When adversity threatened to kill one small business, some corrections put them right back in the running.
Adversity can turn out to be the mother of innovation
In late 1995 my company, MC2, was on top of the world. We were growing at an astonishing rate, winning huge contracts, and devising aggressive growth plans . And then, on January 8, 1996, a blizzard ripped through Warren, N.J., where MC2 has its headquarters. I arrived at work and found that a section of the building had collapsed from snow buildup on the roof. Instead of waiting until we could regain our space, we quickly acquired 1,500 square feet of temporary office space in an industrial-warehouse complex. Our 50 employees were piled on top of one another there -- a huge contrast from the 8,500 square feet of luxury space we were used to.
Blow number two: our landlord told us that our building had been condemned by the township. Soon the novelty of working in one room began to wear off. Employees grew tired of not being able to use the equipment from our former site that could not be moved. Sales plummeted.
Blow number three: When I called our insurance company to submit a claim, I learned we didn't have business-continuation insurance. No claim would be paid for lost contents. When I called the Federal Emergency Management Agency (FEMA), I was told it couldn't help. I called the governor's office, which said to call FEMA. I called the Small Business Administration and was told to call my bank. We were desperate.
Blow number four: A call came in from the Internal Revenue Service for our accounting-department manager. Intrigued, I returned the call and learned that MC2 had been late on payroll taxes for the second and third quarters of the previous year. It was the first I'd heard of the matter. I couldn't sleep that night. For the first time in the history of my company, I was concerned that there might be no way out.
But then things began to turn around. Because of the cramped quarters, I had become increasingly aware of what was happening minute to minute within the organization. Having direct contact with bottom-level employees taught me that certain managers -- who I thought were strong -- commanded no respect from their workers. I ended up firing three managers, including my accounting-department manager. Then my vice-president and I worked through every scenario and concluded that MC2 could barely survive another two months.
And then came a miracle. A call came inviting us to participate in a large bid for a Fortune 10 account. Our chance of winning was close to nil, but what did we have to lose? Five of us worked on the proposal for four days, from 8 a.m. until 2 a.m. each day. We beat out the competition and were awarded the job.
Miracle number two: After cutting the fat from the staff, we discovered we could get the same results we had in the past. I also learned we could be just as productive, if a tad uncomfortable, in a 1,500-square-foot office as in an 8,500-square-foot one.
Today we're back on our feet. We've paid our IRS debt, instituted new efficiency procedures, and saved a great company by reducing unnecessary expenses.
The blizzard was a felicitous catastrophe. It forced us into a one-room office where I could see what was actually happening within my company -- things that I was sheltered from in our luxury offices. I was forced to closely study the operations of my company. I had been so focused on future growth that I had missed the problems that existed in the present.
Mother Nature did us a tremendous service by throwing a hurdle in our path. I wish all entrepreneurs the same luck.
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Paul G. Lewis is president and CEO of MC2 Corp., a $10-million, 60-employee computer-network-design company based in Warren, N.J.