Business Services and Deloitte Consulting. He has extensive experience leading consulting teams that advise small business owners across the globe.
Full Transcript Below
Roy – The Business of Business Podcast (00:02):
Hello, and welcome to another episode of the business of business podcast. This is Roy. We are the podcast that brings a wide variety of topics from a diverse group of professionals. You know, we want to raise awareness of a new ideas, processes, procedures. Also, uh, give, uh, give you some actionable tips and also put you, uh, put some people in front of you that may be able to help you if you’re in need. Yeah.
So today this is going to be a special release episode that. We typically release on either Sunday night or on Tuesday, but this one will come out, uh. Some point, uh, earlier during the week feeling like this is a, it’s a very timely topic. I don’t think we can wait to normal release times. And, uh, we want to get this information out there. We know that COVID, um, you know, it’s taken its toll on businesses. And, uh, this is, this could be a program that may really be able to help you out.
Roy – The Business of Business Podcast (00:59):
So we’re going to, um, kind of get right to it. But just wanted everybody to know why we, why you will be seeing this release kind of off schedule. So, uh, without, uh, taking up too much more time, I want to introduce, uh, Hunter Johnson. He is a veteran business strategy and management consultant. Who is, who in the middle of the pandemic founded top Hill advisors and his marquee program.
The 90 day reorganization. He grew up in a family business that his grandparents founded over four decades ago. And that his father and brother continued to run today. He can empathize with the stresses and pressures of operating a small business. Hunter has a progressive track record at Academy consulting companies like IBM global business services and Deloitte consulting. He has extensive experience leading consulting teams that advise small businesses, small business owners across the globe, Hunter. Thanks so much and a welcome to the program.
Hey Roy, thanks for having me. I’m glad to get the opportunity to chat with you today. Yeah,
Roy – The Business of Business Podcast (02:04):
Yeah. I mean, this is so important. I’m, uh, you know. I’m glad that we were able to get connected and like I said, uh. I want to make a special exception for you. To get this information out there because I feel, uh, this program probably has the ability to help, um, you know, a lot of small businesses. That may be wondering what tomorrow is going to, if there is even gonna be a tomorrow for them.
Sure, sure. So I couldn’t agree more, um, mass, I talked to different small business owners. I find that awareness of these new reorganization solutions is, is really relatively low. Uh, and then when I talked to different, you know. Accountants and professional professionals in their, uh, in their kind of sphere of influence. I’m finding that the, um, similarly the, the awareness. There is low and the need is kind of at an all time high. With the stresses put on small businesses by the pandemic.
So, uh, yeah, I’m really grateful to, to have the, to, to, uh. If nothing else raise awareness of this option and, uh, making sure that some of these small business owners can, uh, save their business if nothing else. Right.
Roy – The Business of Business Podcast (03:08):
Exactly. So now, uh, you know, if you could tell us a little bit. Not only about your background. I think that if I’m not wrong. Uh, you formed top Hill advisors just to take on this project. of, uh, talking about the 90 day, uh, reorganization and getting that out. Is that correct?
That’s, that’s exactly right. Roy. So I launched top advisors, as you mentioned in the introduction last summer. Uh, and I came from a consulting background. And when it came to kind of who did I want to help? It was really the intersection of my skillset and my passion. I had a lot of experience. You know, advising small business owners in the past, kind of grew up in that family business.
So there was a lot of passion there. And then when it really became the, a matter of, kind of. What problem am I going to help them solve? Uh, obviously the most topical problem was an existential problem, right? Small business owners, their biggest problem is losing their business. So it became a matter of searching for a solution. Is how can you prevent small business owners from losing their business? There’s a lot of solutions that are out there PPP, uh, E I D L loans, things like that.
But a lot of those things were temporary. Ether kind of temporary fixes or kind of loaded the business businesses up with more debt. When I came across the SVRA the small business reorganization act. That’s when I really thought, okay, this is a solution that can actually help, you know, restructure businesses for success for the longterm.
That was really when I said, okay, let me double down triple down, kind of 10 X down. Specialize in this, uh, that seems like the right opportunity for people. That are truly in need, people that are in pain that really need help. Um, and that’s kinda when I went all in and started launching this business. Yeah.
Roy – The Business of Business Podcast (04:56):
I don’t think that, um, you know, intuitively maybe we are. But I don’t think we really sat down and think about the impact small businesses have. You know, the latest statistics. What is it like 70 or 80% of the economy is built up of small businesses. And then there’s that trickle down effect because, uh, they all have employees. That put money into our economy as well, that pay taxes, pay rent, go to the grocery store, do whatever.
But, uh, you know, when you kind of cut that off. When, when we lose a small business. You know, my understanding about businesses that have closed during this pandemic so far, is that probably 99% of them aren’t coming back. I mean, they are gone and that’s just it for them.
No, I think you’re, I think you hit the nail on the head. I think the economic impact, uh, or the economic contribution is that small businesses have, are huge. Um, and I think beyond there’s just a cultural impact, right? Is some of the places that really define the culture in our. In our local communities, more often than not are small businesses.
