Surviving Hard Times | September Contractor Tip of the Month
At dinner a couple of weeks ago, my three daughters were expressing how much they had admired a person who had recently died by suicide. Their sadness and story have stuck with me. It also took me back a few years ago when I was helping a friend turn his business around. My friend asked for help on overcoming depression. I felt I gave him good advice that would help him through his situation. However, two weeks after my visit, he died by suicide. I always wished I could have done more. Therefore, I felt compelled to write a tip about what carried me through some hard times of my own.
After coming off our three most profitable years in the history of our four companies, we were expanding greatly in 2007. I invested in construction office space, a new factory, high production machines and tooling. Not to mention, I had gone through a divorce that year. In all, I consumed about $7 million in cash and borrowings over 12 months. I was not too worried though as I had confidence the good economy would last forever. Boy was I wrong!
In October 2008, the great recession had begun, and it was like someone turned off the valve as equipment orders stopped flowing in at the factory. Projects we had already been awarded at our construction companies were canceled, so our tremendous backlogs dwindled quickly.
In the spring of 2010, while still in a great recession, we had gone from 200 employees to around 65 at my four companies. A decent month between all companies was a net loss of $200,000. Over the three-year period, I estimated my net worth had dropped by $15 million to almost zero. With no end in sight, I decided to bring on some top consultants on business survival to help me devise a plan to stay afloat.
After weeks of on-site visits and studies of our company’s operations, my chief operating officer (COO) and I were sitting in a conference room at the consultant’s high-rise office complex in Columbus, Ohio when they delivered their recommendations to us.
They informed us we could not save all the companies. Our only course of action was to bankrupt two of the four companies to survive. Under bankruptcy protection, we could negotiate to pay off the majority of the debt at 10 cents on the dollar. This would reduce the debt we owed greatly, and put us back in a good cash position with the remaining two companies.
I was so embarrassed by their findings that I wanted to crawl under the table and hide. I told them, “I can’t do it, for I wasn’t raised that way. I had signed on the dotted line with the banks, companies and people I owe money too, and I will pay them back.”
The top consultant said, “So you paid us $30,000 for our advice, and you are not going to listen to it?” I replied, “Yes, that’s what I am telling you.”
It was a quiet, lonely ride down the many floors on the elevator with my COO and me not talking or even looking at one another. On the dreary drive home, my cell phone rang. It was the consultant who pleaded again for me to listen to their advice to survive the crises.
He asked me to think of it this way: “You are standing on the foul line, and you have to make four foul shots in a row to survive. Do you think it is possible you will make all four in a row?”
“I am going to have to,” I told him. He replied, “You say you are worried about not keeping your word to those you owe money too, so you are going to pay them back. Soon to be out of cash, and regardless of your good intentions, you won’t be able to pay these people back anyway. You need to heed our advice on the bankruptcy of two of the four companies. You paid interest for the chance the bank took on you. We will talk to the banks and suppliers and help you work this all out.”
A couple of nights later, I laid in bed staring at the ceiling. I told myself, you have really done it this time. There may be no way out. It was a long night, and although I never considered suicide, I began to understand how some people take their own lives during the most stressful times due to depression.
What got me through the hard times:
- I exercised most mornings and listened daily to motivational audio programs about others who had struggled and survived. These programs were like medicine for me. My favorite is How to Stop Worrying and Start Living by Dale Carnegie.
- Although I had curbed my spending greatly, I never stopped traveling for business, taking vacations, or visiting with friends and family. This kept me connected to others whom I was close to.
- I developed a survival plan for each company that included either a turnaround or closing the company down, but still paying all the bills.
- For peace of mind, I made a promise to myself that even if my companies did not survive, I would keep track of every single person I owed money to, rise again someday and pay them back every dime, even if it was 20 years later.
- I told myself I would not panic or let anyone see me sweat, for I knew if I did, my employees would too, and it could be like rats leaving a sinking ship.
- I never shared how bad the situation was with others at work. Instead, I kept giving them positive advice on the changes we needed to make to survive.
- We started paying our suppliers in 60 instead of 30 days. I called the big ones personally explaining the situation and informed them they would get paid. Thirty extra days of accounts payable is a lot of desperately needed cash.
My Uncle Gerald, who I admired, always told me, “If you don’t like Damian Lang, you don’t like yourself.” Those words helped me accept the fact that if my companies did not survive, he and others would still like me.
I eventually closed down one of the companies the consultants were referring to, and just finished paying all their debts at $90,000 per quarter payments over several years. We made changes at the other company I was told to bankrupt, and along with the remaining companies, it is going strong today. Thank goodness I never gave up during those times of despair.
If you are going through hard times right now, remember that you are not alone. Even under the stress of the COVID-19 pandemic, there is always a path for hope, healing and recovery.
Like I would tell those who called me for advice, as they were going through hard times as well: Never, never, never, never give up, for there is always hope if you get the right counseling and advice.