Visualize this: You get off a plane from an EO event in Tokyo, Japan, you’ve been away for five days without cell phone reception and with limited contact with the outside world. As you prepare for the commute home, your cell phone rings. It’s the office.
An office manager is calling to tell you that, over the weekend, a handful of your clients have all hit the wall and left you with about US$375,000 in bad debt. Only minutes later, you get two calls from separate bankers, both of whom let you know that the overdraft you had is being called up. “But I’m not out of terms,” you protest. They don’t care. They know you now have debtor issues, and they don’t want to be on the end of the line when the money runs out.
The phone rings yet again, and you answer it with a sigh. It’s the tax office, with a courtesy call saying you will be receiving notification through the mail requesting you to justify some tax returns; some of the more recent returns are not quite correct, and there could be a deficit.
Hands down, this has to be the worst few hours of your life. In a matter of hours, you went from the penthouse to the outhouse. So, what do you do? Well, here’s what I did when all of this happened to me a few years ago. This is an abridged version of the crisis checklist I used to get my business back on track.
- I called a staff meeting as soon as I got off the plane and told them exactly what I thought our position was, and that we had about a week to work out a plan.
- I got on the phone with those clients that had hit the wall and assessed if we were going to get any money or work out of them. We were on our own.
- I called each of our debtors to grab as much cash as I could. I then called each of our creditors to make appointments to meet them in person.
- I called my Forum members for an emergency Forum meeting to help me wade through the clutter. Without these guys, I simply would not have made it through.
- I sent out a message on Member Exchange, asking for help from anyone that had been in a similar position. I also called any EO member I could think of that would have some information or contacts that could help me.
From the information I gathered, this is the plan I came up with:
- I engaged an accounting firm to help me pull the numbers together, and to act as a go-between when necessary with different parties.
- I asked our key clients to start paying in advance, as we had done our share of favours for them over the years and been good suppliers.
- We met and explained the truth to all of our creditors, asking for payment terms. If we didn’t get them, they would get nothing.
- I met with the banks and, after much bargaining, we came up with terms of settlement. This was one of my greatest moments in business.
- I met with the tax office and came up with a settlement plan for them, as well. This was decidedly tougher, and required much more groveling.
- I turned two houses into a rented apartment, a Range Rover into a 15-year-old Mitsubishi, retrenched a handful of staff and reduced the overhead until we were running on fumes.
- I put my head down and went as hard as I could for the next 18 months, burning 18- and 20-hour days until we had momentum and clarity that we could build a better business out of the ashes.
After all of this, I didn’t go broke, I didn’t die and I didn’t ever give up. The outcome was that we delivered a 30 percent increase in profit the following year, and have been in the black ever since.
What did I learn from these business crises? That there is no such thing as a self-made millionaire; everyone needs help from someone. In my case, I wouldn’t have survived without EO and my Forum mates. Now that I know how EO can help my business, I’ll be prepared for whatever comes my way.