Leveraging better Payment Terms


Negotiating better payment terms is always easier if a company has some bargaining chips. The party with the most to lose or the most to gain is always on the defensive; therefore, the secret to successful negotiating is to develop leverage that forces the other party into one or the other of these positions. Other than not meeting payroll, only two conditions might create circumstances more detrimental to a company on the brink of failure than to a creator: (1) being evicted from the building that houses the business, and (2) not receiving critical materials and services to keep the business going.

 

Not much can be done about either situation. A business must be housed, and it must have materials and services to make and sell products. That’s why landlords and critical suppliers top the payment priority list. Some leverage can be achieved, however. Most lessors would rather work out an extended payment arrangement than go to the expense and aggravation of a formal eviction. As long as the renter’s market holds, deferring rent payments for at least several months should be a real possibility. That’s not a permanent solution, but it does provide some breathing space.

 

It might be possible to leverage critical suppliers to gain better terms. The threat to go to a competitor usually brings even the most recalcitrant supplier to terms. In most cases, a supplier has more to lose (the overdue amounts plus legal costs to sue) or gain (future sales) than a debtor company does. At least making suppliers think that’s the case is good negotiating ploy.

 

Assuming that you have taken reasonable precautions to safeguard your personal assets, the worst thing that can happen is that you will be forced to liquidate the business. Granted, this can be a blow to any entrepreneur’s ego. It might also reduce personal income for a while, however, once the liquidation is over, you can always begin again. As long as creditors believe that they have the most to lose, you’re in driver’s seat. The ultimate creditors’ threat is to force the company into bankruptcy. By making it clear that this won’t hurt and that other plans for the future are in the works anyway, such leverage vanishes abruptly.

 

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight

Advertisements

The Fudges of Brainstorming


The term brainstorming has passed into common English usage. Invented by Alex Osborn, a versatile advertising executive, brainstorming has come now to mean freewheeling discussion.

The principles of brainstorming as a technique are deceptively simple:

  1. All evaluative or critical comments are taboo during the phase of generating ideas or solutions.
  2. The attempt is to generate a very large number of ideas or solutions. The logic is that at least a small proportion of ideas tend to be high quality that are both novel and useful, so that the larger the number of ideas generated the larger may be the number of quality ideas that are produced.
  3. Emphasize novelty, not correctness or appropriateness. The stranger the ideas solutions, the better. The reason is that strange ideas demolish existing mental frames and liberate the mind to generate and accept unconventional ideas.
  4. Participants in a brainstorm are encouraged to build on each other’s ideas.

Typically, in a brainstorm, a specific problem is first introduced. The problem must be quite specific, and capable of many alternative solutions. Thus, one cannot brainstorm on a vague problem like how to increase productivity, now on a problem with one right answer, such as what was worker productivity in the plant last month But how to increase worker productivity by 30% in a particular is quite appropriate for brainstorming. Gnenerally, brainstorming problems are preceded by how to …

After the problem is stated and clarified, the brainstorm begins.Each group member gives one . . . .

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact Asif J. Mir.