They’re not the mega corporations, you know, your, your, your culture is not built around the Walmart. It’s built around, you know, the, the local small businesses that, that really influenced that. But, um, yeah, I couldn’t emphasize the economic impact in terms of employment. Uh, in terms of the dollars that go into those businesses, stay in those communities, uh, that. You know, they don’t, they don’t trickle up. Uh, in, in, in go off to places that are not local. Um, so, so yeah, I, I definitely agree that that’s, that’s an important aspect of it.
Roy – The Business of Business Podcast (06:38):
Then we’ve got the, you know. That human aspect of this as well, that people losing their jobs. You know, we’ve been fortunate to have a pretty robust economy, you know, the, the turndown of 2008, it, it, it lasted, but it had an end in sight.
Then, um, but we’ve, over the years, we’ve had a robust economy. That if you lost a job, you could find one, it may be. It wasn’t as good a paying, but now, you know. We have people that have been on the sidelines for going on a year now. And, uh, and it’s not like a. Hey, I can go find this other job because if that company. They’ve not only if they’ve been cutting their employees. But now there’s probably, uh, you know, 10 times more people fighting over just one position.
And so that trickles back down to the home. Um, raising kids, families, marriages, relationships, it’s. Uh, you know, you see, uh, families that are living out of their cars nowadays.
Roy – The Business of Business Podcast (07:36):
And it’s, you know, there, it’s just, uh, I, I don’t know. I just can’t even explain the devastation that we’ve seen over this last year. So, uh, anyway, now let’s talk about, uh. So, you know, this is the other thing about these programs is. I think there were some misconceptions in the beginning of a couple programs were, uh. Yeah, they were helpful at the time. But basically they kicked the can down the road for three to five months.
And so, um, I liken it to the, uh. The rent protection program is that, um, for some people it’s not that that is forgiven. It’s said it’s kicked down her road. So it was like, now. All of a sudden, at the end of some point in time. You just owe this huge sum of money that you can’t. You know, you probably never be able to get out from under. So businesses have been the same with some of these other programs.
And so I think that’s another reason. Why I feel it’s important to get these guys in front of somebody like yourself that. You know, can help them navigate through what is alone, what is kicking it down the road versus something that may be sustainable help where you, you know, you’re not gonna come out at the end of this own a ton of money,
Right? Yeah. I think the, the two big ones that I’ve seen are on with regards to the landlord. And with regard to some of the loans, as you mentioned. And so, you know, there’s a lot of small businesses that did get some relief from their landlord. But more often than not, it was in the, in the form of a deferral versus just a full-on, um, you know, forgiveness.
So it was, we’ll allow you to pay 50% of your, of your rent payment. But starting in 2021, you know, we’re going to start calling some of that back. So you’re going to go back to paying the original rent and then some. So that’s something we see here kind of early 2021. Is all that’s coming to a head in terms of that. Uh, those deferrals, um, it wasn’t forgiveness in a lot of cases. Um, and then on, on the, on the loan side is. Um, you know, it’s, it’s nice to have that cash in the short term. But structurally it’s not changing the way you’re doing business.
Right. Um, and I think you’re, you’re, you’re kind of a metaphor of kicking the can down the road. That’s exactly how I think about that. Think about that whole situation. So, um, I think that’s where the, these reorganizations are, are a bit different. Is it’s, it fundamentally changes the structure and the financial health of the business. Uh, and makes it more viable for the long run.
Roy – The Business of Business Podcast (10:09):
Okay. So if you don’t mind kind of, uh. Because I don’t really know a lot about it, maybe some listeners don’t. But can you give us a little bit of the background and, uh, like when this, the, uh, the small business reorganization, I think it’s the SBR a if I’m correct when the SVRA came out and kind of, uh, some things it can do for us.
Sure, sure. I always kind of start with things that people are familiar with. So, you know, so often we see in the news, these big mega companies that are declaring bankruptcy.
You see a GM or a, uh, you know, American airlines or a JC penny, and the headline is American airlines declares bankruptcy, right? And I think the first instinct is people always think of what we call chapter seven, bankruptcy liquidation, right. But more often than not those big mega companies would often go the, the, uh, form of chapter 11 reorganizations. Um, and which means you get to reorganize and continue to run that business.
And, you know, that’s. I don’t know how many people are really intimately familiar with that kind of process. But it’s a pretty heavy process. It’s an 18 to 24 month process. There’s a lot of heaviness, uh, in terms of just the documents and filings that have to proceed.
You’re paying a bankruptcy attorney, a thousand bucks an hour for that entire duration and for a small business, even during their best of times, they couldn’t have afforded that much less when they’re distressed. So it was never really a, a realistic kind of viable solution for small businesses who got into distress situations.
So as kind of toxic as our political environment is right now, and I don’t want to wait into that mess, but I will, that they got, they got this thing, right. Um, so, so Congress, in the summer of 2019 put forth an act called the SVRA, as you mentioned, the small business reorganization act. And what it was meant to do was do exactly that is to say, Hey, chapter 11, reorganizations work for the big guys.
They don’t work for the small guys let’s fix that. So they, they put forth this bill, the president signed it in August of 2019, and they, they knew they had to kind of get some things in place with the courts and all the mechanics that were required behind the scenes.
