When Inc. 500 CEO John Waters, of Waters Design, filed for bankruptcy in 1992, he realized he lacked the business savvy needed to run his company. After hiring a team of managers, business boomed.
Type of business: Graphic-design and integrated-communications services
In ashes: 1992
Key to resurrection: CEO's recognition that he needed help from others in managing his business
We believe success begins with collaboration." So states an obscure sentence in the marketing materials of Waters Design Associates (#270). It could serve as CEO John Waters's motto, as it reflects the hard lesson that he learned when Waters Design entered Chapter 11 bankruptcy, in 1992. Waters had to turn to others for the business savvy he lacked--to collaborate--if he wanted to save his company.
His ordeal unfolded in the early 1990s as he watched his graphic-design company slide into trouble. Founded in 1977 as a sole proprietorship by Waters, the company was humming along in the mid-1980s with 12 employees and $1.5 million in revenues. But high capital costs--Waters had spent lavishly on such things as a $125,000 LightSpeed design system that turned into a white elephant in just three years--and a long-mounting $236,000 New York State tax bill reversed the company's fortunes and swamped it in red ink.
Stunned by the bankruptcy, Waters concluded that he lacked the business expertise to manage critical aspects of his company. He concedes, "I was a graphic designer running a business."
Open to advice from a bankruptcy accountant and a lawyer, he began putting his company's finances on a sound footing. Waters Design didn't actually present its Chapter 11 reorganization plan until June 1996. By then revenues had jumped to $2 million, and Waters had hired a seasoned graphic designer and entrepreneur as director of business development. Soon to come on board was Fran Brill, a New York consultant, who persuaded Waters to create a steering committee of top managers who might check his impulse to invest in expensive equipment.