The Elephant in the Room

January 22, 2008.

We Need to Talk

Okay, so I have not really wanted to talk about it, I admit it.  I have been acting like a man, a boy, a dude - if I ignore it long enough maybe it will just go away.  I am guilty as charged, I have not addressed the problem head on.  I tried to....really I did.  The times I wanted to "talk" about it though you were always like talking about something else, or I could not put my emotions into words.  So, I have pulled or more like ripped the band aid off and I am here all naked............no wait I DID not mean that - I mean raw, or vulnerable....yes I am ready! 

My Background

On a side note I must say that this reminds me of the time I got dumped, and I mean dumped with a capital "D".  When I was in college I dated a boy ( he was so not a man) who had his heart stomped on and spit out by his ex-girlfriend.  He thought he was finally ready to date again, and he picked me......oh how I wish he picked someone else.  We dated for like 4 or 5 months, I was quite taken with him - he treated me super nice, was not hard on the eyes and well I thought I was in love. 

Fast forward to the end of the relationship when he seemed to have quite the wandering eye, enjoyed spending time with anyone else but me and I found him flirting with my friends on vacation.  So, while I was in some um, sorority meeting thing I get a voice mail message; "we need to talk...but not tonight, later maybe another day."  Me being me, Ms. Won't take no for an answer and insist we talk now - I needed to know what was going on.  I drove to his apartment and he sits me down on his couch and utters these now infamous words, "Remember when I said I loved you?  I lied."

Yep - try to swallow that one down.  What a painful pill that was to take.  Years later I have told that story multiple times to many women and I am actually able to laugh about it.  I mean it makes a great story, right?  Some friends from college will back me up and confirm that actually happened - I love me a good story, but I could not make that one up.

Accepting the Inevitable

Anyhoo.....not sure if that little incident brought me to where I am to day or not - but it does conjure up a few smiles - which I could use right now.  So, as I stated I am ready to talk.....we need to talk.  I will have to now address the Big Elephant that has been in the room for awhile.  I have hinted at it, I have pointed at it, I have even explained how it hurts me - but I have not been completely honest.  Times are tough, it is bad - and there does not seem to be an end in sight.

• Sales for 2008 were sluggish, it started in the beginning of the year.  We watched our sales month after month decline - but we thought that they would pick up over the Holiday Season. 
• We were smart, we did pay attention to sales - we did everything in our power to save money.   We got shipping breaks, we purchased in bulk, we cut back, we improvised - we did make those few dollars we got stretch.
• The end of September when the Stock Market-Financial Crisis-Credit-Mortgage-Crash Thing happened our sales stopped.  For the first time in the  history of my company we had no sales for days.  We have over 200 sales channels - and we had not one sale.  People were not shopping, and they were not using their credit cards on line.
• Christmas looked good - nothing like the past years, but we rallied, we did well.  We shipped, we did favors, we took orders right up until Christmas.  We worked hard and created a lot .(not a ton, just a lot) of product that we happily shipped to the customer.  The future  may not have looked bright, but it was looking up. *

*As a drop-shipper and as a little guy (or gal) that works with all sizes of business - we ship our product and then we bill be the sales channel.  No, no the ideal way to run a company, but it had worked in the past - and some of these stores had policies in place before I came along.

The Aftermath

Not long after Christmas we had some bad news.......um some really, really bad news. 

• First we found out one of our largest channels filed for bankruptcy.  We still do not know if we will ever get paid by them - the Bankruptcy courts protect them - ouch! 
• Next another new large account could would not pay their bills until they spoke with their investors (they had already re-structured years before)....this one hurt more.  We never thought one of the Big Guys would not pay us - never occurred to us - never say never, believe me, I KNOW! 
• Other accounts were behind, some not paying on time, some lost invoices, check is in the mail.....starting to sweat a little now.  
• Many sales channels seemed to have had their credit cards maxed out.......day, after day, after day we tried to run charges.  Now I am blowing into a paper bag so I do not pass out.
• One sales channel had a health emergency and we have yet to be paid by them.

 Those that actually answered or calls or emails had an excuse, some just ignored our calls all together.  Or my personal favorite......lied about it, and when the check was sent.  The fact is that each one alone did not amount to a lot of money (well no not true a few did amount to a lot of money).  Mesh them together, add the almost extinct sales for the Holiday Season + Slow January Sales = putting my company in a very, very bad place.

When I started Jamie's Painting & Design I was green, I was new - I was literally so happy to get an account I did not pay close attention to the terms.  It was not too important when I was running the business out of home.  Margins?  We are fine?  Terms?  Whatever?  Sales, sales - if I sell it they will pay.  What I did not know would not hurt me, or so I thought.  As soon as I left the safe haven of a "no rent studio" I soon came to understand how important it was for our channels to pay and pay on time. 

Which brings me to where we are today.  We are not good.  Things are looking bad.  Bankruptcy court protects companies that declare bankruptcy - what if they take me down with them?  Do I get a bail out too?  So Congress, Mr. President where is MY bail out?  Companies that have no money.....no wait companies that spent the money I was owed, they got paid - me....not so much.  A maxed out credit card may never free up any funds. 

Fun  A Fact: A  small business that drop-ships and works with large/small/medium companies........can get screwed.