So 190 days later, it goes into effect. So February of last year, February of 2020, it goes into effect. And what it does is it takes traditional chapter 11 reorganizations that the big guys always did and amends that law with the new sub chapter five, you’ll see it sub chapter V is because lawyers are fancy and they use Roman numerals. Uh, but that new sub chapter five is the small, the small business variety.
And when I say it becomes small business friendly, it’s now a maximum 90 day process. So that 18 to 24 months now is maximum 90 days. Um, you know, it’s like any kind of big mega process. There’s a, there’s a huge ecosystem around it. I’ve mentioned all the lawyers and accountants that start, uh, you know, um, working on it and charging, you know, pretty, uh, pretty, uh, generous fees, a lot of those creditors committees and, um, a lot of the disclosure statements.
And I won’t bore you with all the details, but a ton of that it’s tripped away. So it’s much more streamlined, much more lightweight, much faster. Um, so that goes into effect February of last year. And then as we know, you know, right after that, the pandemic hits the U S all the, you know, uh, shelter and place orders go down, not essential businesses, um, uh, have to close, at least in the short term and small business closures, uh, became began to spike. So in that way, it was very timely.
The unfortunate part of it was that just as I mentioned, not enough awareness, small business owners, weren’t aware the people that were probably most where were the lawyers that traditionally work on these reorganizations, but it’s kind of cannibalizing their golden goose, right? They’re used to charging six and seven figures worth of fees to do these kinds of things. We’re now that now this is discounted by 90 plus percent. This is not a super attractive alternative, that’s cannibalizing, a lot of that traditional work that they have.
So it wasn’t necessarily great for them. They’re not shouting this from the, from the rooftops. Um, but yeah, that’s kind of the, the timeline of kind of right around the time that COVID interesting. The U S is when this coincidentally went into effect. So in that way, timing was perfect, but awareness has been the unfortunate part of this story.
Roy – The Business of Business Podcast (14:45):
Yeah. And I think the 90 days is a good, um, a good, well, a better timeframe because what, I guess what I generally think about with the, uh, you know, the larger businesses when they do the chapter 11, uh, people don’t really realize that they’re not totally bankrupt. Like they have no assets, they usually have a stock pile of cash.
What they can do is just see that they’re not going to be able to cover their operating expenses or their assets have been devalued so much that there’s no worth there. So they start the process where small businesses, you know, they typically, uh, when they get into trouble, they’re typically out of cash and that, uh, are very, very low. They don’t have enough cash to sustain them for, you know, 18 to 24 to 36 months to go through that traditional cycle. It, regardless of all the crazy expenses that are tagged on to that,
No, I think that’s exactly right. I think, you know, there are definitely situations where big companies are a bit maybe too proactive in terms of utilizing this they’re forecasting a, you know, 40 months from now, we’re going to be coming solvent.
So let’s take this action now, small businesses, if anything, around the other end of that, you know, people coming to me that half, you know, $1,200 in their bank account. Um, and there is a point where it’s, it’s too late, but, um, yeah, I think that, that, that kind of ethical portion of, you know, are we working the system or are we doing something that’s, you know, really right by everyone? I think there’s opposite ends of the spectrum. And the folks that in the small business community are truly in dire straits, they’re in distress situations, government restrictions in a lot of cases have put them in a really bad spots.
They’re, they’re trying to, you know, save their employees are trying to do right by, um, you know, their customers. And, um, in, in salvage the blood, sweat, and tears and personal equity, both literally and figuratively that they’ve put it in their business. So I think, I think that is a point of difference there.
Roy – The Business of Business Podcast (16:44):
Yeah. Another point I think, may be worth making, and you can tell me if I’m right or wrong about this, but, uh, typically, uh, you know, what, what I have seen in the past is, uh, small businesses, especially more than, you know, the corporations, but they will, you know, they just run right down to the wire and the first kind of a wake-up call for them is, well, they missed the mortgage payment or, uh, you know, payment on their bill, their current commercial property.
They might have missed truck payments. They may have missed payroll, uh, things like that. So it’s usually something very dire sends up the alarm. And so, um, I guess one thing we could think about if you know, that there’s in a lot of times, it’s because that there, there was no help there. And so it was like, well, we gotta play this out to the end and see what happens.
Roy – The Business of Business Podcast (17:37):
So I guess now, uh, another message to this might be small businesses. Let’s be more aware, let’s be looking out two, three, four, five months. Don’t wait until it’s, you’re out of cash and it’s dire, but let’s, you know, there’s something there for you now with the small business reorganization act. So be thinking ahead, if it’s something, you know, you may need to reach out to somebody like Hunter to say, here’s my situation. I’m still solvent. We still have cash. We’re still we’re running. But at this, you know, at this burn rate that we’re on, now, it, you know, if we continue this in three, four or five months, it’s not going to be solvent.
No, I think that’s exactly right. I think, you know, small businesses by definition are more lightweight in terms of kind of the administrative functions that are sit at top of the organization. They some, you know, may or may not have a CFO, or even if they do, they probably don’t have a large team underneath that. So unlike a mega corporation, they’re not generally, you know, re forecasting the business every month on a 12, you know, rolling month, um, basis.
