CRISIS MANAGEMENT IN ECONOMIC BOTTOM THROAT
CRISIS MANAGEMENT IN REAL LIFE
Crisis Management , which is summarized in general terms in literature , is a unique situation that forces us to experience situations that we have not read about in books and have never encountered in real life when it comes to real life. I will try to flesh out what I mean by this explanation by talking about my personal experience.
INDIVIDUAL COMFORT ZONE
My professional career began when I graduated from Izmir American High School, completed my business and international relations education at Purdue and New York Universities in the USA, and returned to Turkey at the beginning of 2004 to start working in the planning department of our family company, which was founded by my father in 1976. Our family company in question was an organization operating in the design, project planning and mass production of products needed by international advertising companies in both Turkey and Europe within the outdoor advertising sector, built on an area of 18,000 m2 and employing 145 people at its busiest. At that time, I was working with one of the international companies within the group called the big four in terms of independent auditing and CPA. My life story up to this point can be described as a standard example planned for the second generation of a capitalist family.
THE ROAD TO CRISIS
The part concerning Crisis Management started with a tax audit notification sent to our family company by the tax audit board in 2006. This issue came to our agenda when a tax audit report was prepared against a supplier from whom we had been purchasing raw materials for many years, and all the companies to which the relevant business had made sales were also subject to additional investigation based on this report. The entire management of the tax audit process in question was undertaken by the international independent audit company we were working with at the time. Although we were confirmed that everything was done in accordance with the relevant legislation for our company and that there were no problems, we were faced with a situation where a report was prepared against our company at the end of the tax audit process. The relevant independent audit company stated that we should not have any doubts and that the issue could be resolved in favor of our company at the tax court and assumed responsibility for the relevant legal process. 2008 was a period in which the biggest financial crisis in the global sense was experienced in history. For our family company, 2008 was not only a year when the banking system was shaken to its core by the bankruptcy of Lehman Brothers, all bank limits were reduced, new limit allocations were stopped and simultaneously all international advertising companies we did business with suspended their investment projects, but also a year when a lawsuit we filed at the local tax court was ruled against us. The independent auditing company that had undertaken the process appealed the local court decision to the Council of State. However, a fact that I learned for the first time at that time was that the Revenue Administration Presidency started the collection process after the local court decision without waiting for the Council of State’s decision.
The year 2009 was one of the darkest periods I have ever encountered in my life. Previous economic crises in Turkey were situations that we as a country had only been subject to and that had entered a recovery process after a certain period of months. What happened that day was a year in which, for the first time, we had to resort to methods that had never been on our agenda before in order to keep the company afloat as a result of a very long global economic downturn. As a result of all the measures we took, in the last months of a very difficult year, our family company was faced with a life-or-death situation as a result of the decision made against us by the Council of State. At this point, my father first cut all ties with the independent auditing company we worked with and gave me the responsibility of all financial affairs of the company based on the business education I received. Suddenly, I found myself faced with a situation that I had never seen before in business school and had never experienced in my 4-year professional career. I still remember very clearly today that I understood the situation we were in more clearly after a series of detailed meetings with the managers and consultants of the relevant units working in our company and that as a result, I had difficulty sleeping at night for a long time.
EITHER HERRU OR MERRU
For the first time in my life, I was faced with the necessity of managing relations with public institutions such as the Tax Office and Social Security Institution, seeking the right solutions regarding the legal process we were facing, and producing new credit solutions with banks to finance the working capital deficit required by the company through long-term payment plans we were exposed to in the orders we started receiving again when the markets started to open in 2010. As I write these lines, I can still remember how the panic and stress I experienced while going to my first meetings with public institution managers, lawyers and bankers made my heart beat faster. After I started to manage relations with public institutions both in the province we were located and in Ankara, I experienced firsthand how consultants, whom we trusted to be competent in this regard for years, could actually manage the processes incorrectly and how correct information could be obtained by establishing correct communication with the relevant public institutions. The most crucial lesson I learned for me was how consultants who interpreted the legislation only by reading it from the official gazette and who did not have a close and correct personal relationship with the relevant public institution could potentially lead their clients into wrong situations with their own interpretations of what they read. During the same period, I witnessed a very similar situation regarding legal processes and that although you have to work with a law firm in the province you are located in, the issues are actually resolved in Istanbul and Ankara. When it comes to banks, I personally observed that every place outside the provincial borders of Istanbul is considered as “provincial” by the general directorates, therefore, all kinds of credit allocation requests made through branches/regional directorates in different provinces are evaluated within this scope and at this point, a solution can only be reached by explaining the project financing needed correctly to the general directorate through the right consultants.
