Discussion:A client needs money

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Discussion Forum Index --> General Chat --> A client needs money

Actionbsns (talk|edits) said:

26 November 2013
I have a client that is having financial difficulties with her business. She is pretty much "banked out", meaning that she is unable to qualify for a bank loan. What she really needs to have is working capital, she's been badly undercapitalized since she started a few years ago and is always just a breath away from real problems. When I last spoke with her she was upset because a mutual friend, who is a bank manager had turned her down for a loan, and she mentioned that she was going to start looking for an investor, but for now, a friend has offered some money from the friend's 401-K if my client will pay as much in interest as she is currently earning. Then she mentioned bringing the investment program to me to see if I could help find an investor, and also alluding to borrowing money. I don't want to invest in this business, I don't want to loan a client money, and I don't do investment planning so I don't want to be involved with that. My personal feeling is this is a total disaster waiting to happen at a lot of levels and I don't want to be part of the disaster.

I'm curious if anyone else has been in a similar situation and how did you handle it? What was the outcome?

Bottom Line (talk|edits) said:

26 November 2013
I've run into this a few times. JUST SAY NO!! I tell them that I don't know anyone that has the money to invest in such a business (which is the truth...you don't know anyone that has any money to throw away). Act dumb and make her ask for a loan, don't volunteer. Then explain that it would be against your ethics to invest in her business and/or you don't have any "investible" money at present.

As a side note, make sure you get paid quickly for any work you do for her and make sure everything is spelled out in writing. When she goes down, you don't want her to take you with her.

Tenletters (talk|edits) said:

26 November 2013
It is a painful thing, a little like shooting Old Yeller, but sometimes a person needs to let go of a business and sometimes it is that person's accountant's duty to tell them that it is time.

If you do not have all the facts and are not sure, then all that you can say is "I'm not sure".

If you do have a good handle on the facts and figures, then you owe it to your client to say so and suggest that they pull the plug if you think that they should.

I have seen clients blow their retirement savings trying to keep a doomed business going. And I have seen clients keep a good business with a short term cash flow problem going by pumping in some cash at the right time.

You owe your client your honest opinion. If you are not sure, then do not be afraid to say so. If you are sure, then give the bad news as matter of factly as you can. It's what your client pays you for ... your knowledge and business acumen.

Know what I mean?

Captcook (talk|edits) said:

26 November 2013
I know of a business owner (I initially spoke with them as a prospective client) who seems to think some cash would solve all his problems. Even from my cursory review of their financials and discussions with them, I know cash would only submerge the real issues at play, which are all management related. If this is the case, cash will not solve the problem. If they have a viable business and manage it well, but just can't seem to get out of the problems to get to the opportunities, then perhaps you can help them craft a plan to get the investment necessary.

I, generally, won't pitch investment opportunities for clients. Too much risk for me and very little payoff.

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