Dilemma with employer - what would you do? (1 Viewer)

[Quez]

The shark play would be to start taking out loans to keep the company afloat. List assets of the owners as collateral. Then when they go bankrupt they not only destroy their company, but they start losing all their stuff.

 

[jomar]

You really know a lot about your friend's company!

He's one of my best buds and we hang out all the time. I am also a CFO/Controller at my company so we frequently talk about work related things. He can't talk to anyone in his company so I guess that leaves me.

 

[jomar]

The shark play would be to start taking out loans to keep the company afloat. List assets of the owners as collateral. Then when they go bankrupt they not only destroy their company, but they start losing all their stuff.

I think, at this point, one of the reasons he would like to stay would be to see the look on the family members faces when they realize they are going under and the gravy train is coming to a stop. these people have nothing else going for them, they don't work. who would hire them? and if they could find a job, at what salary? they'd be SOL and it'd be all of their own doing. the only downside is that a number of good people would also lose their job. I'm sure they could find something else but it would still suck for them.

 

[Joe Summer]

Can your buddy start his own competing company and then hire all the good people from the current company?

 

[Gr00vus]

The best move is to tell the CEO that he needs to revamp the sales leadership if he and his family want to continue to take money out of the business. Also suggest laying off some of the employees. Both of these ideas should garner the CEO's attention while also positioning your friend as a guy looking to make sure the family's gravy train keeps rolling along as long as possible.

The CEO and Sales Leadership are related. President is scared to ruffle feathers among family. sounds like they are all useless and have no idea how to run a business and wouldn't be doing so except for the fact that the founder of the company was related to them. Founder is no longer in the picture.

This is baffling to me. He would rather fold the company than ruffle feathers? Im sure everyone in the family will be delighted if the place shuts down in a couple years.

at this point, yes, that sounds exactly right. He's met with the family along with the head of their CPA firm last year and, among other things, laid out their cash flow that showed them running out of money around the end of 2015/early 2016. VP of Sales made some suggestions to cut expenses to operations that were apparently laughable. CFO and CPA firm showed them that it was overhead that was killing them and the cash distributions to family members with no net income were obviously hurting cash flow. this is common in S-Corps. Owners get used to 'free money' that was being distributed during the good years and when business slows, owners continue taking money. They agreed to one more distribution and that was it. CFO didn't agree with the one more but thought it better than business as usual. no he's hearing rumbles of more money being taken and he's had it.

He's told them they are going out of business but, like I said, they need to keep up with the Jones's and keep up the appearance that their rich. it sounds like their plan is to just hope things work out. he told me flat out that he told them to cut their spending now or a bankrupt business will cut it for them. but they need their money. he was really pissed about the situation. apparently the only cuts they've agreed to were Christmas bonuses for their managers and the employer 401k match. this kind of sent him over the edge as he doesn't feel its right to penalize the employees when the only reason the company is losing money are these family members. the COO was told to tell his managers that there would be no xmas bonuses because 'cash was tight'. 2 weeks later, the owners took another cash distribution. CFO knows this but no one else in the company knows whats going on and it isn't like he can tell anyone in the company.

He needs to move on, and more quickly than I initially thought. That's a horrible situation. And when he does land a new gig he needs to start telling the people who do actual work to start looking as well.

 

[eoMMan]

Can he sleep with the CEO?

 

[roadkill1292]

I hope we're kept posted on this situation over the next couple of years.

I've actually seen this situation in two other small businesses, where the second generation paid itself Founder's-type salaries for doing essentially middle management work. And doing that in a mediocre manner. Neither of those businesses survived.

 

[Johnny Rock]

I hope we're kept posted on this situation over the next couple of years.

I've actually seen this situation in two other small businesses, where the second generation paid itself Founder's-type salaries for doing essentially middle management work. And doing that in a mediocre manner. Neither of those businesses survived.

It's tough sledding to keep second+ generation private businesses going if entitled kids aren't kept grounded and learn the work ethic involved. This is likely one for the failure column.

 

[sbonomo]

The best move is to tell the CEO that he needs to revamp the sales leadership if he and his family want to continue to take money out of the business. Also suggest laying off some of the employees. Both of these ideas should garner the CEO's attention while also positioning your friend as a guy looking to make sure the family's gravy train keeps rolling along as long as possible.

The CEO and Sales Leadership are related. President is scared to ruffle feathers among family. sounds like they are all useless and have no idea how to run a business and wouldn't be doing so except for the fact that the founder of the company was related to them. Founder is no longer in the picture.

This is baffling to me. He would rather fold the company than ruffle feathers? Im sure everyone in the family will be delighted if the place shuts down in a couple years.

at this point, yes, that sounds exactly right. He's met with the family along with the head of their CPA firm last year and, among other things, laid out their cash flow that showed them running out of money around the end of 2015/early 2016. VP of Sales made some suggestions to cut expenses to operations that were apparently laughable. CFO and CPA firm showed them that it was overhead that was killing them and the cash distributions to family members with no net income were obviously hurting cash flow. this is common in S-Corps. Owners get used to 'free money' that was being distributed during the good years and when business slows, owners continue taking money. They agreed to one more distribution and that was it. CFO didn't agree with the one more but thought it better than business as usual. no he's hearing rumbles of more money being taken and he's had it.

He's told them they are going out of business but, like I said, they need to keep up with the Jones's and keep up the appearance that their rich. it sounds like their plan is to just hope things work out. he told me flat out that he told them to cut their spending now or a bankrupt business will cut it for them. but they need their money. he was really pissed about the situation. apparently the only cuts they've agreed to were Christmas bonuses for their managers and the employer 401k match. this kind of sent him over the edge as he doesn't feel its right to penalize the employees when the only reason the company is losing money are these family members. the COO was told to tell his managers that there would be no xmas bonuses because 'cash was tight'. 2 weeks later, the owners took another cash distribution. CFO knows this but no one else in the company knows whats going on and it isn't like he can tell anyone in the company.

that is miserable. I would be looking for a new job regardless of the pay.