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HELP! I Had To Takeover My Fathers Company,financial Problems.

 
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Old 06-22-2015, 09:23 AM   #21
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


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Someone once told me that the difference between rich people in business and poor people in business is that the poor business man believes in doing everything he can to bail out his failing business before going down with the ship. The rich business man gets off of the ship the moment that he knows that it's failing. He saves himself and starts another business before the ship sinks.
The downside to that is a lot of those never learn to build and run a successful business - they just keep folding and reopening. It's an actual business model - get the money in your personal pocket and fold.
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Old 06-22-2015, 01:24 PM   #22
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


Exactly. But the right way to do it is to resolve every outstanding issue so your old clients will do business with your new company.

It's amazing how the multi-level marketing people get the same folks in their pyramid over and over again.
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Old 06-22-2015, 08:12 PM   #23
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


After being on the labor/production side of the family business for several years, I found myself in your exact situation about 2 years ago when long time subs and vendors started calling me asking me to talk to my dad about their way past due invoices. I started digging into the books and find all kinds of mingling of personal/business money, personal guarantees, credit lines past due along with a host of other problems. Bottom line is there was no system in place for accounting, insurance/risk management, job costings, purchasing etc.

Lots of good advice in this thread, but the one thing I would like to stress is while you are going to feel like this is all on you, make your dad (and mom if appropriate) part of the solution. Chances are your dad ran a successful business for years, but didn't have the systems in place to recognize when changes needed to be made. He still probably knows how the business should run profitably and you should use that knowledge. And if he truly kept it all in his head, the only way to get the information is through him.

The other advice I can give is to keep your temper in check with dealing with your dad. After a week of digging, filing and trying to figure out what the hell our accounts payable status actually was, I blew up on my Dad (ie.. how the hell can you let stuff get this screwed up, why should I waste my time trying to dig us out of this). I felt worse after and it threw him into a deeper depression than he already was. It took weeks to get him back out of it and back to the task of getting us out of this mess.

2 years later we are better organized, but still fighting. PM me if you want more details.
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Old 06-22-2015, 08:32 PM   #24
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


I think your situation involves both short and long term strategies. Short term is to quickly map out the remaining work on each house and determine if there are quotes or contracts from subcontractors for work yet to be completed. If not then, you need to get material and labor estimates to calculate the remaining costs for each house. This will allow you to forecast cash flow.

You need to stop the bleeding immediately, these kind of situations can cause entire programs to fail quickly. Word gets out to subs, vendors, realtors, and even buyers that your ship is sinking. When this happens, you cannot get credit from suppliers, subs to work, or buyers to buy. I would do a quick balance sheet showing cash on hand + amount of work in progress + any receivable (insurance?) less payables and loans. This should tell you your equity and potential profits from sales once houses are completed and sold. If by chance you are upside down on the equity side, and do not have $ to cover this negative position, then bankruptcy might be an option.

Regarding the work itself, if you can continue construction and funds are available, I would determine if you (with Dadís help) can manage the work. If so, move ahead. If not you need to hire a project manager, assuming you have enough money to pay for one.

Long term, you need to decide if the building company can continue, can Dad be involved, what will be financial health of the company, what your involvement will be, etc. I would think to some extent your long term strategy and goals might influence what you do short term.

Good luck!
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Old 06-22-2015, 09:58 PM   #25
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


Either way, try to stay positive about it all. I have run my business now since 2008. There are still hard times that are constantly evolving, and may times I though that was the end of the line. But persistence will see you through whether the business survives or not.

If it does, congratulations. Like myself, make sure you do all the necessary tasks to never get back into that position. Reaching down and rebuilding something to success again will be more rewarding then starting from scratch, as a personal victory and the education you will gain in the process is priceless.

