BOSTON — Last spring, a high-tech company (which requested anonymity) faced a crisis. It had lost $6 million in the previous year, and $4 million in the first quarter. The $70 million company was also at war with its bank.
Lawyers for the bank were about to file suit against the company. Company lawyers were about to file suit against the bank. Because the bank was ready to pull the plug on the company's financing, crisis consultants were called in.
They found that maintaining customer service was the top priority. The company's customers were multinational companies that were buying $5 million machines. These customers needed the assurance that Corporation X would be around five years down the road to provide service.
The consultants recommended cutting about $10 million in operating expenses. They brought the bank and company officials together to negotiate a deal whereby the bank would finance the company for a year if it made the $10 million in cuts.
From that day forward, Corporation X was profitable. In the last three quarters last year, it made $3 million.
After having spent two solid weeks in conference rooms, the CEO finally got what he wanted. He never had to meet with the bankers again.