My late father summoned me to a business meeting over ten years ago regarding our family business. My father owned and managed the family box-making business since the early 1980’s. He was on edge and about to declare both corporate and personal bankruptcy. We had lost over $300,000 the previous year, and our balance sheet was in rough shape with almost no equity. Everything was going wrong. Employees didn’t know if they’d have job security or if the company was going to be around much longer. With my lack of access to cash or a credit line, I needed to make some difficult decisions.
The first thing I did was take a look at all the numbers on the financial documents. I was surprised to find the CFO paying himself dividends while the company was operating with a net loss. Once we brought up the dividend issue to him, he refused our request to wait on dividend payments until the company was more stable. It was time to fire him.
My next step was to start looking into a way to consolidate the company’s debts in a loan that was more favorable than the current line of credit we had. Banks were not eager to take a chance on a failing business with debt. I had experience negotiating vendor agreements in my previous job at IBM, so I decided to take advantage of those skills and sought avenue after avenue until I found someone willing to take a chance on our business.
I discovered the three separate divisions of the company accounting, manufacturing, and sales, were operating in silos. I took charge and decided to put myself in the position of CEO until the company was more stable. I turned the company operations over to a general manager so I could focus on turning the company around.
Here are a couple of lessons I learned while transforming the business back into something profitable:
Always know what is on the balance sheets no matter how small or large your company is. I have an executive MBA, but you don’t need a degree to read balance sheets. An online course can also give you some tips and skills. A second opinion can give you new insight into your business’s finances whether you’re thriving or struggling. A small accounting firm can aid in managing your company’s finances.
I received one rejection letter after another when trying to get financed. I even met with representatives and got advice, but no one wanted to take the chance on me. I kept at it and made appointment after appointment until a large bank took a chance on my small business, allowing it to exist today still.
This hard time taught me about the importance of having a reliable team around you. Previous management didn’t integrate clients, employees, and vendors. Working together as a team truly transforms your work environment. I went out on a whim and asked vendors for extensions on payments and was pleasantly surprised when they honored the request. This was when I learned the importance of a “Let’s Grow Together” strategy to maintain a successful company.