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Jimmy’s Descent Into Hell: A Cautionary Business Tale … Part III
Oct 13th, 2014 by LOONEYEXECUTIVE

A true story ripped from The (Mis-)Adventures of The Looney Executive

– By Blake Glenn

 

Just finding us?  Catch up on Part I and Part II of the story.

 

A Murder – Suicide in Van Nuys!

Say It Ain’t So Jimmy!

After Jimmy had been coming to our sessions for a few weeks, I noticed something striking about him. He looked so different. His look of suicidal desperation was gone (though he was certainly still a little desperate … just not so much suicidal). The blood no longer rushed to his face, turning him into a talking beet.

But perhaps most importantly, I no longer had to keep the SBDC staff on high-alert. I no longer was afraid that I would make the back page of the LA Times as the victim of a murder-suicide!

I could just imagine the 6:00 news anchor making the announcement:

“This is Tim Weathorford Tisdale bringing you the 6:00 o’clock news.”

“This just in … In Van Nuys just moments ago, a crazed and desperate small business owner brutally attacked a business consultant before taking his own life.”

“Apparently the emotionally distressed owner beat the unsuspecting consultant upside the head with a stack of financial statements, rendering the poor man completely senseless. The victim staggered into the hallway of his office where he collapsed, several months of financial statements were triple-stapled to his scalp. I can’t verify this, but sources close to the situation say the consultant also had at least a half dozen cash flow statements protruding from his rectum.”

Financial Graph

 

 

 

 

 

 

“My God! Ladies and gentlemen I’ve never seen anything like this. It’s senseless barbaric brutality …”

“Then the killer ripped a computer monitor from the wall and smashed it into his own head. Both men were rushed to the hospital. The owner and his business were pronounced Dead-On-Arrival.”

“In a heroic effort, the doctors enacted an emergency surgical procedure to remove the financial statements from the consultant’s skull. Although he had a heart attack on the operating table, at this moment the victim is still waging a desperate battle for his life as the cash flow statements are being delicately removed by North Hollywood’s top proctologist.”

“This is such a tragedy. I’m sure the consultant was only making a valiant and desperate attempt to help keep the anguished, distraught small biz owner from going under. Such a senseless attack is nothing short of … a tragedy. These days being a small business consultant is such a dangerous and thankless job.”

“Oh well.”

“In more breaking news … 12 year old Cinnamon Johnson narrowly won the West Hollywood spelling bee, just edging out 11-year old Wilbur Montgomery …”

Winner!

 

 

 

 

Closing This Case

Many firms in Jimmy’s highly fragmented industry were in similar circumstances. I saw this as an opportunity for him to possibly roll up 2 or 3 rivals via acquisitions. So I suggested this as a long-term option. Once he regained his health, he could pounce on weaker rivals with buyout offers. He could then root out overlap, cut costs and create a larger, more stable, and more profitable firm that had a better chance of surviving and thriving. I offered to help him in researching and exploring this further.

But Jimmy would have none of this. He was no opportunistic predator. Sure, he understood what I was saying. And it made lots of sense intuitively. He just didn’t really have the heart or ambition to go on a takeover spree and become a poor man’s Carl Icahn. You see he was the classic small business owner. He felt fine at $1,200,000 in revenue and $200,000 – $300,000 in take-home cash, plus perks. He lived a certain lifestyle. He had no real growth ambitions to speak of. He just wasn’t an entrepreneur. He felt comfortable just where he was … operating as a commodity business, always trying to best the price of a competitor.

The bottom line is this, once Jimmy saw what was happening with his cash flow, he felt a hell-of-a-lot better. He knew the expenses he had to manage closely and how much loss or profit to expect.

Cash Register

 

 

 

So What’s The Lesson In All Of This?

Well, there are a couple of key lessons you can take away from Jimmy’s experience.

1.  Stay Out Of A Commodity Business

Anytime there’s lots of competition and sales is based almost solely on the price of your product, you’re in a commodity business. You’ll have low margins. And your revenue will based on trying to achieve a high volume. That’s a rat-eat-rat world not worth the effort … if you can avoid it. Aside from a complete exit from the market, coping methods could include (a) Moving into related higher margin products; (b) Creating premium priced services to package with the commodities; (c) Buying up competitors to eliminate competition, reduce  expenses, and force up prices.

