Compliments of the Season.
As we are entering the silly season, office parties, etc. I have decided to celebrate the years successes by presenting the TOP 5 Vlogs of 2016 (as voted for by you) in descending order between now and New Year’s.
At No. 5 we have the story of what happened when I couldn’t pay my suppliers.
Our first business failed. But only spectacularly! Towards the end, I knew it wouldn’t work, suppliers hadn’t been paid in months, the banks were screaming for their money, I knew there was none but I still needed their support.
To find out how I survived, read on…
My ‘Coffee with Colm’ topic this week centres on the importance of your professional reputation.
We are, each of us, positioned today exactly where we are based on how we have performed in the past, good, bad or indifferent and I touch on this in my book, Feeding Johnny – How to Build a Business despite the Roadblocks when we get to the point in the story where my failed business, a Bewley’s Cafe Franchise, has entered the final death throes.
Below is that snippet from the book for you to consider.
For context, we had moved to Limerick from Dublin in 1998 to take on the Bewley’s Cafe Franchise there – our first venture away from the relative safety net of the corporate world. The business failed finally in 2005, having lumbered to a slow painful death following a ridiculous rent review in 2002 that pushed our rent to €1,000 PER TRADING DAY! Our fledgling School Lunch Business was trading from a different premises and we needed to keep it alive if we were to have any chance.
What follows in the snippet, entitled, You will get paid, trust me tells of some of the most difficult conversations I hope to ever have to face.
“You will get paid, trust me.
“There is no money. The café will close soon. I need you to trust me. I need you to continue supplying the café and also to continue supplying the school lunch business. You will get paid, I just can’t say when.”
This was the gist of the conversation I started holding with each of our suppliers in January 2005; not an easy one to have.
I was effectively asking each of them to a) not expect money for invoices that were coming due or were perhaps outstanding in January 2005 and b) as if that wasn’t enough, to continue to supply both my businesses on credit and trust until further notice. To have them discontinue supply for any element of either business would have made it very difficult to continue trading and we needed to continue trading to give ourselves a chance at surviving. We were treading very deep water and if we stopped treading we would drown. If one stopped we would never find a replacement.
That is a lot to ask anybody. Imagine if you were our supplier to one or both businesses – all of the suppliers to our school lunch business were suppliers to our café business initially – what would be your gut reaction to my request? Would you be nervous? I would. Angry? Perhaps?
Effectively we had three types of supplier: Corporate suppliers, SME’s and small mom and pop-style operations and each one had its own unique process to go through to see whether they could or would support us. The mom and pop’s at one level were easiest because in most cases we were dealing daily with the owner him or herself. However being, in the main, the smallest operations, they had shallow enough pockets meaning their consequent ability to fund our cash flow problem for an extended period would prove difficult even if they wanted to help.
SME’s are typically that bit bigger with a management structure involving the guy on the ground, i.e. the salesman, with whom we had the relationship and so the conversations started with him and very quickly entered the phase where the owner of the company hurried in for a meeting. In a funny sort of way the SME’s often have less access to funds than mom and pop’s because they are often very highly indebted as a result of their investment in growing from a mom and pop operation to becoming an SME.
The Corporates were a different animal altogether. Here we dealt with the salesman, as with the SME’s. He would wheel in the regional or perhaps national sales director who then had to ‘put a case’ forward to the board recommending that they continue or otherwise. There was stress at all levels. The salesman was in the spotlight for ‘not seeing’ this thing coming down the track; the director similarly for not being on top of his sales people and their accounts.
But we found ourselves where we found ourselves and no amount of if only’s were going to make it go away; we all had to ‘confront the most brutal facts of our current reality’
They all agreed!
They agreed because of our track record.
Every supplier continued supplying one or both businesses until we finally exited Cruises St in March 2005.
Once the dust settled and we knew what funds we had access to, we met with each and closed off the account to the full satisfaction of all parties.”
MORE: If you enjoyed that and would like to watch last week’s vlog on The Perfect Storm: the events that conspired to kill the business, click here
FREE BOOK: If would like a complimentary copy of the book in audio, narrated by yours truly so you get all the nuances, feel free to grab one here
STAY CONNECTED: If this is your thing, consider joining in the conversation here
Thanks for thinking with me.