If the business must go under, so be it. But try to figure it out and recognize it before more damage then necessary is done. And most importantly, pay attention to everything that has happened, that is happening, and figure out WHAT is putting a roadblock on the path back to success. Notice it. Remember the signs. Mark my words, you will not regret putting the time and effort forth to recognize these details, and it will benefit you in future business and just life in general.

wishing you the best of luck! You are already ahead of the game here. Most would lay down and die. You are young, seem to have a vision even if it is still a little blurry, and an opportunity to come out better from this regardless of the outcome as this experience isn't something you can get in classroom or as an employee.
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Old 07-02-2015, 04:00 PM   #26
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


A lot of good advice here. You will probably need help with collecting from the insurance company. My father was an upper level manager. Per his advice I always asked to speak with the manager to wrap up a claim. The manager is probably the boss of the person delaying your claim.

Although some are advising against it I would advise a long meeting with a CPA. You need to know the status of the business (including taxes) and the status of your projects.

Once I tracked how many hours I invoiced for an entire year. I met with my accountant and she asked my rate and looked at my materials and told me how many hours I invoiced in 30 seconds. In our first meeting she told me about deductions I could have used previously. Accountants are worth the fee.

My gut feeling is that there is a basic problem with the business. If this were a decent business running at a 5% net profit, you would be seeing $30-70k per house in a savings account and have good cash flow. That is obviously not the case. Find out why.
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Old 07-07-2015, 03:22 PM   #27
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


UPDATE 7/7/15

First off I just want to say thank you for all the replies,support and guidance in the matter I really appreciate it. I have been busy with this and some other things to consistantly provide updates.

After digging into the situation more it seems that the relationship with the original lender is sketchier that I first imagined.

Long story short, after the horrendous winter MA had this year and the fact that my father suffered a mild stroke in January the projects had been delayed and construction progress was slowed.
Originally I thought the lender had stopped making releases entirely but as it turns out the lender decided to put my fathers foreman in charge and is now making releases directly to him(foreman is not officer of corp have any vested interest in company).Also the homes he is building have been selling(770k-900k) so I dont know what the exact mindset of the lender is. I have been trying to get the relationship back on track but there are 2 sides to every story and the lender has not been returning our calls. We have spoken to a lawyer to sort out the legality of the matter to see if any contracts were violated.

According to my father this shift in management occurred verbally and he never signed any paperwork regarding change in releases and was never given a warning about progress delays etc.

Currently I have no access to any of the financials prior to mid May when the management shift occurred. I suggested to my father that we set up a meeting with the lender to try and repair the relationship and "feel him out" to see if its worth repairing or we can work out and agreement that is beneficial for both parties and walk away from the project( he is slated to builder 3-4 more houses on the development).

In terms of the improvements I have been able to make they have been limited. I have organized all his information and set up a big "project board" with punch lists and scheduling information. However he has been hard headed in letting me take full control and do it 'my way'. It has been frustrating to say the least, and them compound that with the daily arguments between my father and mother about the situation, I'm at my wits end.

Insurance
As of 7/7/15 we still have not received the insurance check for the 238k dollar claim. We have had our real estate attorney working on the matter but I dont know if he's incompetent or the insurance is legitimately dragging their feet. We have filed a 176(b) letter for unjust claim practices and a 93(b) letter for treble damages if this causes the business to fail. However we still dont have a concrete date as to when we will have the check or if any serious progress has been made. (Just to fill in the details the claim was looked at by both our private adjuster and theirs and as far as I know is deemed legitimate and approved for 238k).

Sorry for answering we specific question I will try to answer some more tonight and more as this goes along. Thank you for any input.
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Old 07-07-2015, 11:36 PM   #28
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


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Originally Posted by SinkingShip View Post
Originally I thought the lender had stopped making releases entirely but as it turns out the lender decided to put my fathers foreman in charge and is now making releases directly to him(foreman is not officer of corp have any vested interest in company).Also the homes he is building have been selling(770k-900k) so I dont know what the exact mindset of the lender is. I have been trying to get the relationship back on track but there are 2 sides to every story and the lender has not been returning our calls..
Hate to tell you the bad news...But your old foreman is running the show. you're pretty much out of the picture. I think all this will help you move forward on your own with greater clarity. Also do not post anywhere where either of them can read your thoughts.
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Old 07-08-2015, 06:47 AM   #29
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


Sounds like a screwed up mess.
Exactly how does the foreman deposit money in a checking account for the business and then make payments?
To me it sounds like they made the decision to continue in this manner to get the houses finished so they could sell and the lender could recoup his investments.
Again I suggest an account to help with the money matters and now it looks like you should have a lawyer to help out with the legal mess.