 

2.  Know Your Financials

The bottom line is that you need to keep a strict handle on your revenue, expenses, profit, and cash flow so that in good times or bad, you know the financial condition of your company. You’ll see the trends as they’re developing. And, as revenue and profit dip, you’ll know where you can cut back expenses if necessary

Let me offer a little more creative twist on this lesson:

 “If you’d just keep a better handle on all of your cash … You could end up saving your’s and someone else’s precious ass.”

“And frankly, the ass you save could be mine!”

 

You’ve just read a tale from “The (Mis-)Adventures Of the Looney Executive!” …  A series of biz stories from Blake Glenn.

 

The Looney Man

 

 

 

 

 

Blake Glenn shares his looney perspectives, stories, and mis-adventures in The Looney Executive  blog. He has interviewed hundreds (or at least tens) of people via  The Looney Executive Podcasts and former TV show. He’s the founder of a tech group called IgniteTech, and claims to be a direct descendant of the original Looney Executive – Because there must be SOME explanation … right?.

If you dare, he can be reached the old school way … blake@LooneyExecutive.com

 

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P.S. – If you’re really interested in growing the tech startup scene in SW Ohio, you’ll want to join the IgniteTech Meetup Group.  Join the group. Come out to our events. Bring your energy and ideas. Build your connections.

Join us on this adventure. And help us to create a great story!

 

Jimmy’s Descent Into Hell: A Cautionary Business Tale … Part II
Sep 6th, 2014 by LOONEYEXECUTIVE

A true story ripped from The (Mis-)Adventures of The Looney Executive

– By Blake Glenn

 

Click Here … to catch up on Part I of the story

 

Jimmy Spills The Beans!

Slowly Jimmy unwound the story from deep within the depths of his knotted up stomach. You see, Jimmy and his wife owned a business that supplied nuts, bolts and related items. Fasteners is what they call these things. They had purchased the business a few years earlier from the previous owner. And a big chunk of the purchase price was loaned to them by the prior owner in the form of a note. For instance, let’s say the purchase price was $1,000,000. Jimmy and his wife make a down payment of, say, 20% ($200,000). They pay the remaining 80% ($800,000) over, say, a 7-year period in monthly installments … with interest of course.

Wad of Bills

 

 

 

 

 

Yea, fasteners is real boring stuff. And the industry was cluttered with small mom-and-pop shops doing the same thing, with absolutely no differentiation and consumed by commoditization. The low price was usually the winner. It’s a bad, bad business model dependent totally on volume.  At its peak, Jimmy’s firm brought in somewhere around $1,200,000 in revenue. I deduced that they cleared at least $200,000 to $300,000 annually for themselves. But now it was just a few months after the September 11, 2001 attacks and business had fallen off dramatically. Customers just stopped buying. Jimmy was panicking because sales were down to about $700,000, a nearly 50% drop. I thought how terrified he must be. He didn’t say it. But then, he didn’t really need to. His face told the story.

 

Problem … What Problem?

The problem was that most of Jimmy’s family wealth was probably tied up in this thing. His nuts and bolts supplier business was rapidly tumbling into the dark chasm below. His firm was descending into business hell and it was taking Jimmy’s wealth (and probably his wife’s) right along with it. Maybe the marriage too. Whether or not that would be a blessing in disguise for either party wasn’t for me to surmise.

It scared the hell out of him to think that all of his hard work was doing a Thelma and Louise right over a cliff! Yep. It was driving Jimmy nuts. He was deeply embroiled in a daily living nightmare. On the upside, his wife still worked a job outside of the business. So they weren’t completely screwed. After listening for several minutes, it was clear that cash flow monitoring (or lack thereof) was a big source of his anxiety. He thought there was more cash going out than coming in on a monthly basis. But he didn’t seem to be real sure how much he was losing.

So I asked Jimmy a simple question … or so I thought.

 

“What does your financial software tell you about your cash flow?”

 

Whaaaat!

Jimmy stood amazingly silent for what seemed like hours. He appeared to be in a deep trance. His eyes widened to the size of golf balls. Then they glazed over. I was terrified they would completely pop out of his hairline-receded oval-shaped head. His brow furrowed. His face wore an expression of complete bewilderment. Based on what I’d always heard – but not experienced personally though – Jimmy appeared to be tripping on  acid.

