Brush with Business Doom: How 2 Firms Came Back from the Brink of Disaster

SVT and Altel Systems share their tales of tumble and turnaround to help those who may face the same problems prepare for the worst.

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“We needed to bring in a third party to do a complete business analysis,” says Shanahan, noting the company also evaluated its legal and accounting firms, implemented Solutions360 business management software and leveraged its NSCA membership to help turn the company back toward break-even.

They trimmed serious overhead and stopped working with customers who weren’t paying or weren’t within its new margin threshold, explains Shanahan. “We didn’t need as much revenue as we thought if we’d been bringing in the right kind of revenue,” he says.

SVT recently hired someone to run its procurement and supply chain program and has brought in other new employees with experience in its core vertical markets (gaming/entertainment, enterprise and retail) and is working with partners with large sales teams to sell SVT products and services.

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With outside help and a new lease on life, along with an improved economy, “we feel the processes are providing us with positive traction and we’re pursuing opportunities with far more laser focus,” says Shanahan. “There’s still a great deal of concern, though, because we’re highly leveraged. We look at it like we’re a brand-new company with a much better focus, but with a bit of a monkey on our backs.”

Shanahan is philosophical about SVT’s situation and that of others who’ve struggled like them. “It’s a practice, not a science,” he says. “The reality of business is most go through cycles.”

Slow Turnaround for Altel

Brewster, N.Y.-headquartered Altel Systems Inc. found itself staring at lots of red ink in large part because the integration firm didn’t change anything it was doing as the U.S. economy went into a protracted recession starting in 2008 and extending several years, says president and CEO Andy Musci.

Even as there appeared to be less work coming in and less new work to bid on, Altel kept its staffing levels at 24 and dealt with high overhead as it tried to navigate the choppy economic waters almost 60 years after the business began.

“As the economy turned down, we were lulled into thinking it would turn around,” says Musci. “We didn’t think we had to make any aggressive changes.”

Because Musci and the Altel team were slow to react to the economic conditions around them, they were faced with a series of collection letters, he says.

“I woke up one day and realized we had to do something,” says Musci. Altel lost viability on potential projects because of a credit hold and was dealing with a long payment window by its vendors.

“As the economy turned down, we were lulled into thinking it would turn around,” says Musci. “We didn’t think we had to make any aggressive changes. Because of prior experience with this type of thing, you have certain expectations about how it’s going to go, but there was a much deeper trough this time. Five years later, it’s still very slow.

“It’s my business so I’m responsible for what happened. When you’re trying to get jobs in and out, it’s hard to look closely at the finances,” he says.

About 18 months ago, Altel trimmed its staff to 10 and scaled back on all expenses that were not considered mission-critical, says Musci. Altel also had to adjust some employee benefits and perks to help turn the company around, he says. The moves were tough, but necessary.

“When you have to do a harsh analysis and cut back on access to certain perks, it’s hard,” says Musci. “Everyone in the company has to come to realize they can do more. It’s forced us to also look at our processes and how much we put into certain parts of the job. Any big business does this regularly; small businessesneed to do it too.”

Facing the prospect of more bidders than ever on most projects and living in a world that seems to favor larger companies, especially at a time when IT is becoming a more important part of the equation, Musci and the Altel team are changing how they do business, he says. “We got a lot of religion on cash flow analysis,” says Musci.