A peek into the real world of small business survival
It’s time to give small business owners a voice
Why do I get physically ill when I read about Solyndra, the company that announced last week that it was declaring bankruptcy DESPITE $535 million in federal loan guarantees. Maybe because I’ve just been through an 18 month long cash crisis where I’ve had to go to the mats to survive. Federal policies didn’t cause my problems, but they sure didn’t help matters. Take the small business credit crunch, which is ongoing and brutal for millions of small business owners who could use a little cushion. I believe its continuation to be an unintended consequence of stepped up bank regulation. And I don’t think anyone in Congress or the Administration has a clue about small business. Or truly gives a damn, except when the cameras are rolling.
What do I mean going to the mats? Well, it starts with a commitment to never give up, no matter what the odds, or the amount of humble pie you have to eat. (If humble pie were fattening, I’d weigh about 400 pounds!) But a little of it is good now and again, it helps keep one grounded. Too much gets tiresome, especially when you read about $535 million pissed away on a company that apparently doesn’t know how to do financial projections.
And then I learn that “a major fundraising bundler for Obama” – or rather George Kaiser’s family foundation – was a major investor in Solyndra. In Saturday’s Washington Post (9/3/2011), there was an inside article about the George Kaiser Family Foundation issuing a statement that “George Kaiser is not personally invested in Solyndra and did not participate in any discussions with the U.S. Government regarding the loan.” Translation: that’s what underlings are for.
Why the rancor?
I feel like I don’t have a voice. There is a serious small business credit crunch going on, and the federal government just seems to make it worse. Yet they find $535 million for a “green” company funded by a campaign contributor. That’s just not fair.
Meanwhile, I have to fight American Express tooth and nail to get more time to pay a huge bill I ran up in anticipation of new sales that did not materialize. It was a week after the 15 day grace period that I got the call. I was dreading it, like you can’t believe. This was mid to late December, 2010, just before Christmas of course. I find that Murphy’s law is strongest when applied to matters of small business cash flow. Two weeks earlier, my daughter Kelly, who had moved back temporarily with us because she lost her job (with guess who!) – totaled our only car and broke her pelvis. She had no health insurance of course.
She had driven my wife, Laurie, to work that day so she could have the car. It was raining, and I assume she was late (operating on “Kelly time” as we family members affectionately call it). She didn’t see the speeding (at least that is our contention) vehicle barreling down the George Washington parkway as she pulled out to turn left, and took the full impact in the driver-side door. It was about 7:30 a.m., 2 or 3 hours into my workday, when I got a call on my office phone from a number I did not recognize.
I ascertained that she was alive and conscious, and then much discussion ensued about how to get me to the scene. One of the good samaratans who stopped to help offered to pick me up (Kelly was driving our only car). But traffic had been stopped in both directions on the parkway. It was only two miles away. I grabbed a backpack, my iPhone, and lots of reading material (ever been to an emergency room?!), hopped on my bike, and pedaled furiously in the rain..
I’m happy to say that 8 months later, Kelly is fine and dandy, and living on her own.
Two weeks to the day after Kelly had her accident, my wife slipped and fell while leaving for work and broke her foot. When she called and told me what happened, my second thought was “your poor thing, I hope you’re OK.” My first thought was, ”Damn, who’s going to help take care of Kelly?! What impact will this have on our family income? Does my life insurance policy have a suicide clause?”
Within a few days of that, son #2 flew in from California, separated from his wife. You guessed it – he was unemployed because his father had eliminated his work hours.
Then shortly after the new year, son #1 moves back home – also unemployed. There are advantages and disadvantages to employing family members.
I finally worked out a repayment schedule with Amex. One thing nice about doing detailed cash planning, is that it strengthens your resolve, and helps you avoid commitments that come back to bite later. At first they let me get by with paying $100 every couple of weeks as a sign of good faith. Of course, what really hurt was losing all the points I had accumulated. I was tempted to use them up prior to becoming delinquent, but figured that would not look so good.
The Amex collection rep was professional and firm, but relentless. She even suggested I skip a mortgage payment in order to pay them instead. (I declined) Some time in January, we reached a standoff, and finally she called in her manager who quickly offered me a work out plan to pay them over two years. A ray of light at the end of the tunnel. I tried not to sound too eager when I said yes.
I’m afraid I had to swear off employees for a spell, and hunker down. This when my work day was constrained by driving my wife to work, my daughter to X-ray’s and doctor’s appointments, and cooking and (occasionally) cleaning for our suddenly un-empty nest.
And in my business, software and consulting, time is money. So , yeah, I felt the strain. Good thing I didn’t hear about Solyndra back then.
I won’t bore you with all the gory details. A few highlights include getting turned down for a re-financing because I couldn’t document my income for the previous year. I had a lousy year. I had hardly any income. My house value in relation to my two mortgages was such that in normal times, I would have been able to take another $50,000 or so out. That was not to be.
I even called a micro-lender in late December. They wanted several years of tax returns, a formal marketing plan, a long application filled out, and collateral. They’d even accept cash as collateral. Wait, what? I wasn’t born yesterday. I’m not going to give cash to someone so that they can turn around and lend it to me at a significant rate of interest.
I decided at the time that it was not worth the time it would take to apply. The maximum loan amount was $35,000, and the guy I talked to seemed to have “writing grant applications” as a core competency vs. understanding the needs of a small business.
Then there was the email vendor I had stopped using in January. Long story short: I let them know that I was not going to be able to pay them for the duration of the 12 month contract I had signed the previous May (one of several infrastructure building mistakes I made in 2010). I suggested we work out a compromise. They declined. So I ignored their calls and emails until I received an overnight letter in May from their in-house counsel. I waited a few days before calling them back – wanting to preserve at least a shred of dignity. I dragged it out until June, and started making payments the end of July. Just 10 more to go. Again, the detailed cash planning strengthened my resolve, and gave me confidence.
But listen – I am not the only one. These stories are repeated a million times over out there in small-business land. I know – I talk to customers every day. I see their financials. I am not the only one who has war stories about business survival.
So you can see why we small business owners would be a little upset when we learn that a company received $535 million in federal loan guarantees, and then declares bankruptcy. They found that selling solar panels for less money than it took to manufacture them was not a good business model. Well, duh! Apparently this “green” company wasn’t so good at bringing in the green.
I hope it turns out to be a case of corruption – because I would hate to think that it was mere stupidity on the part of policy makers in the federal government.
I guess I should be thankful. The small business credit crunch is good for (my) business. When sources of capital dry up, business owners just have to make do with less. Good cash flow planning and decision making is critical. SurvivalWare shines in this environment.
But let me say this: we’re not going to put up with this incompetence much longer. Remember who the front line tax collectors are. That’s right: business owners with employees. We are not totally without political power. It’s time to give us a voice.