The Looney Man

 

 

 

 

 

As he fixated his dark golf ball eyes on me, I think Jimmy was pondering whether or not I was an alien from the unexplored planet Chromoton 5. He had no idea life existed on Chromoton 5. No one did. For years, NASA had considered sending exploration missions to that region of space. But they hadn’t even completed missions to Chromotons 3 and 4 1/2 yet. But I was an English-speaking alien. And that was something.

Finally, Jimmy began stuttering through a response. He stumbled for a good answer, perhaps a bit embarrassed. He said that he used some vertical industry software to provide income statements and balance sheets quarterly, but didn’t know how to use it for cash flow analysis, or if it even had that capability. Frankly, I didn’t trust the accuracy of his financial statements. As if that first question wasn’t torture enough, I followed with another. I began to feel a sadistic sensation of power – putting a small business owner through a torture chamber of boring and unanswerable questions.

I was soooo evil!

 

The Evil Power of Boring Questions!

I felt a slight discomfort in connecting to my dark side. But on the other hand, it also felt damned good. A million volts of unadulterated power surged through my body. This evil power was addictive. So I asked another question. Ha Ha Ha!

“So then how do you create monthly financial projections?”

 

At this point, Jimmy looked at me like I was a Chromoton 5 alien that didn’t speak English after all. Now I appeared to be speaking some dialect of Southern Klingon, and without the benefit of a universal translator. But good ole’ Jimmy suffered through and responded anyway. He said the company didn’t do any projections. He relied on what was in the bank account to monitor his cash. This was a typical small biz owner MO … aka Method of Operation. Watch at least 3 episodes of the original “Hawaii 5 0” (pronounced Five Oh) for further explanation of MO.

Voila!

There’s one big problem. He didn’t have an accurate way of determining what cash flow to expect from one month to the next. This caused him (and I imagine his wife too) many sleepless nights. So I told him we’d start with the finances. Over the next couple of weeks we analyzed his finacial information. I also helped him to set up a spreadsheet in Excel specifically to track cash flow … nothing fancy, just basic stuff.

Soon we had a good handle on revenue, expenses, and cash flow. Indeed the business was in trouble. But now Jimmy knew exactly how much trouble. And frankly, it actually wasn’t as bad as he originally thought. While we were analyzing cash flow, we also discussed a number of immediate actions he could take to raise or save cash in Phase I of a broader turnaround plan.

These actions included:

  • Selling extra inventory
  • Providing incentives to get customers to pay earlier
  • Making cuts in perks and other miscellaneous expenses
  • Consolidating personnel functions, cutting staff … etc.
  • Repositioning and charging for value-added consulting services he had been simply giving away for free
  • Restructuring the debt held by the previous owner

 

I also didn’t cushion the blow for Jimmy:

“Death is imminent … unless you act fast and decisively”

 

Skeleton

 

 

 

 

 

 

Once he exhausted these steps I knew Jimmy would be in a much better position. Not great mind you. Just better. His business might still be in the critical condition, but he’d be off of life support. He might even survive. And survival was better than, well, death.

 

In Part III and the conclusion of “Jimmy’s Descent Into Hell” … A Potential Murder-Suicide In Van Nuys!

 

Blake Glenn shares his looney perspectives, stories, and mis-adventures in The Looney Executive  blog. He has interviewed hundreds (or at least tens) of people via  The Looney Executive Podcasts and former TV show. He’s the founder of a tech group called IgniteTech, and claims to be a direct descendant of the original Looney Executive – Because there must be SOME explanation … right?).

If you dare, he can be reached the old school way … blake@LooneyExecutive.com

—————————————————————————————————————

P.S. – If you’re really interested in growing the tech startup scene in SW Ohio, you’ll want to join the IgniteTech Meetup Group.  Join the group. Come out to our events. Bring your energy and ideas. Build your connections.

Join us on this adventure. And help us to create a great story!

 

Jimmy’s Descent Into Hell: A Cautionary Business Tale … Part I
May 14th, 2014 by LOONEYEXECUTIVE

A true story ripped from The (Mis-)Adventures of The Looney Executive

— By Blake Glenn

 

It was Spring of 2002, late April. It was a typical beautiful spring Southern California day – sunny, no rain in sight. I was in Los Angeles. So even if it was raining … who cared.

