Giving up. Now this is going to be a wasted article for those who need to read this, won’t. They’ve given up and convinced themselves there’s nothing they can do but close the shop or sell their accounts to the printer down the street. However, I say that the only time to close the shop is when the entrepreneur gives up. Until then, there’s always a way out. In this specific case there was a complicating factor; Lisa, the wife, lost trust and gave up on her husband Michael, the printer, who hadn’t.
I see “giving up” mostly in the form of objections or “yeah butta’s,” a phrase Nancy DeDiemar, my friend and colleague, introduced me to years ago. “Yeah, butta you don’t understand.” “Yeah, butta I can’t charge that.” And those that truly have given up argue the ultimate, “Yeah, butta there’s nothing else that I can do but close, don’t you agree?” You get the drift. In this case, while Michael appeared willing, Lisa appeared not to be.
Can’t say she doesn’t have cause, however. Financially, the business owed $50k more than what they have. Good news, in a way, is that much of the debt is owed to them as they sunk a chunk of change into the business in exchange for loans. Now that’s probably from an inheritance but I don’t know. However, Lisa’s is apparently tired of it.
Now the real squeeze is in their current ratio. They can owe themselves money and that’s one thing. But when their current assets (cash, receivables and inventory for instance) falls too low in relationship to what they owe vendors, taxes, etc. then it’s time to dip back into the personal bank account and plow more money back in. Without saying it, I think that’s what really was going on and I don’t blame Lisa for standing firm as this obviously has happened a number of times before without any long term change.
That’s when Michael reached out to me. So, my take was, yes, they’re in a pickle but if they create a little positive cash flow, they can work their way out. “Yeah butta.” Heard that a number of times on the conference call from Lisa. In my opinion, she was in the “obviously we have to close it down” mode. Too bad. But the real issue was with Michael who had promised change if we put a little more money in several times before but didn’t produce.
Appeared to me that in the past, Michael cut staff and just took on more work. Today he spends half his time estimating and the other half producing. He admitted that he had an irrational price scheme that only he can apply. And others on the payroll, well, they’ve never been trained to do what’s needed (print, bind, and price) and, of course, there’s no time to do so now for Michael’s too busy. They’re circling the drain and every infusion of cash just buys them more time to do the same thing without any solutions.
Here’s the deal. Their top 25 customers produce 90% of their total sales and the top 10 produce 50%. Typically the top 25 produces some 50-75%. They’ve got customers but a shrinking customer base. Their direct materials (36%) indicated either low pricing or a lot of brokering which would mean they’d normally need less in wages walking out the door and overhead. I suspect both was true.
What to do besides “giving up”
Look at the market. Even though they’re in a rural Virginia area, it’s a suburb of a larger town and I identified 120 businesses within five miles of their doorstep that traditionally yield significant accounts. The market is there. All they would have to do is attract three or four more significant accounts that would pay a fair price.
“Yeah, butta we can’t hire someone to sell.” Agreed. What has to be done is to juggle Michael’s time so he can do some basic selling tasks.
Like what? Start over as if it were a new shop. Reach out to the 120 probable prospects within 5 miles of their doorstep through direct mail and phone calls; mine their existing files for repeating jobs; and rejuvenate old accounts that have dropped off.
These fundamental steps will yield results and give them breathing room to solve their other problems such as pricing and training and then create time to get even more customers. Long sludge but doable.
But the big obstacle is Lisa has given up. So I don’t see it happening. First rule in saving a failing business is: you gotta wanta. The time to give up is when the entrepreneur does. In this case, at least half of them have. And I don’t see them recovering. Hope they do.
Tom Crouser
If you’d like to chat about your business without cost or obligation, message me at tom@cprint.com
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