But I absolutely agree that it’s more important now than never would. I usually will guide. And kind of coach is kind of the next three to six months. If you’re a revenue, the faucet there turned off and you were still incurring your expenses, especially your fixed expenses and whatever variable costs you would still have. How many months of cash do you have? Um, and is that in that three to six month range?
And if it is, this is something that you need to kind of sharpen your pencil on and really know that you’ve, you know, what tool you’ve got in your toolkit. And I think that’s always been kind of the, the coaching is, you know, what, if your revenue goes to zero and it’s always been just like this science fiction scenario, like, why would your revenue go to zero? But it’s, it’s more real now than ever, right? It’s very much can happen. You never know, crazier things have happened in 2020 and, you know, extending down into 2021. So, uh, that, that three to six month range I think is, is the right range.
Roy – The Business of Business Podcast (19:37):
Well, and that brings up a good question for, for actually for you. And top Hill is, um, if I’m a small business and getting kind of nervous and don’t really know where I stand, can I reach out to you, you know, before I’m insolvent or are you basically only like picking up people once they realize that and kind of start that process? Or can you help them maybe prior to need in that process?
Oh, for sure. I mean, that’s always, the first step is, you know, we never want to put someone into a reorganization process who doesn’t need it. So that very first discovery call would be with myself and likely one of the attorneys that I have strategic alliances with, and we would sit down and really reassess your options, you know, are you headed to a liquidation scenario?
And is that the only option? Are you eligible for a reorganization or are you maybe in, in a, in a, you know, tough situation, but you’ve, you’ve got, you know, more degrees of freedom and you just need to renegotiate some of the, um, you know, parameters in your business with your landlord, with key suppliers, things like that, or is it just a matter of, um, you know, kind of a, that you, you don’t need to do anything necessarily structural, but it’s just some kind of tweaks and things like that.
So those are kind of the four or buckets, liquidation, reorganization, uh, renegotiation, uh, and then turnaround that we try to help coach you on in terms of kind of where you sit with your business today, and then in the event that it is a reorganization, then we, then we can get, uh, get rolling on that process.
Roy – The Business of Business Podcast (21:11):
All right. Yeah, that’s good to know because always, uh, you know, being proactive with this is that what I’m hoping is that this act can save a lot of businesses that prior to it, you know, they just gone until it was over quit and went on, but now maybe if, uh, they can get, uh, get out in front of it, get some help from somebody like yourself, uh, you know, there’s, uh, maybe a lot more options available to them now.
So that’s definitely, uh, definitely something to consider. Uh, so, you know, there’s, you spoke about a lawyer, so who are some professionals out there that kind of need to have their antenna up, uh, to, I guess, um, talk to their clients about who this may be good for. Maybe they could refer them to you as well.
Yeah. So there’s three that come to mind right off the bat. The biggest one, I think our accountants to CPAs, bookkeepers that whole kind of community, if I can, if I can lump those together. Um, and I think they’re in a really opportune spot for a number of reasons. One is they have, you know, some awareness by the nature of the work that they do of the financial health of, of these businesses.
And two is they already have that built in trust. They’re already a trusted advisor for these small business owners. So to me, that’s a really, um, you know, key ingredient is you’ve got both, you’ve got the knowledge and you’ve got the influence. So, um, you know, I think there’s a huge opportunity there for them. And there’s a couple of benefits to them. One is that, um, you know, they get to kind of elevate their status as a trusted advisor.
They’re always looking for new, you know, solutions to present to their clients, but frankly, more selves selfishly that gets her retain a paying, you know, revenue stream, right. That, that revenue stream won’t disappear overnight. Um, so that’s a big one accountants.
Um, two others that come into mind, uh, come to mind are, um, you know, folks that are in franchise development mode, franchise development leaders is to make their franchisees aware of these options.
So, you know, sometimes that’s kind of the gray area between a mega corporation in a, in a, you know, what we think of as a small business is are those franchisees, but we see quite a few franchisees taking advantage of, uh, of these types of rare organizations, but they are in that kind of those franchisees are in that entrepreneurial mindset where they’re just hustling, trying to keep, uh, keep the whole thing moving.
And they’re not, you know, they don’t have the time to, you know, peruse all these different options. So to the degree, those franchise development leaders kind of at the top can make their franchisees, uh, aware. Um, that’s another really critical one.
And then the other one that I think is kind of an interesting angle is landlords. So, uh, yeah, we see, we see, you know, quite an evolution with kind of the whole brick and mortar based economy right now, you know, retail has been in kind of a, um, you know, transition state, if I can say it that way for a while now. And if I’m sitting here as a landlord, I don’t want my tenant disappearing right now because what’s the alternative, right? So, you know, I’ll think a lot of the landlords, as I mentioned before, kick the can down the road and said, we’ll give you some rent relief. Now you’re going to pay us back, uh, later.
But, uh, this is a way for them to introduce an idea that allows that tenant to get relief, not only from them as the landlord, but everybody in their, in their ecosystem. Um, so it’s a more systematic relief package that comes to that tenant that allows for more longterm health. And, um, you know, I think that’s, that can be a very savvy play for, for landlords.
