What Put My Grandpa Out of Business

Mitchell Earl
Jan 27, 2017 · 3 min read

In the early 2000s, the smartest man I’ve ever known filed for bankruptcy.

He owned a burgeoning electrical contracting company. After almost 40 years in business, cash flow problems forced my grandpa to close his doors once and for all.

The weight of this failure changed him. He lost something that day.

But this story isn’t about failure and it’s not about my grandpa. It’s a fable about the harsh realities of small business ownership and how to address them proactively.

I want to tell the story of my grandpa’s business because his story fuels my why — my reason for doing what I do. I wake up each day invigorated by the opportunity to work with small business owners. My grandpa’s story gave me that.

In the last 15–20 years he owned his business, a number of unknown variables took the business by storm.

Embezzlement and fraud showed their ugly heads. Tools mysteriously disappeared from job sites. Numerous unworked hours were logged by employees. Parts disappeared from the warehouse. Billing also fell six to nine months behind causing even worse cash flow problems.

The business bled assets and cash. Before anyone knew what happened, a little bit of money had become a lot of money. The lack of pulse on the business signed its death sentence. The business didn’t even stand a chance.

When I recount the story of my grandpa’s business, what’s most troubling is that his failure did not come from lack of knowledge or effort. The man understands business as well as anyone and he worked liked a team of clydesdales. In fact, his drive and perfectionism consistently brought in millions of dollars in revenue and created hundreds of jobs over several decades.

By all normal standards, he had built a successful business . But an information gap lurked behind the scenes. The cost of that missing, vital information steadily grew.

It would be too easy to prescribe a solution today to the situation my grandpa faced years ago. His business failed. Nothing I say changes that. But he is not alone. Thousands of U.S. small businesses fail every day.

A deeper dive into those numbers reveals many, if not most of these small business failures could have been avoided. Research indicates cashflow problems wipe out 82% of small businesses. Another study cites poor bookkeeping and financial reporting as the culprit for 46% of all SMB failures.

Small business owners are smart. They don’t fail for lack of knowledge, they fail for lack of information.

This much-needed information reduces risk for small business owners and enables their businesses to thrive. It provides a clear view of the health of their businesses. It establishes a framework for compliance and mitigating the risks of fraud, or embezzlement.

Fortunately, all of this information is readily obtainable for small business owners with a good bookkeeper or accountant. This often overlooked element — when done properly — holds immense significance for the success of any business.

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Insight, inspiration, and advice for small business entrepreneurs

Mitchell Earl

Written by

Author of Don’t Do Stuff You Hate. | Director of Marketing @CareerCrash | Prev. @Ceterus @TheOdyssey | Learn more at https://crash.co/mitchellearl

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Insight, inspiration, and advice for small business entrepreneurs

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