As you are working at your office desk, you hear the faint ring of your cell phone.  The caller is one of your promising prospective buyers and you’re hoping she’s calling with good news.  After you get past the normal greetings and weather report, she proceeds to tell you that she just read about your builder filing a Chapter 11 Bankruptcy.  Stop the press… Your initial reaction is total disbelief.  Once the shock wears off, you rationalize that she must be talking about a different company.  Finally, you quickly gather your thoughts and tell your prospective buyer that you need to get back with her after you have followed up on this rumor.  Within a few minutes and a couple of quick phone calls, you confirm that the company you are selling for has, in fact, filed for a Chapter 11 Bankruptcy.  OMG! First of all, let’s hope that it’s never a prospective buyer that breaks news of this nature to you.  It is extremely important that the company owner shares every detail of these kinds of financial matters firsthand before going public with such news.  Briefing and educating company staff is the only way to ensure that everybody can get on board with the strategies that I’m about to discuss.  What’s the Damage? The first thing to do is grasp an understanding of exactly what bankruptcy is and which type your company is filing.  There are three kinds of bankruptcy that we hear about most often in the news: 

• Chapter 7 Bankruptcy is where a person or company files for total liquidation.  The court seizes and liquidates all assets in order to make some kind of meaningful monetary distribution to creditors for debts owed.  Chapter 7 is the most severe of the three and usually results in the end of the company.   
• Chapter 13 Bankruptcy is typically used for personal reorganization.  Payments due to creditors are delayed over a period of time and amounts sometimes may be reduced.
• Chapter 11 Bankruptcy is used by companies and resembles Chapter 13.  If all a company needs is a reorganization plan to pay off debts, then a Chapter 13 is preferable, rather than a Chapter 7, particularly when trying to reestablish their credit worthiness.  Recently, you’ve probably heard that companies such as Delta Airlines and US Airways have filed for Chapter 11 bankruptcies, reorganized their debts, and both have come out winners. 

Now the Good News … So what does this mean for you, a sales professional in the building industry?  Unfortunately, in today’s market, some builders will be forced to file for Chapter 7 bankruptcy and total liquidation.  On the other hand, builders that choose to file Chapter 11 make a crystal clear statement to the community that they want to honor all of their debts and existing customers by utilizing this form of reorganization, allowing them to manage their debt loads and continue to take care of customers during their temporary financial setbacks, (something we can all sympathize with in such sluggish economies).  A builder that files for Chapter 11 says it wants to do the right thing and that its intentions are to continue operating business as usual.  It is important that their customers understand the integrity the builder is portraying at this stage of business.  The builder’s plan to restructure its business is subject to the oversight and jurisdiction of the court. It is natural for anyone to be skeptical of buying from a company that is in some form of bankruptcy.  However, Delta Airlines continued to sell tickets and fly with business as usual, providing on-time arrivals and outstanding customer service as usual for their customers, during their restructuring and emerged triumphantly.  They exited bankruptcy stronger and better positioned to compete in the market, and so can your home builder. Are You In or Are You Out? Now comes the final part of the equation:  as a sales professional, you have a tough decision to make.  Do you understand how the reorganization plan works and how this will affect customers now and in the future?  Are you comfortable with your company’s direction and the fact that it is moving forward?  If you are not, the advice is simple – you need to leave the company.  Otherwise, get on board 110% and bring your best selling skills ever to the table so your company has its best chance at emerging successfully from the reorganization.  Sales are the most important part of the entire plan because they are the lifeblood of the company.  Each sales professional becomes the lifeline for the next few months as the company goes through this restructuring.  In conclusion, the restructuring of a company’s business can be a real opportunity for everyone involved.  However, the sales professional needs to understand how important their role is in securing a positive outcome.  If you are in, get all the way in, and help your company monetize its success in this economic environment.  Be a part of the home builder’s and home owners’ success for today and tomorrow.     About the Author: John A. Palumbo is CEO of The Sales DNA Institute, an idea studio and research laboratory for sales and marketing management. He has presented hundreds of speeches and seminars internationally on the science of sales and influence. He has been instrumental in restructuring the Sales DNA or thousands of individuals from small, family-run companies to large-scale developers such as Trump Grande International. He is author of Close and Grow Rich, Selling at the Bottom of the Market, and his bestseller, What’s Your Sales DNA? Visit www.SellingOnStage.com or e-mail PalumboJ@aol.com for more information.

Tags: Builder Business, New Homes Sales