Roy – The Business of Business Podcast (24:54):
Yeah. And, you know, kind of thinking about that, it’s like a lot of small businesses work on very thin margins anyway. So even if business came back to 2019 levels this year, uh, the ability to pay, you know, 150% of that rent, or, you know, 125% trying to make up for that, uh, that’s just going to prolong their agony. And, you know, that’s some things that I’ve heard about some of these other relief programs is basically all they did was just extend somebody’s misery for, you know, three or four extra months.
And then they ended up, you know, going out of business anyway. So yeah, those are all definitely things to think. I would not, while you were talking, I was just thinking like chambers of commerce is, uh, other business associations, you know, those, this is something that all those groups need to be talking about to, to, um, you know, basically help their members out because I’m sure, uh, there’s really nobody, no organization that hasn’t been touched by this.
Oh, for sure. For sure. Yeah. The one, the one that I think, uh, well not, no, do I think I see it in the data, you know, these, these filings are public, so you can go in and see them. And the number one industry has been restaurants, not surprisingly, right. Uh, you know, they’ve probably been, um, you know, effected most by by government restrictions and things of that nature.
Um, and you were talking about kind of the, the low margins. I think you see that in that industry in particular, right, is if you’re a restaurant with a 15% margin, you were probably doing, doing pretty well, um, you know, amongst that cohort. Um, and then, you know, not only did they get shut down the lease for indoor dining dining in a lot of instances, but when they pivoted, uh, in, in to their credit, they, a lot of them did, but to delivery those delivery sources, services third charge in 20 to 30%.
So it’s, how do you pay a 20 to 30% commission when you’re at, in your best days of 15% margin business? Uh, that just doesn’t work. Um, so, you know, I think that that’s, that’s a crowd that, um, you know, I’ve mentioned they’ve, they’ve used it, the, the amount of filings in general has been very modest. Um, there, there’s probably been 150 restaurants that have have reorganized, and there’s been tens of thousands that have closed. Right. Uh, so that ratio is not where it needs to be, but that’s definitely an industry sector that can, um, utilize this type of solution.
Roy – The Business of Business Podcast (27:20):
Yeah. And I think you mentioned earlier about franchises, but, you know, the, the cultural section that we’ve talked about too, is the, you know, the mom and pop corner restaurant that has been around forever. And, you know, I’ve got three or four, you know, that we frequent in our area that, you know, they just, uh, you know, they have a family that’s been running them for years and luckily a couple of them have survived, a few have gone out of business.
So, you know, we’ve lost that. Um, we’ve just lost that, that family, I guess, you know, that used to be part of our, uh, neighborhood, but then also these, uh, you know, the bigger chains, the taco bells, the, um, Chick-fil-As and all those, most of those are not typically a company owned store their franchises. So that is where, you know, making these franchise, um, administrators or managers making them aware of this program too, so they can help their franchises to, uh, uh, stay around because I’m sure that they’ve probably helped them on their fees in some.
But still, they, they typically have a very high priced, real estate, very high priced, uh, buildings, and a lot of fixed costs that don’t go away.
Right. Right. I think it, you know, the data I’ve seen is a lot of the fast food has done, done pretty well, uh, through the pandemic or in indoor dining based establishments that are, um, and it’s those kind of ones where it’s a family owned, you know, spa where, uh, they’ve got whatever 20 tables in there they’ve been kind of generation to generation been around forever.
And, um, you know, those, those are the ones that I think are the biggest shame that they’re, they’re in a tough spot. Um, you know, everyone’s trying to pivot, and I think that’s where reorganizations can really come into play. Is this buys you time to do a pivot like that? So an example, snap, snap, kitchen. I’m not sure if you’re familiar with those guys, but they were kind of a restaurant retail concept, health, healthy food kind of grab and go kind of deal.
Um, they went through and each independent, um, you know, store is set up as a unique LLC. So each of them file independently, but they’re going through a major pivot right now through their entire entire strategy is to, to break those leases. They’re getting out of that restaurant retail concept. They’re going to go to consumer now, uh, and are utilizing these re reorganizations to enable that whole strategic pivot, which is pretty massive.
Um, so, you know, I think more than anything, people just need time and options right now because it’s pivot was kind of the, the term of 2020 that people use that nauseum. Um, but it’s, it’s hard to do that overnight, even if you’re the most creative and the most, you know, execution oriented person. It’s, it’s, it’s hard to do that. So, uh, I go back to kind of that degrees of freedom just gives you some degrees of freedom to actually,
Roy – The Business of Business Podcast (30:14):
And, you know, it’s like, um, in any business, if you’re known for something, you know, you can parlay off of that and maybe have, uh, products that are related. But if you’ve had to pivot to something that’s pretty much unrelated, you know, it’s basically like starting over again. So, uh, there is a lot of time involved in that, for sure.
So, um, w so if I was to call you today and say, uh, Hey on her, I’m really struggling in my business. Um, let’s see. Can you kind of lay out that process? I mean, there’s, and there’s two scenarios. I’m thinking about number one, I’m calling like, uh, you know, I can see that things are kind of on the edge, but I’ve got some time I’m not in a big hurry. And then there’s the one that, uh, you know, I just, uh, not going to be able to make my, my, you know, some payment this month. So I guess there’s one that’s maybe has a little lead time, and then there’s going to be one that the crisis is upon them immediately.
