There’s Nothing Like Being Backed Into A Corner To Discover Who You Are
I got a call yesterday from a tradesman friend in trouble. Business was down, cash flow was bad — he was in a dark drunk place.
I’m a writer now, but in another existence I was a sparks, an electrician. I guess I still am. Afterall we don’t unlearn the skills we develop. All experience is valuable.
I owned and ran an electrical contracting business for 16 years and it was good to me, and then it wasn’t so I got out. Sounds very clean cut doesn’t it?
Well it wasn’t.
It was a bastard of a time. But I wouldn’t change a thing. You see I learned a ton of stuff wading through that manure and the experience has been of significant advantage to me.
So for a while after getting out I worked with a couple of contractors, provided some advice, posted lots of free stuff online and built a small following.
That was fine but the niche was too small so I pulled the pin on it.
Anyway, that’s not what I wanted to talk about…
Back to The Story
So this guy, lets call him Bill, gets on the blower about 3:00 am and spills his broken heart and soul out to me about all the shit and puke he’s going through.
Tough station. I know it only too well.
He started out much like I did, working solo doing what work he could get, pricing work just to get it and so on.
Most small businesses get going this way. They make a few bob for a while but then as work grows they don’t and eventually the brown stuff hits the blowy spinny thing.
Payments are slow coming in for Bill and what business he does land there’s no fat on it. He makes sure to pay employees every week without fail, often refraining from paying himself.
The common and flawed notion here is that, that practice of not paying yourself and paying others is honorable - it’s not. We dishonor the very person we should honor when we do this.
Suppliers are beating down his door for money. He plays a constant game of cat and mouse and he knows he’s going to get caught.
As he gets tired the cat will pounce.
It’s a slow death for small business.
So What Does Bill Need To Do Here?
Firstly, the reason why this happens so many skilled people is that we are not fundamentally business people. We are technically gifted first, all the business stuff we have to learn.
With a strong desire to be free many of us jump right in without any essential business experience. And that’s not necessarily a bad thing, but it is dangerous. Some of us come out the other side with scars and bruises still in business, but many don’t.
The momentum of bad habits and poor business practice takes over and we get taken away on a very uncomfortable rollercoaster ride.
I faced these same questions as Bill and there’s no easy answer. It will eventually work itself out, but there will be pain along the way.
He does however have a few choices though;
1. Keep going the way his is and see what happens.
Well, current momentum suggests that if he makes like an ostrich and ignores the trend he’ll end up in a worse situation. It’s likely that in this particular case other people will make the decisions for him.
All it takes is for a significant creditor to lodge court proceedings to recover what’s owed to them and then it’s all over bar the crying. This is a bad buzz for any small business owner and it’s something Bill will need to avoid at all costs.
2. Cut his losses and wind the business up now
Depending on how deep in the manure Bill is this might be the best option available. At least the destiny of the business is under his control and the ultimate decision is still with him.
He can always start again the following day under a new company or indeed as a sole trader if he chooses and keep his clients. Despite what Bill may believe his clients don’t care what the name of the business is or if he’s trading under a new name.
They just want Bill.
The biggest issue for Bill in winding up his business is his creditors. Keeping channels of communication open and dialogue going is important. But he needs to be careful that he’s not leading them on and just kicking the can down the road.
3. Scale back his business to a one man show
If Bill is a sole trader this might be the best option for him. A sole trader typically will be liable for all debts of the business so in theory he could have other assets such as his home on the line if he winds things up.
I have no idea why any small business owner would not incorporate when they start out. Sole trader arrangement is just too risky to personal assets in my opinion.
The key here for Bill is to get in front of his creditors and explain his difficulty. Most will be understanding and work with him to find a solution. Those who are not understanding can be simply made an offer in writing which they can either take or leave.
An accountant or an insolvency practitioner can usually assist here by getting in between both parties.
Meeting With Creditors
When Bill meets with his creditors it should be an open and honest discussion, all cards on the table. When I wound up my first business I was in debt to one creditor to the tune of €25k. Not a huge deal to many businesses but for me at the time it was certainly a huge deal.
I went to meet them and explained my situation. I told them I was closing the doors and the business had no way to pay the account down. I was amazed at how understanding they were. I was one of the top customers on a sales basis with him for many years and there was mutual respect.
After writing off the loss against tax his company was not out of pocket too much and so we parted on good terms. He smiled, shook my hand and wished me the best for the future.
Our Biggest Source Of Pain
You know I’ve managed to realise over the years that the greatest source of difficulty we experience in our lives is our focus on what’s going wrong. At the same time I understand that telling someone who’s in a hole that the reason they are in a hole is because they are in a hole is no advice at all.
We’ve simply got to accept where we are and endeavour to find a glimmer of hope from somewhere. Seeing even the slightest of good in a difficult situation is our best chance of finding a way out.
As the spiritual saying goes…
“Play the ball where the monkey leaves it”
I told Bill to try focus on his good points. Try to find the thing that he knows he is good at and where he knows he brings value. It doesn’t have to be work related, it can be at home with his family, it could be in sport or somewhere else, but he needs to find it.
Bill needs to find space to think. He needs room to move and to make rational decisions because the constant pressure to meet demands on him is an ever downward spiral.
You know there’s nothing like being backed into a corner to discover who you are, and although he doesn’t feel like it right now, this experience is likely to be ground breaking for him.
For me finding the space I needed was in winding my business up allowing me to chill out for a while. Turns out I never went back, not really anyway, not with my heart. I found a new place to be and a quieter mind to boot.
Howdy, I’m Larry, Writer & Artist. Thanks for taking the time to read my stuff. I write short stories about the ordinary lives of people and the challenges they face. My stuff can be edgy, hard hitting, and sometimes controversial, but never contrived. If that’s your bag you can Sign-up To Sunday Letters Here.