The Pacific Coast Highway, also called the PCH, hovered in the distant background, beckoning like an  exotic temptress. PCH was the siren sweetly calling out to all of us working stiffs to break free from the musty office doldrums and make a frantic get-away to the freedom of its beautiful, sexy, writhing coastline.

Coast Line

 

 

 

 

 

 

Upon arrival we could shout to the top of our lungs,

“FREEDOM!”
“FREEDOM!”

Instead, I sat in my office at the North LA County Small Business Development Center (SBDC) in Van Nuys, patiently awaiting my next small business client. Van Nuys is in a part of LA called the San Fernando Valley.

Yes, THAT “Valley”. The valley of “Valley Girl” fame.

Though I’d met many girls who were from or near “The Valley”, I’d not encountered any that represented the prototypical “Valley Girl”. Perhaps one or two had a little Valley Girl DNA. But I’d met none of pure-bred Valley Girl stock. Rumors had it that they were becoming extinct. But if you were real lucky, you might be able to spot one during certain times, usually after 6:00 pm. Their survival instincts had driven them to become nocturnal creatures.

This sort of adaptation has long been a part of nature’s evolution. But still, they were a dying breed. It was a shame really. They’d meant so much to our culture. I hoped that cultural anthropologists would find a way to preserve those remaining few Valley Girls, perhaps in captivity surroundings that closely simulated their natural environment.

Just as my daydream about Valley Girls drifted nowhere in particular, a mysterious stranger walked into the SBDC office.
Let’s call him Jimmy.

 

Mysterious Man

 

 

 

 

 

 

Jimmy was shepherded straight into my office without delay. I guess they gave him to me because I had a little experience helping distressed businesses navigate difficult situations. Or maybe I was just the only consultant available at that moment. I don’t really know.

In any case, as soon as I met Jimmy the alarms started blaring away in my head. He stood about 5’10″, a little soft but not fat by any means.

His age appeared to be mid- to late-40′s. Jimmy had a receding hairline that was moving backward as if retreating from a more powerful unconquerable enemy. He had a glazed “I ain’t all the way here” look in his eyes. His face was a beet red. He was noticeably nervous. He had sweaty palms that felt like cold, damp sponges when I shook his hand. I wondered where the hell his hands had been. And where was the antiseptic gel when I desperately needed it?

I eyed him calmly but nervously throughout our meeting. I kept a hand by the phone in case he went all berserko on me. He had the desperate look of someone that was ready to take himself out of this world … and maybe take two or three others along with him. And just my luck I was the closest to him at the moment.

No sir. No thanks. While I might not have had the galaxy’s best life, it was the only damned life I’d ever have. And I sure as hell planned to keep it as long as possible! This was only months after the September 911 attacks. The Internet 1.0 bubble had exploded.

 

Descending Stock Chart

 

 

 

The parallel telecom and IT bubbles went Kaboom. And day trading had mercilessly crashed and burned into a fiery mushroom cloud. A recession had ensued and was followed by occasional office shootings and murder-suicides.

So I asked Jimmy how I could help him. He looked at me like a lost puppy trying to find his way. He said that he didn’t know if I could. He hadn’t been to a Small Business Development Center before. He said his situation might be irreversible. He might have to shut down his venture. Maybe no one could help. I told him to hold the horses on the doomsday scenario. And then I simply asked Jimmy to tell me the full story.

 

In Part II of “Jimmy’s Descent Into Hell”, Jimmy makes a desperate plea for help!

 

Blake Glenn shares his looney perspectives, stories, and mis-adventures in The Looney Executive  blog. He has interviewed hundreds (or at least tens) of people via  The Looney Executive Podcasts and former TV show. He’s the founder of a tech group called IgniteTech, and claims to be a direct descendant of the original Looney Executive – Because there must be SOME explanation … right?).

If you dare, he can be reached the old school way …  blake@LooneyExecutive.com

 

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Ride The RocketP.S. – If you’re really interested in growing the tech startup scene in SW Ohio, you’ll want to join the IgniteTech Meetup Group.  

Join the group. Come out to our events. Bring your energy and ideas. Build your connections.

Join us on this adventure. And help us to create a great story!

 

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