Debbie, a recent networking contact introduced me to John last month. When Debbie made the introductions, she said that John needed accounting support possibly requiring a search. John and I traded a few emails and phone calls but did not connect until this week.
When I talked with John he was very animated and emotional to the point of desperation. He was clearly having a bad day and unloaded on me. He wanted me to have as much background information as possible. John is a commercial contractor who has been in business for over 15 years. Although he can generate new business the gist of the conversation was about his current debt service. I inferred that he is on the verge of bankruptcy.
I had the opportunity to give him an overview of my background. I told him that had a 22-year corporate career managing retail stores and restaurants. During that time, I was responsible for the development and construction of new stores. Additionally, I told him that I serve as the business manager for my wife’s residential construction business. He took this as welcome news as he thought I could relate to his situation and positioned to help him. We agreed to meet Thursday afternoon to further explore a business arrangement.
I shared that conversation with my wife to get her perspective which was useful. The recession that began in the fall of 2008 hit the Atlanta market very hard. The following years were difficult for people engaged in the construction sector. We are well aware of the toll it has taken on the industry. We also understand what’s required to dig out of a bad situation to make a healthy recovery.
I had lunch with my attorney on Thursday and gave her the top line of John’s situation. I didn’t share any names, so the conversation was completely confidential. Although she is not bankruptcy attorney she has keen business insight. She told me that in today’s environment one cannot be forced into bankruptcy by one’s creditors. They understand that it is better to work with their debtors to minimize their loss. They know that if they don’t work with their debtors they risk losing their entire investment. She also suggested that this prospective client probably has one or more bad habits contributing to his problems. I had come to the same conclusion.
I continued to do my research on John prior to our meeting. I found that he was well-educated with two undergraduate degrees, including a degree in construction management and a master’s degree in construction management from a major university. Additionally, he had about 10 years of corporate experience working for major construction companies. His father was an architect and his grandfather was an engineer. He has the background to be a successful contractor.
John and I met Thursday evening over a couple of margaritas and chips at a local Mexican restaurant. We spent about two hours getting to know one another during which time he provided further clarification on his situation. The good news is that he is effectively managing his creditors, keeping them at bay. He has an issue with an accountant that unfortunately has control of all his financial information and an attorney who sued him to recover payment. He has paid the attorney most of what he owes so that debt is not much of a burden. His overhead seems high, with over 30% dedicated to insurance. He said he’s looking into a more reasonable alternative, as he should.
As we talked it became clear that John’s real issue is the need to generate more top-line revenue. Sure, he could raise more funds by increasing his prices to increase his margin, but the easiest solution to his situation is to generate more business. His concern is that he doesn’t have the personnel to support that growth. He needs someone to help him manage the financial side of the business particularly managing cash flow. He also needs a sounding-board to ensure that he is making the best decisions for his business.
By the end of our meeting, John asked me to consider working as his business manager. It’s an intriguing thought as it falls right in my wheelhouse. I suggested that we continue the dialogue and set up a ride-along next week. That will give us an opportunity to understand one another to determine if we can work together. This could become interesting.
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Jim Weber, Managing Partner
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