Who's name is the property that you are building on in?
If it is the lender, then it looks like a takeover to keep losses to a minimum.
Do you have a decent relationship with the foreman?

lots and lots of questions......
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Old 07-08-2015, 08:03 AM   #30
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


You should have your attorney sort out the legal situation, ASAP, before the the lender walks away with the cash from the sales of the properties, leaving you (or your father) as the builder of record, with a pile of bills and other obligations, including warranty coverage on houses completed in unknown circumstances.
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Old 07-08-2015, 09:15 AM   #31
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


As Bob pointed out, there are some big implications. In most states, a verbal contract is void if it doesn't explicitly get fulfilled in a year by it's terms. The verbal OK may be invalid.

If that's the case, there are a number of torts available. Best case is you can wind up with the money you were due and the lender and foreman are holding the bag. Worst case is you're hosed.
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Old 07-08-2015, 10:43 AM   #32
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


Legal matters usually take a long time so try to be patient. I'm very curious why you have no access to financial records when Mom was the bookkeeper/accountant. As far as family goes it sounds like you're in the middle, which sucks for you.
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Old 07-24-2015, 06:24 PM   #33
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


Sounds like a mess, my father passed away last year and I inherited his company he had been in bad health for a about 5 years and the company was in shambles, I lost all the work we had lined up threw in the towel after a few months and got a job working for another company. Since then I have decided to start my own company and just build from the ground up, its a constant battle of swimming up stream. I wish you the best of luck
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Old 07-26-2015, 04:34 PM   #34
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


The solution depends on what do you want to get finally.

Whether you want to just help your family to get out of these problems or you want to finish projects and hand over them with maximum value I would suggest:
1) Open all contracts and appendixes with subcontractors, check they have technical docs, cost and time, check your subs are all in line with their contract obligations. If not - you have reasons to start raising questions.
2) Try to find total budgets for each of the projects or invite someone without conflict of interests to help you to prepare it for you, estimate costs for completion;
3) If your subs are enough mind you could discuss possible discounts because everyone wants to be successful in general, work on successful projects, get recommendations, wants to help and so on - please note that their strict costs could be much less than you could imagine;
4) Speak with investors, explain them your efforts to finalize their projects, discuss possible updates for investment contract - at least if you will participate in site management, your subs will give discounts and etc. - why not, generally it is better than to get unfinished house without as built docs and courts with LLC;

Could advice further but this might be at first.

And be positive, you already inside and have no other ways than to safety land.
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Old 07-27-2015, 11:32 AM   #35
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


Son, you have yourself a job. You can fix it, but you need several things:

You need an older mentor to guide you through this . he's out there.

You need a great attorney .

You need a totally clear picture of where it all stands ,as far as cost to complete and sell prices of homes .

The lender is way more motivated here than you may know ..he just needs to see how it's going to work. He needs to be kept very informed .

Don't count on the 230,000, and if it comes , it won't be fast.

This may be a great chance for you to build something , or to at least wash it out and protect your family . It also has the potential to drag you down into it and mess you up . .particularly if you sign guarantees and deliveries and lender bails .

I'd definitely go slow here, and sit down with involved parties and see what options are out there .
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Old 07-28-2015, 04:35 AM   #36
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


Good advice
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Old 09-11-2015, 11:59 AM   #37
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Re: HELP! I Had To Takeover My Fathers Company,financial Problems.


Any update on this situation?

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