Today, many hvac companies are in financial, legal, managerial or other serious trouble. They have several basic alternatives open to them to improve their troubled or crisis situation. The company owners and management need to understand the alternatives and select the best and most appropriate for their situation.

The hvac industry consists of many troubled companies. Most of these companies are in cash crunches, have large debts, are suffering operating losses, and/or have IRS and legal problems. Sadly, many are near collapse. When in this desperate situation it is not uncommon for owners to try to ignore their mounting problems, hoping desperately that some miracle will somehow get them out of serious trouble. Others are ready to give up and will seek bankruptcy as a solution.

Ideally, the owners and managers of a troubled hvac company should carefully analyze all of their company's alternatives. They should logically rank and select the best solutions that could improve their business situation. However, this logical process is exceedingly difficult to do under the circumstances. Like most humans faced with an apparently-hopeless situation, owners and business managers are affected and motivated not so much by logic as by emotions and other psychological aspects. When a company is in trouble, logic is often overwhelmed by anger, desperation, fear, anxiety, false hope, frustration, despair, and other negative feelings.

Too many troubled company owners and managers wrongly assume and feel that their situation is unique or that they are fully at fault and to be blamed for their company's problems. The fact is that many, if not all, of the problems relate to the hvac industry itself. Throughout the country, the hvac industry is going through major changes and evolution. The result is major consolidation, severe price competition, and other competitive and adverse pressures. The industry is in a period of difficult times and marketplaces. As a result, a large number of hvac companies are experiencing serious financial, legal, and other problems.

Too many troubled hvac companies wrongly conclude that they do not have any desirable alternatives to improve their business situation. Typically, they see the following three options, all of which are scary and negative:

Continue operating without change, hoping to somehow get out of trouble alone (this alternative ultimately fails over 95% of the time).

File for bankruptcy reorganization (this alternative goes badly or fails over 90% of the time).

Liquidate the company either informally or through a bankruptcy liquidation filing (this alternative is generally a poor choice).

A troubled hvac company often has one or more favorable options to consider and possibly implement that would significantly improve its business and competitive position in the marketplace, including:

Spin-out. A troubled company can transfer various operations or assets to a new company, preferably one that is larger, stronger, and team-managed. The new company then moves forward successfully through the infusion of additional capital, executives, specialists, and other assets. Meanwhile, the old company concentrates on resolving its financial, legal, and other problems. (Because of the dynamics of the highly competitive hvac industry, this solution is often an excellent alternative).

Turnaround program. The troubled hvac company can develop and implement a strategic plan to stabilize the situation and then to reverse the downward spiral of losses, cash drain, lawsuits, and other serious problems. A turnaround is an internal program within an existing entity (without forming a new entity as under a spin-out).

Crisis management program. A troubled hvac company can develop and implement a strategic program specifically targeted on managing and resolving the company's crises.

Temporary shutdown. Usually, a troubled company's managers get spread very thinly over a variety of operational responsibilities and urgent troubled-company issues. If the workload and stress become overwhelming, one basic alternative is to temporarily shut down operations so that management can give full attention to resolving these problems and crises.

Transactions with other companies. Often, a troubled company has specific operations, facilities, technology, and/or other assets that can be used as a foundation for mutually-beneficial transactions with other companies. Possibilities include: sales, mergers, joint ventures, strategic alliances, joint marketing programs, and others. These transactions can be structured so that other companies would supply capital, some or all of which would benefit the troubled company directly or indirectly.

Don't take passive approach

In conclusion, many companies in the hvac industry are facing difficult times as a result of changing industry dynamics. Many of these companies will not survive unless they take appropriate action now to improve their business situation by becoming more competitive. Some companies will take the traditional passive approach of waiting it out until it is too late, then filing for bankruptcy reorganization or liquidating or selling out under unfavorable terms. These are not solutions; these are outcomes of not changing with the industry.

On the other hand, there are five proactive alternatives to consider, all of which are proven solutions to a troubled-company situation. They are: spin-outs, turnaround programs, crisis management programs, temporary shutdowns, and transactions with other companies. The hvac company should seek an experienced professional troubled-company specialist firm to assist it in implementing the most appropriate of these five solutions. Each troubled hvac company should immediately:

Evaluate its situation carefully and logically.

Avoid any undesirable alternatives.

Develop and implement the best desirable alternatives.

Get assistance from a professional troubled-company specialist firm.

Re-assess the situation, making any appropriate strategic and/or operational changes on a regular basis.

Remain as logical and rational as possible at all times.



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