So kind of, regardless of which of those camps, you’re in the first step, so there’s really a five step process. The first step is going to be, is going to be the same. So about first step is reassess options. We’re going to, we’re going to assess kind of your personalized situation in where it stands, whether it’s, you know, status quo, renegotiate, reorganize, liquidate the business. Let’s, let’s at least put all the options on the table and see kind of where, where you are.
So there’s that reassess options. Um, step one, um, in the event that it is that, you know, a situation where the reorganization is, is the path that’s kind of more, most advantageous to you. We started going down that path. The next step, the second step would be what we call reef re forecast the future. So what you have to, you know, believe with yourself and get you all the constituents in your, in your kind of ecosystem, all those suppliers to believe is that if you get this relief, there’s a path back to viability, right?
So that re forecast the future. There is a kind of strategy element to that. There’s a financial element to that. The financial part is kind of a three-year income statement, projection, and this is what we think, you know, you can get back to, um, cause if you’re not going to get back to viability, you know, if there’s not a, uh, a path there, then there’s no sense in going any further.
Um, and then the third is, is really when the rubber meeting the road, that’s when you really start to invoke the filing that third step we call recalibrate timelines. And what that’s meant to be is that’s when you file the initial petition and we call it recalibrate timelines, because that’s what invokes that 90 days stay. And that 90 day stay is like a pause button where your creditors can’t call you. They can’t show up at your door.
They can’t even write you that’s really that w you can file a, take a deep breath and say, okay, I’ve got 90 days now to get my act together, you know, write the second chapter on this whole thing. Um, the fourth is renegotiating terms. So I talked about renegotiating as an option, kind of outside of the filing.
Even if you go down the path of reorganization, you’re going to want to renegotiate, um, with, with your key suppliers, with your landlord, things like that. And then the last is the fifth step is reinforced all these things legally. And that’s where my strategic alliances with those different attorneys come into play is, um, you know, it’s, it’s not going to just be us, you know, trying to, uh, do what we can. Um, it, there’s actually a legal process that’s behind this and that’s prescribed by the SVRA.
Roy – The Business of Business Podcast (33:43):
Yeah. And that’s good that you have a group that you work with because these lawyers will be familiar with the process. And unfortunately, sometimes you reach out to people that really may not know the ins and outs, and they can get you in more trouble. So this is one of those times to go with people who know the process and, uh, you know, I’ve already gone down this path multiple times.
Uh, the other question I have though is, um, so let’s say we, um, we get to the filings and maybe even the, the renegotiations, are you going to give them a plan and kind of walk them through the process? Or are you going to be actually involved in, well, you know, if I I’ve got a supplier that I’m meeting with tomorrow, are you going to come sit at the table with us while we talk?
Oh, absolutely. Absolutely. And I think that’s, I think that’s beneficial to all parties. I mean, I think there’s a, there’s a relationship element there. Um, I think, you know, it’s, it’s very easy to be objective when it’s kind of a third party coming in to, you know, just say here’s the data, here’s where the business is going.
If we don’t get relief and here’s where it goes, if we get relief, then let’s look at, you know, let’s roll it all up very simply to an NPV. If it do the, give us relief, if it’s better for you in the longterm. And don’t, if it, if it’s not. And, um, and that, no, so that’s there, it’s a very hands-on process for sure. Um, that’s not only hands on with you, but those different suppliers, landlords, et cetera, that are better in your ecosystem.
Roy – The Business of Business Podcast (35:11):
Yeah. And I think, uh, I think that’s great because the other part of this is managing expectations and credibility that, well, if I come to you, you can make a, a non-emotional decision if I have a path out of this or not. And I think that carries over to, uh, you know, my creditor suppliers, whoever we’re meeting with is that, uh, I’m always going to say, yeah, I’m optimistic.
I can do this. I know, you know, this path, whereas as you as a third party professional, uh, I think that it just lends a little bit more credibility that you’re not emotionally invested in this decision, and you’re looking at it from a strictly, you know, business, strategic, financial point of view that there either is, or there isn’t. And so, um, yeah, I think that’s great.
And I think it sends a, it sends a signal to the, to the other party, whether it’s the landlord, the supplier, whoever that, uh, this is not a bluff, right? This is not a negotiating tactic, this is real, right. This is, uh, where the, the reality of where the business is at this time. Um, we’re either going to work together and partner on this in a way that’s a win-win or we’re not, but, uh, I, I think it’s it, uh, it cuts through a lot of the noise very quickly. So, um,
Roy – The Business of Business Podcast (36:31):
If somebody, of course, you know, we want them, we want you to be their trusted advisor in this, for sure. But, uh, let’s just say, if somebody was looking around to try to, uh, choose an advisor to help them through this, what are some things that we should look for positively? And then what are some red flags that should definitely make us run?
Sure. So there’s really three things that I would say that you, you should look for. So one I would look for is this professional. That’s trying to help me through this. Do they specialize in this? Right. So it could be that someone’s an attorney, um, and they can technically take you through this process if they’re an attorney, but they could be a family law attorney. Right. And, and, and they’re not, you know, a special, they don’t specialize in, in, um, in small business organizations.
