Financial

Trauma

Recovery

www.c4-consulting.com

Agenda

Definition. Experiences. Challenges. Considerations for healing.

Financial Trauma Defined

Considerations. Principles & Processes. Progress as Practice.

Resilience & Recovery

Q & A. Further Considerations. Closing Poll. Grounding & Gratitude.

Discussion & Closing

Our Panelists. Opening Poll. Grounding Exercise.

Introductions & Invitations

We appreciate your consideration &

sincere investment.

Be Courteous, Kind, & Respectful

With so much remote connection, it’s

easy to get distracted & disconnect.

Getting “Zoomed Out”

Submit your comments, considerations, and

curiosities through the “Q &A” section for our

panelists to address.

Share & Share AlikeKeep Calm, Relax, & Live Your Integrity

Etiquette & Guidelines

Breath, Stay grounded. Provide feedback

with professionalism.

What is Financial Trauma?• Reaction to Change: Dysfunctional reaction to

significant loss or change of financial

circumstances

• Often present as symptoms of PTSD:• Intrusive thoughts

• Avoiding reminders of the traumatic event

• Negative thoughts & distorted beliefs

• Arousal and reactive symptoms

• Personal• Can be the loss of a job, loss of a home, change in

wage, depletion of savings or addition of debt

• Organizational • Can be loss of revenues, increase of cost,

reduction in demand or addition of debt

COVID-19 Economy

11.6% or 17 million people currently

unemployment as of July 18

Unemployment

The US economy contracted 9.5%

in Q2 or 32.9% annually YTD

GDP Collapse

As many as 30 million Americans

are facing eviction in coming

months

Eviction Moratorium

Yelp shows 26,000 restaurants

have closed, 16,000 are closed for

good

Closed Restaurants

What is Financial Trauma?

Practical - Lack of knowledge, structure, & preparation

Emotional - Emotions clouding decision making

Responses - Fight, flight, freeze

How

Does

Financial

Trauma

Happen?

What Does it Look like?

What do you see?

What goes unseen?

What does an Organization experience?

What are staffing dealing with?

What is Organizational Recovery?

What ability does Organizational Recovery give you?

What steps do you take for Organizational Recovery?

What type of analysis is vital?

What do I prioritize?

Analyze the Health

of your Business

➢ Businesses don’t go bankrupt because they are unprofitable, they go

bankrupt because their cash reserves run dry and they cannot meet

current obligations.

Net Margin:

Measure of Profitability calculated by finding the net profit as a

percentage of revenue

o Margin is dependent on business, geography, service, etc.

but >20% is considered healthy

o Formula: Net Income / Revenue

o Example: $300K of Income / $1MM or Revenue = .3 / 30%

o EBITDA iteration adds back interest, tax, depreciation,

amortization

Analyze the Health

of your Business

Current Ratio:

Represents a company's ability to pay its current liabilities with

its current assets. This is a quick measure of a company’s

liquidity, efficiency and short-term financial health

o Analysts consider 1.2-2 to be ideal

o Formula: Current Assets / Current Liabilities

o Ratio Example: $200K Cash + $150K A/R / $100K A/P +

$50K Short-term debt = 2.33

Analyze the Health

of your Business

Debt to Equity Ratio:

Financial ratio used to gauge the relative proportion of equity and

debt used to finance assets, generally used to see if a company is

over-leveraged

o Analysts consider below 2.0 to be ideal

o Formula: Total Debt / Shareholders Equity

o Example: $50MM / $120MM = .42 (For every $1 of equity

biz has 42 cents of leverage)

Analyze the Health

of your Business

Debt Service Coverage Ratio (DSCR):

Ratio of operating income to debt service, typically used to measure an

entity's ability to produce cashflow to cover debt. Unlike debt-to-income,

DSCR is higher the better.