As an example of what I have explained, I can give how I learned during a personal visit to the Revenue Administration in Ankara that an official at the tax office we are affiliated with had insisted on a practice that was not correct for years, and then, as a result of being directed by the relevant presidency, I found the official opinion given previously on the same subject on the private letter portal, and then presented the relevant private letter to the official who insisted on the wrong practice, and then witnessed that the long-standing insistence was suddenly abandoned. Similarly, I can tell you how, when we worked with the right legal advisors, a decision given against us by a higher court turned in our favor with the application for correction of the decision made to the same higher court. I can also give an example of how our loan allocation request, which was submitted through a bank branch in the province we were located but rejected, was approved when the issue was correctly explained to the general directorate of the same bank. The processes I mentioned above both shook and transformed my perspective on professional life to its core. I had the opportunity to see during a difficult two-year period that the phenomenon called Crisis Management can only be managed by completely stepping outside the comfort zone we had been used to until then, and looking at events from scratch and from a different perspective.
FACING THE WORSE OF THE WORSE
Although we were able to find solutions to the difficulties we faced in the period following the bankruptcy of Lehman Brothers, the competition with Chinese manufacturers, which we encountered for the first time after 2010 due to the permanent change in product preferences in the sector we serve, squeezed our family company into a financial vicious circle. The company’s increasing debt, which resulted from the decreasing profit margins not being able to cover the financing costs, forced us to apply to the court for bankruptcy postponement at the beginning of 2013. This new process showed me that there were many different issues that needed to be learned in my life regarding Crisis Management . Following the court’s decision to postpone bankruptcy regarding our company, first our bank checks in the market started to be marked as dishonored. Within a few days, suppliers who could not make their collections piled up at our door. Simultaneously, branch managers of the banks to which we had loans came to visit us one after another. We had to go through a very intense and stressful period in terms of personal and corporate relationship management. Our priority was to establish the right communication with the person who entered our lives for the first time and was appointed as a trustee with all kinds of authority over the company by court order and to implement the right strategy that he would find appropriate. In this context, we first managed an intensive interview traffic to convince the companies we did business with to continue to order from us. In addition, we made serious efforts to find a compromise ground to continue working with our suppliers whose checks bounced in order to continue the supply of raw materials and semi-finished products for the jobs we would receive. Our second priority regarding the process was to make restructuring agreements with all the banks we owed money to regarding our credit debts. The most important issue regarding the bankruptcy postponement process was that the company could continue to do business and, within this scope, to restructure its past debts and start paying them back on a certain schedule.
When we applied to the court, there was a statistic that more than 80% of the companies in Turkey that had been given a bankruptcy postponement decision had failed to show the necessary improvement at the end of the first year and had been given a bankruptcy decision. I understood why this rate was like this after the great difficulties we experienced in the process of convincing individuals and institutions after the bankruptcy postponement decision. Despite this reality in front of us, with the great effort we put forth, we were able to successfully implement the debt payment process and obtain the decision to extend the bankruptcy postponement twice more in the relevant court during the review periods repeated every year. However, at the end of the third year, in the first quarter of 2016, our debt repayment capacity was disrupted as a result of the decrease in our orders. Since the court was obliged to see a sustainable recovery trend as required by the relevant law, it ruled for bankruptcy regarding our company in April 2016 as a result of the stagnation in our repayment capacity. Following the relevant court decision, a bankruptcy estate was established and the authorities from there prepared the necessary minutes regarding all the assets of the company in the factory, legally assumed responsibility for the business and put an end to the journey my father had started 40 years ago.
INCREASING OUR ADAPTATION CAPACITY FOR A SOLUTION
During the eight years of Crisis Management , which I have summarized above, I have personally experienced many different issues and situations that I have never read about in the literature before and have never encountered in my career. The biggest lesson I learned from this experience is that in a crisis period, past experience gained during normal times is of almost no benefit, and that it is very important to remain calm in extremely stressful situations, to approach issues from scratch with a new perspective by thinking and questioning. Another important issue in this journey is the capacity of the person managing the crisis to sort out the right options from dozens of people and institutions that come up with different explanations and promise to provide a solution. The biggest test faced in such a period is to continue to progress on the right path without wasting limited money and time on wrong choices in an environment where people are most vulnerable to being misled under extreme stress and the risk of showing weakness is the highest. The secret to doing this is to personally read and research on the subjects, to question everything that is said, to persistently apply relationship management that will proactively reach the right people without withdrawing into oneself, and to keep self-motivation high in all situations, no matter how much stress you are under.