There’s also a red flag side of that equation. If they, if they, you know, try to sell their pants off, that they’ve been doing this for 20 years, that’s a red flag because it went into law February of last year. Right. So if anyone tells you they’ve been doing this over a year, that’s, that’s a red flag. Uh, so there’s kind of a specialized, but if they, if they claim to have a whole lot of tenure and that specialization, that’s another red flag.
Um, I think you also want a one stop shop, right? Because there’s both a financial element to this, as well as the legal element. There’s those two pieces. And, um, I think you, you, you know, you’re going to have to, you’re going to need both. And if you go find, um, an attorney and then you go find a CPA and they don’t know each other, you’re going to get stuck in the middle of trying to orchestrate this whole thing, right.
That you have no experience orchestrating. Right. So finding a one-stop shop, I think, um, is very valuable. And then the third I’ll highlight is, um, really getting into, uh, kind of the scope and the pricing is, um, are they charging a fixed fee in which case your upside is, is really kept, you know, what you’re getting, or are they the type that comes to you and says, Hey, give me a $25,000 retainer.
I’m going to charge you $500 an hour. And, you know, maybe we’ll overspend that maybe we will under spend it. I guarantee you that they’re going to overspend that, and you’ll have exhausted all that, you know, 20 days in, and they’re going to be asking for another 25 grand. Um, so my coaching there would be find someone who will do this on a fixed fee basis.
You know, what you’re getting into because that’s, that’s what I’m I coming into this, I knew I didn’t want to be in that business where you just exhausted someone’s resources, who were, who was already in a distress situation and caused them to go out of business. Um, you know, honestly in the business of trying to save these businesses. If we can know up front that we can do it, I’m going to do the deal. And if we, if we know what won’t pay itself back in immediately, then we won’t. And to me, it’s really as simple as that.
Roy – The Business of Business Podcast (39:28):
Yeah. I think that’s an important distinction because unfortunately, a disasters bring out a lot of predators and, uh, it’s like anything else, if you’re not careful, somebody will just, you know, milk you for everything that you have left and, uh, leave you in the dust and not really care about it. And, uh, the other thing I was thinking about too, is something that’s cookie cutter, because this is, it sounds to me like this needs to be an intricate look at everybody’s business.
Because it’s not just financial, there’s going to be that strategic portion that will help lead you out of this as well. So I think if somebody comes to you with a 10 point checklist that, you know, um, I would be concerned if they, weren’t asking a lot of questions about my specific situation in my business, because even though the program basically works the same for everybody, there’s going to be a lot of individualization for each and every business.
Right. And that I a hundred percent agree. That’s always some of the funny parts of my initial discovery calls with, uh, uh, you know, who I consider a prospective client as small business owner is a lot of times they just come in and say, just tell me exactly what you do and what this new law is. And, and I want to say, I’m viewing it like I’m a doctor, right?
Tell me your pain points. What have you tried? But I don’t want to just tell you about this surgery, right. That that might be a fit. Tell me, tell me what your pain points are. I, I don’t want to just force, feed this solution if that’s, if it’s not the right the right thing. So, um, I think that’s the right mindset, uh, or, you know, you know, obviously I’m biased. This is the one I use, but is, is to have that doctor’s mentality as well. Let’s understand what those pain points are, what alternatives you thought and then, uh, try to problem solve there. Yeah.
Roy – The Business of Business Podcast (41:14):
Yeah, because this is vitally important for, people’s not only their business or livelihood, but their personal life, but you know, we talk about this with marketing and other aspects of businesses that, you know, anytime somebody comes to you with the cookie cutter that, you know, this plan has worked for 10 other people.
I know it’s always a flag because they don’t know your business. They don’t know your pain points. They don’t know what you’ve tried, where you’re at, how much money, you know, there’s just so many things that people, uh, you know, professionals need to have, uh, that discovery call to find out. And another thing that you find out too is, you know, we all like to work with people that we like.
So if you have that call with somebody that you just feel like there’s a rub, or you don’t get along, then that’s going to be, cause this is going to be a very highly charged emotional process for the owners. I can only imagine. And so you want to have somebody that’s going to be patient and, you know, really feel like that they’re working for you working through this process.
I know I a hundred percent agree with that point, as well as, you know, that’s the hardest part about this is just how emotionally charged it is. It’s, it’s emotionally charged in a number of ways. It’s, it’s their baby that is business or their blood, sweat, and tears into, um, one thing we haven’t talked about is the personal guarantees nature of this.
So like in the event that they, they lose their business a lot of times because they’ve personally guaranteed their rent or some of their key suppliers, those creditors are now coming after their personal assets. Right. So they’re coming out to get their, their checking accounts. So we get super personal. I had a guy that was working with here recently down in, uh, South Texas had like a birthday kind of place. Actually. It’s pretty cool. Sounding play is kind of an arcade laser tag kind of deal.
As you can imagine, that best business has been decimated, you know, families, aren’t wanting to bring a ton of kids into an indoor environment like that. And I had been working with them, talking to them pretty regularly, almost every day. And I had gone about a week where I’d reach out a number of times and hadn’t heard anything.