The Future Looks Grim

I do not want to really burst anyone's bubble, and sadly I heard that a few business in our industry have already closed up and declared bankruptcy - this makes me sad.  I do not want to become one of those businesses.  I can and will fight to survive - problem is we were already a lean-mean-well run machine.  People say I am resourceful, creative - they say I will figure it out.  Maybe I will.  I do know one thing though - if our channels do not pay us we can not survive.

Comments

[Nicole]

I am so sorry to hear. I have to admit as an employee at a large company (totally different business) we are slow to pay, and slower now, with this economy bringing all these checks and balances and a new "system". Most of our vendors know we are big and beaurocratic and cheap, but safe and will always pay eventually. We have systems in place but vendors (and me) often bypass those, so take heed in this economy, get the PO first unless someone insists.

Side note, I have a co-worker who actually refused to give her vendor's name to a co-worker as she said they were "hard to work with" - if I was a small business owner I'd be pissed, but what do you say to a good client who tells you that?

[Sharon]

Jamie, I am sorry to hear about this. I have been thinking about you and wondering how you were doing at the start of this new year. It's no comfort, but you are in good company with other small businesses who are paying the price because larger companies spread themselves too thin. I hope you are able to find a way to ride out this storm. Best of luck to you.

[Monique from Stable Solutions]

Good luck with your new blog!

Melissa forwarded your blog to the Ladies Who Launch Bay Area group. You are blogging on a subject close to my heart. I have a blog that chronicles the journey that I am on with my small business. You might look at joining LinkReferral.com as a way to boost traffic to your site. (I'm including a url below)

Monique
http://www.astablesolution.com

http://www.linkreferral.com/adwel.pl?oldrefid=218797

[Jo Ilfeld]

Jamie,

I totally feel for you! The economy is tough! I think your blog and writing is fabulous though so I'm sure you'll make it through the darkest hours!

Let's have coffee sometime in Berkeley!

[London E]

It's nice to hear honesty. Because in this industry, all you hear from the big guys or those reporting on the industry is that it was a "slow market, but sales were great". Whatever!! They don't want to admit to what they know, because it means their advertising or booth sales go down. Everyone is slow right now and I like to believe "not being honest" if they say otherwise. It's my story at least and I'm sticking to it!

[Krysta B]

Jamie,
As always, I admire your brutal honesty and willingness to report the good and the bad of running a business. I am so sorry to hear about your recent set backs but have no doubt you will come out of this experience as an even smarter and savvier business woman. Hold on Sister.. it's gonna be one bumpy ride.

JAMIE....Boy I wish we could get together for coffee.....this business used to be fun, but now I wonder - why am I doing this?? Sounds like we should talk! Whenever you need to vent (919) 833-8863. Kristen (Kootie Bug D.)

[hazel]

Jamie, I'm right there with you! I had been as trusting of my buyers too. I got screwed. For the first time ever I have people that have not paid for their mdse. I have contacted ALL my shops with my NEW payment requirements and if they don't like them then they can close their accounts with me. I have decided for the time being to only wholesale keychains and get a part time job... my kids really do NEED to eat. I'm sure the money my shops made off of mdse they didn't pay for fed their kids! I'm with you... Good Luck!

[Jamie Bird, MiniMe BabyGear]

I always admire your honesty and ability to put into words exactly what I am thinking.

I feel like my retailers are teetering on the edge, waiting to see if they are going to have to swipe all their merchandise come Feb 10. Congress is refusing to even meet to discuss changing the issue, implying that they have limited resources and will only be going after the big guys that violate.

Sounds good in theory, but no manufacturer or store wants to be hit with jail time/ $100,000 fine, so they pull stock. And pulling they are.

In a touch economy to begin with, I cannot help but think they will begin to start dropping like flies.

[Stacie Dale - www.staciedaledesigns.com]

Jamie-
I admire your honesty and willingness to talk about this problem. When I had my clothing business back in 1995, I had the same situation with stores who simply just wouldn't pay in times of hardship. I decided then, that wholesale can not be the bread and butter of any business I do. I get way too angry when companies steal from me...it is stealing. Taking merchandise and not paying for it is stealing, plain and simple. I'm sorry you have to weather this storm but I know you will, and you'll figure a way to keep Jamies's Painting & Design going. Chin up!

[Carrie]

I'm thinking you need to write a book. Told you that before...

I am sorry about the sales, right there with you on many aspects. In honesty, who isn't?

I hope you can figure out a way to make it all work...Hope we all can.

[Beth]

Hey girl... thanks for the brutally honest post. I'm so sorry to hear that so many of your channels have left you hanging like that. It's such a scary time for everyone, with the little guys even more exposed and at risk than the big. I've never considered packing it up until now, but I just can't bring myself to do it. I love my site and my business... and the special people who have come into my life through it. *grin*

I have been looking for extra outside accounting work for a while now... but I'm going to keep my site "open"... dammit! We have to hang in there and believe that there were lessons to be learned from all this (crap), lessons that will make us smarter and savvier and come out the other side stronger than ever.

We need to organize a grass-roots DAY (or WEEK) OF SPENDING! Let's kick start this damn ecomomy ourselves! :)

[Stacey Kannenberg]

I have been getting the news that more and more of my larger booksellers are closing shop. Sadly, I have an outstanding invoice for over $1000 from last summer with the largest one and am trying to secure payment before they close their doors in March! Yikes!! I am sending you a hug in support and I so appreciate your brutal honesty!