• Analysts consider a ratio of 1.25 or higher to be ideal

• Formula: Net Operating Income (EBITDA) / Principal + Interest

• Iterations include the reduction of CapEx and the addition of

lease payments

• Example: $550K of EBITDA / $100K P+I Debt service = 5.5

(Biz can repay its debt 5.5 times with operating income)

• DSCR below 1 means you have negative cashflow and

aren’t covering debt

Analyze the Health

of your Business

Return on Equity:

Measure of profitability in relation to equity to gauge how

effectively a company is using assets to create profit.

o Analysts consider anything below 10% to be poor

o Formula: Net Income / Equity

o Example: $150K / $550K = .27

What can you do immediately?

✓ Ensure that you are keeping clean financials

✓ Ensure that you are receiving regular reporting

✓ Assess the situation (study cashflow & debt load)

✓ Plan early and act

What do you have control over?Sell More, Price higher, Cut Cost:

• Understand your contribution margin

(your price exceeds your cost)

• Cost containment

• Prioritize your payables

• Plan cashflow very carefully

• Use debt / communicate with Creditors

Examine Contribution Margin

Contribution Margin

The amount by which an item

contributes covering fixed costs

and profitability of the business

• Equation:

• Revenue – Variable Cost

• Categorize Fixed and Variable

Costs

• Example: Define Example

Contain Cost

• Review General Ledger and view each cost as up for grabs

• Approach supplies and vendors and request cost reductions

• Get many bids / look for savings

• Stop capital expenditures

• Reduce stock / purchase only when necessary

• Narrow benefits

• Labor Reductions

• Operating Expenses

o Leases

o Office Supplies

o IT

o Telephone

o Maintenance Contracts

Prioritize

Payables

✓ You can start to do this immediately!

✓ Define what matters most to the business

➢ Anything that impacts revenue, compliance or could damage business relationships

✓ Use all terms offered (generally 30-60 days)

✓ Request terms / longer terms

Cashflow

Planning

Planning Cashflow

• Study Accounts Receivable

▪ Communicate with customers

• Forecast next 30, 60, 90 days based upon

A/R & actual expense

• Understand Assets

▪ Begin to liquidate assets if needed

Debt Planning

If you have debt:

• Communicate with creditors

• Push aggressive terms / always make minimum payments

If you don’t have debt:

• Explore the impact of debt on the business

(cashflow hiccup or a lasting change)

• SBA products / LOC

Alternative Options

• List the business for sale

• Sell equity

• Acquire another business

• Bankruptcy

Sustainable Considerations

• Don’t operate a cashflow negative business for longer than 6 months

• You aren’t meeting budgeted projections

• Your personal health is suffering

• Your losing passion

Recovery is a healing process that addresses the causes & conditions of the trauma itself

• Evaluating & committing to practices that allow solutions from the inside-out

• Without creating or recreating triggering experience.

• Once internalized, the ability to make sound decisions for the business that are not influenced by

subconscious primal instincts, but rather conscious, mindful, and strategic.

What will healing require?

First step is recognition and acceptance of the situation.

Evaluate your personal views and business.

Seek outside counsel: ground a new perspective

Understand that no matter what, the business will require

a healing process to occur.

Things do not just “go back” to where they were before.

Managing StressIndividuals & Families

• Self Regulation • Co-Regulation with Family Members• Safety & Transparent Communication• Compassion & Mutual Responsibility• Practice Makes Progress

Organizations & Providers • Systemic Regulation • Co-Regulation with staff• Safety & Transparent Communication• Compassion & Mutual Responsibility• Practice Makes Progress

Awareness + Acceptance + Action

Awareness:

• Attitudes & Beliefs

• Healing is a process, not an event

Action:

• Diversifying safety & security

• Information & communication

Acceptance:

• Reality, tempered by resilience

• Changing habits & influences

Considerations

&

Discussion

What is necessary to act on in the next 24 hours?

What are you grateful for?

Closing Grounding Exercise

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