I thought he was just ghosting me. And I wasn’t really sure what to expect. And it was two Fridays ago, sent me an email on a Friday night that basically said, I’m not ignoring you. I’ve been in the hospital all week. I’m in, I’m in the ICU. I had a heart attack. Oh my gosh. And that’s what really brought it home is like, this is real. This is real life. It’s not, um, you know, it’s, it’s not, it’s not a game. It’s, it’s, uh, the emotional side of this, the stress it’s, it’s very real.
Roy – The Business of Business Podcast (43:42):
Yeah. Yeah. Definitely. Like they used to say, this is a chess, not checkers. That’s how it’s. And it, and the other thing is that has lasting consequences, health wise, financial.
So, um, you know, what I’m gonna do is recommend everybody, of course, reach out to you. Uh, you talked to Hunter, see how he can help you with this. Uh, and if, if not, then reach out to somebody, try to and get out in front of this as early as you possibly can because, um, you don’t want to wait till the last minute. Sometimes we, we feel hopeless and helpless, but there, there actually could be some hope with this program or something, you know, they’re.
We never know when there may be a way out, so please, uh, don’t wait until it’s too late. Let’s reach out and get some help. And that’s the other thing, unfortunately, with entrepreneurs or smaller businesses, there’s, you know, there’s that pride factor.
Roy – The Business of Business Podcast (44:36):
I built this business and, um, I don’t need anybody telling me how to do it, or I don’t want somebody getting in my business that intimately it’s, uh, you know, it’s hard to open up your books to somebody and especially if you are in a, um, distress position, because then you, I’m just saying, you know how I would feel like you’ve kind of failed and we need to put all that stuff aside and say, it happens. This has been beyond a lot of people’s control that. Um, you just need to put that aside for a few minutes. Let’s see if we can’t save the business and move forward.
Hmm, no, I think the ego and the pride are good in a lot of ways just cause they get, they get you going. But you know, I always always come back to the employees and you, you touched on it before is the unemployment rate. And the lack of alternative options in the current economy is what would your employees want you to do?
Right. And I think that’s where you get to a point where it’s, okay, ego goes on the shelf, we’ve got to do the right thing by the employees, which more times than not as the right thing for the company, it’s the right thing for everybody. Uh, and how do you, um, you know, take a pause, um, and, and, you know, restructures to that, there is that longer-term viability that everybody benefits from it.
And when I say everybody employees, owner your suppliers, your landlord, everybody, cause that’s really what this process does is you have to quantifiably prove to the courts that this is better for the suppliers than the alternative. Um, so that’s, you know, that’s the big picture view on this whole thing.
Roy – The Business of Business Podcast (46:09):
Awesome. Hunter, thanks so much for taking time out of your day to be with us, uh, such an important message. And, uh, I appreciate you coming on and kind of walking us through this process. So, uh, the other thing I was gonna ask is geography. I know that you’re, uh, you’re just across town from me here in Texas. So, uh, is this something that you’re only working in Texas with people or are you working across the nation or how’s that working out?
So Texas is my primary focus. Um, I mentioned kind of the two facets of it, the financial side of the legal side. Yes I can, I can perform my, uh, part of it anywhere kind of agnostic of what state it’s in, but the strategic alliances I have with lawyers are predominantly in Texas. And so I’m, I’m best suited to do this in Texas, but happy to talk to anyone really, really anywhere. And, um, depending on the circumstances, even other States, there might be, uh, a right fit as well.
Roy – The Business of Business Podcast (47:01):
Okay, awesome. Well, tell everybody how they can reach out and get ahold of you and get this process started if they need to.
Sure. So I’d point people to, to a couple different places. So, uh, one would be LinkedIn is just looking me up Hunter, Hunter Johnson and, or my, my company Tophill Advisers on LinkedIn. Uh, I try to put content out there pretty much every day. I just find that there’s a lot of B2B professionals there, uh, that can, can benefit from this. So connect with me on LinkedIn, uh, and, uh, check out my website, www.tophilladvisors.com.
Uh, similarly, you’ve got a lot of content up there on my blog that you can, uh, spend some time kind of getting up to speed even before your, you re you reached out. Um, and, uh, there’s a mechanism there where you can, you can book a call right there through the website.
Roy – The Business of Business Podcast (47:45):
Okay, awesome. Well, again, Hunter, thanks for taking time out of your day and I’ll get this episode out, uh, fairly quickly so we can make sure we can help, uh, help everybody that needs it. It’s such a timely message. That’s going to do it for this episode of the business of business podcast.
Of course you can find firstname.lastname@example.org. We’re on all the major, uh, uh, well podcast plan when blank, we’re on all the major podcast platforms, uh, Apple podcast, Google podcast, uh, Stitcher, Spotify, Pandora. We’re not on one that you listened to. Please email me. I’d be glad to get us added to that also on social media, Twitter, Facebook, Instagram, and this episode will, uh, the video version will go up on YouTube.
Uh, once the episode goes live as well. So thanks again. Uh, please share with your friends this again, not only do we want, you know, more and better listeners for our show, but this is such an important message that, uh, please take the time to share it with people that it may benefit across your network until next time I’m Roy take care of yourself and take care of your business.