A company owner describes how he was forced to liquidate his eight-year-old business and shut down.
First Person
The signs could no longer be ignored. We were losing money every day we stayed open. It was time to close the business
February 12, 1997, had been circled on our kitchen calendar for more than six months. It marked the opening night of a musical called The Secret of My Success. I was director as well as president of the Hosanna Players, the Christian children's theater group producing the show. The cast included 3 of my own children, not to mention 68 others, a 9-person technical crew, a 13-person stage crew, and a 14-piece orchestra. The show was about a pushy, cocky business-school graduate, Miss Morebucks, who applies for a job with a company called Solomon & Associates. Little does Miss Morebucks realize that Solomon & Associates is not very interested in making money; rather, it is interested in saving souls. Bing Solomon and his associates help Miss Morebucks understand that she needs to reexamine her priorities and goals, that God has a plan for her life (quite different from her own), and that she needs to look beyond worldly riches to find the real meaning of success.
February 12, 1997, turned out to be an important day for me for another reason (not on my long-range calendar). It was the first day that my business, Automatic Door Specialists Corp., a 34-year-old security- system installation company I'd purchased in 1989, was out of business. So here I was, directing a show called The Secret of My Success while my own business had just closed. The irony was obvious. Could I hang on to the point of the show: that true success, real success, has nothing to do with money?
Throughout the fall and winter, the company (which did business as ADS Systems) had been plagued by accidents, illnesses, and bizarre happenings, which together had put us in a deep cash-flow hole. But at the same time there had been more work on our job board than there had been in the seven and a half years since I had bought ADS. It looked as if we were doing well. For most of the years since 1989, we hadn't had enough work. Now we had plenty of work but not enough qualified people to install the card readers, electric locks, cameras, and other security devices on order.
In my view our only chance to survive was to somehow bust through the logjam. The key was to get some help--qualified, competent, reliable help--and get a bunch of jobs done fast, bill them immediately, and get paid pronto. But I'd been looking for some more qualified, experienced, competent technicians for a year and a half. What chance did I have to find one or more right now?
Then, unsolicited, a résumé came over the fax machine. Matt was experienced in our part of the industry and with many of our product lines. He could run his own jobs; he could hit the ground running; he could start producing revenue his first day on the payroll. He was going to be expensive, but I didn't see any other way out. I offered him a job. He seemed really interested, but then I waited--and waited--and waited.
Finally, I said enough was enough; I had to have an answer. Matt liked my final offer and said he could start on Tuesday. I figured if I could get a couple of good solid weeks of work done...
Matt called on Monday, February 3. He had torn a muscle playing touch football on Sunday. He wouldn't be coming to work on Tuesday. When would he be able to start? He didn't know. It could be days, maybe even weeks.
Despite all that was going wrong, despite my near certainty that I needed to close the doors (we were losing money every day we stayed open), ADS still could have pulled out of the nosedive if Matt (or someone like him) got a lot of the jobs done quickly and we got some bills out the door. But now Matt wasn't coming. That was the last sign I needed.
I made an appointment to see my lawyer. I told my accountant. He wasn't surprised. I told Flo, the office manager, and Laura, the finance manager. I called a meeting with the six technicians for 7:15 a.m. on Tuesday, February 11. Flo began informing callers that we would not be bidding on work because we had decided to close the company. We began (discreetly) to let certain customers and suppliers know that we were closing down. After 34 years ADS was going out of business.
In hindsight, I can't imagine any other outcome. It's humbling, to say the least, to look back and ask the obvious question: How could I possibly have been so foolish?
I thought I had done a decent job of checking out the company during the summer-long due diligence process in 1989. My accountant and I had whacked away at the inflated inventory and accounts-receivable numbers. We had uncovered bills that had not been posted. The purchase price for the company had come down steadily until it was 40% of the asking price. But it was a classic good- news, bad-news situation: the good news was that I didn't pay much; the bad news was that I didn't get much.
When my wife, Judi, and I first saw the office, in July 1989, we knew there was a problem. The office was worse than a dump: it was filthy, rat-infested, disorganized, and disgusting. The owner obviously didn't care what the place looked like; neither did the employees. Judi asked presciently, "Do you really think you can work with people who are comfortable in a place like this?" The answer should have been obvious.
Yet I did it. I put everything on the line, too: house, stocks and bonds, college fund, the whole ranch. I can only chalk it up to hubris, pure and simple. I really thought I was a smart, talented, hardworking guy and that I could fix whatever was wrong with the company. Never mind that I didn't have a technical bone in my body and that this was a technical business in a technical industry. Never mind that the company turned out to be struggling and, in fact, losing money when I bought it. I, Niemann the Great, could do it. Proverbs 16:18 says, "Pride goes before destruction, a haughty spirit before a fall." Indeed.
