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The Cedar Croft Consulting 5-Minute Mile News Issue 2 2024

Cedar Croft Consulting News

Minute 1: The “Pivot-to-Profit” Playbook

In these uncertain times, small and medium businesses are getting creative – no more “business as usual.” Forward-thinking entrepreneurs are dusting off their old business plans and making a “pivot.” 

Adaptability is the key to success, whether it’s a mom-and-pop shop turning their boutique into an online sensation, or a machine shop retrofitting to produce personal protective equipment. Don’t forget to run the numbers – an ill-conceived pivot can land you in bankruptcy faster than you can say “Hail Mary.” 

To ensure a pivot is successful, it is important to approach it in a similar manner to launching a start-up. This involves thoroughly analyzing the market, calculating financial projections, and creating an operational plan. It is crucial to avoid going all-in before testing your new concept on a small scale first. 

It’s possible to turn your pandemic-induced lemon into a tart and refreshing lemonade with a well-executed pivot. One that follows the wise words of Captain Picard: “Make it so… but make it so carefully.” Worst case scenario, you won’t have to sell your lemonade stand.

Minute 2: The Rise of the “Zombie” Business

In the immortal words of Michael Jackson, “They’re coming to life, your dead are coming home.” Okay, maybe that’s a bit dramatic. But the truth is, some businesses are finding creative ways to reanimate their “deceased” operations. 

Whether it’s a beloved local diner reopening with a streamlined menu or a manufacturing plant retooling to produce in-demand goods, the “zombie business” is stumbling back to life. Just don’t be surprised if they’re a little…different than you remember.

The key to resurrecting a “dead” business lies in ruthless prioritization and willingness to adapt. Those once-thriving enterprises that fell victim to the pandemic likely had a lot of bloat and inefficiency built up over the years. But now, with their backs against the wall, savvy business owners are stripping away the non-essentials and focusing solely on the core products and services that still have market demand.

It’s a bit like a Phoenix rising from the ashes, but with a decidedly less majestic and more shambling gait. These zombie businesses may not be the sleek, polished operations they once were, but they’re alive and kicking – and that’s what counts. Of course, the real trick is keeping them that way. 

Maintaining a lean, agile, and adaptable business model will be crucial as these undead enterprises navigate the ever-changing landscape. But hey, if they can make it through a global pandemic, a little shambling should be a walk in the park.

Minute 3: The Great Renegotiation

During these difficult times, business owners are now reevaluating their fixed costs and renegotiating agreements such as leases, vendor contracts, and loan terms. As they say, “The squeaky wheel gets the oil.” In this case, the desperate business owner gets the rent reduction. Be prepared to get creative – landlords and suppliers are also feeling the pinch!

The art of renegotiation is all about finding that sweet spot where both parties walk away feeling like they got a fair deal. For a business owner, that may mean trading a longer lease term for a lower monthly rent. 

For the landlord, it could mean accepting a temporary reduction in exchange for equity or a share of future profits. The key is to approach these discussions with empathy, flexibility, and willingness to think outside the box. After all, in these uncertain times, a little creative compromise is often the difference between staying afloat and, well, not.

And let’s not forget the power of the group renegotiation. Businesses in the same industry or geographic area are banding together to leverage their collective bargaining power. Imagine the landlord’s face when a whole strip mall of tenants shows up with a unified demand for rent relief. It’s enough to make even the most hardened property owners quiver in their designer loafers.

Minute 4: Quick Intervals

  • Artificial Intelligence – LAMs
    LAMs (Large Action Models) are a new type of AI model that goes beyond the capabilities of traditional LLMs (Large Language Models) like ChatGPT. While LLMs excel at understanding and generating language, LAMs are designed to understand and execute complex actions and tasks within applications and interfaces.

    The rabbit r1 is a new device from Rabbit Inc. that aims to redefine how we interact with technology. Rather than relying on traditional app-based interfaces, the r1 uses a LAM as its core AI system. This allows the r1 to understand voice commands and directly execute actions across various applications and services, without the need to navigate multiple apps.

    Being a gadget junky, I ordered my r1 device in January of this year and expect delivery later this month. My experiences and impressions will be shared in future newsletters.
  • Bankruptcy: The New Black
    There was a time when the mere mention of the “B-word” was enough to send shivers down a business owner’s spine. But these days, bankruptcy is starting to lose its social stigma. In fact, it’s practically trendy!

    With so many companies filing for Chapter 11, it’s almost become a badge of honor. While we don’t suggest bankruptcy as a fashion statement, if it is necessary to keep the lights on, remember to accessorize with an experienced financial advisor and a good bankruptcy attorney!

Minute 5: Cedar Croft News

Current and Recent Engagements

Quick service restaurant chain, Northeast US

Cedar Croft Consulting is engaged as a Financial Advisor by the third-generation family-owned business to secure financing for their acquisition and expansion plans. A term sheet with a new lender has been signed and a closing is expected within 60 days.

Bakery, Northeast US 

This privately held wholesale bakery and food production company had recently moved to the workout department with its senior lender. Cash flow from operations could no longer support the debt service with the rise in interest rates. The company engaged Cedar Croft Consulting as a Financial Advisor to identify and evaluate options available and lead negotiations with its senior lender. A recapitalization plan involving the outsourcing of production and the sale of manufacturing assets has been developed and accepted by the senior lender.

Engineering services firm, Washington, DC

This second-generation-managed business provides aerospace and aeronautical engineering services as the prime or sub on government contracts. Cedar Croft Consulting is engaged as a Financial Advisor to facilitate project financing and maintain lender relationships.

Plastic resin distributor, Southeast US

Cedar Croft Consulting completed its engagement as Chief Restructuring Officer, which resulted in an out-of-court refinancing that paid its senior lender in full and provided the company with working capital for its owner to continue operations.

Aircraft maintenance, repair, and overhaul firm, Ontario, Canada 

Cedar Croft Consulting has completed its engagement as Chief Restructuring Officer to create and execute a reorganization plan for a company operating under CCAA protection. The company was successfully sold through a Sale and Investment Solicitation Process (SISP).

Selected case studies from our earlier work can be found here, on our website.

Upcoming events

Cedar Croft has sponsored and/or will attend these events in 2024:

Cedar Croft Consulting provides turnaround, workout, crisis and interim management, corporate restructuring, bankruptcy, financial advisory and distressed M&A services. We serve lower and middle-market companies throughout the US and Canada. For further information, contact Pat Walsh at 917-674-2273.

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