Driving a successful business so deep inthe ground it makes the Grand Canyon look small!
Jan 28 '05
The Bottom Line Don't be discouraged by initial success. Follow these steps to bankrupt any business...because financial stability is BORING!
With all the books, articles, magazines and newsletters dedicated to helping your business thrive and grow, I decided to do a 180 on this topic. I wish I could say this was BASED on a true story, but instead I'll have to disclaim that this IS a true story. Basically, how a proprietorship can take a healthy business and completely flush it down the toilet along with his or her credit. It's divided up into simple steps to help you keep track of the things YOU will need to do in order to drive your business into the ground. Because what's more fun? Having a great business or one that's constantly walking the fine line between bankruptcy and foreclosure? Imagine how much more exciting it would be to tell friends and family of the drama that is your business! Afterall, who wants the stability of a predictable cash flow?
The first step is to find a legitimate, financially well-off business with a regular customer base. It's no fun if you already have a shaky business, you're going to want to find one that's well in the black with a booming bottom line. This is the most important step, otherwise people might let you off the hook with why your business failed. We want to find something so well off that it would take something like the earth splitting in half and swallowing your business whole before you would have to shutdown. Yeah, think biblical proportions.
Eliminating Miscommunication
One of the biggest problems in running a business is miscommunication. People listening to hearsay, theresay, wheresay? Second and thirdhand. The easiest way to eliminate MIS-communication is simply to eliminate communication completely. Yup, the only way you can be sure there isn't any miscommunication is by having NO communication. Ways to do this include not going to your business, or if you have regular hours/times you are usually present, don't go. You can still pop in on a 'Hey how's it going' kind of thing, but don't make your presence overbearing.
Also, don't have a phone number where people can get a hold of you. You've employed a staff of competent adults, they can handle the bumps and jolts that come along with it. Besides, what could ruin your perfect Friday worse than knowing your kitchen is on fire? They're able-bodied humans, let them take care of it.
Another thing is not to tell your employees of upcoming changes/events until that day or even afterward. What?? Product X? Oh we're not carrying that anymore! Didn't you notice we've been completely out of it for the last two weeks!!?? If you have been successful enough to run your business completely into the ground, don't inform your staff until the day before. This ensures that they are committed, solid workers until you close. Why risk a walkout or mass exodus when you know they'll keep working if left in the dark! Of course, I'm kind of jumping the gun here on this, as I haven't told you what else you need to guarantee failure.
Cut costs by not paying suppliers!
One of the biggest costs in running a business that provides physical products is the raw goods. Whether steel for a car manufacturer, dairy for an ice cream maker or bottles and hops for a brewery, unfinished, raw goods will make up the largest percentage of expenses. The only way you can be sure to cut costs is by not paying your distributors!
Now I know what you're thinking, but trust me, if you've built up strong relationships with your suppliers, they will let it slide for a while. Think how much cheaper it will be to run your business by selling things at an infinite markup! Your cost basis will be ZERO as you haven't paid anything for what you're selling! After a while, some will get a little ...well a little p'd off. But remember, there's always other suppliers! Heck, there could even be as many as 10 or more companies who could provide you with the same material once your current suppliers stop delivering!
Eventually you will get to a point where you've nearly burned every possible option. That's when you will have to bite the bullet and pay. However, I'm not talking about paying off the bills completely, I'm talking about making minimum payments, sometimes only for what they are delivering that day. As long as you keep paying for what they're bringing that day, most will continue to supply you!
Now hopefully you can keep this up long enough where nobody will supply you with your necessary goods. Don't fret! This is NOT a problem. Most stores will sell exactly what you need, sure it might be of an inferior quality and still cost more, but hey, this is a tutorial on how to run your business in the ground, if you're at this point you're making progress!
Also, don't worry that going to local outlets means a lot of miles on your car and a lot of time going from place to place to get supplies. HAH! That's what you hired your employees for! This goes hand in hand with miscommunication. If you've done what I've said, then your employees won't be able to get ahold of you to get you to run the necessary errands! Make those lazy bums drive to the store to purchase product! Heck, it's the least they could do!
Apathy doesn't mean not helping...sometimes
At this point employee morale will start to suffer. You can stave this off by showing up once in a while to lend a hand. Answer the phone every now and then. It will keep your employees guessing! Some pointers would be to have your employees come up with big lists of items your business needs. Keep them busy, make them THINK you're going to get things done. Because heck, if you're asking for a list, then of course you're still an involved leader!
Another good tip is to purchase big-ticket items to make it seem like you still have more than enough money to run the business. Get that new computer inventory system, get everyone in the office a new desk or chair!! (On credit of course).
Helping it along its path to destruction
Sometimes it seems no matter how hard you try your business still manages to at least break even. One of the best ways to burn through that excess cash is to gamble...gamble...A LOT! Make sure to pick games where you can really push the envelope. Blackjack is a prime example, at many times you can double your bet--by doubling down, or splitting cards. If the dealer shows a 3 and your sitting on two face cards, don't be afraid to split them. The odds are still in your favor. Blackjack is also great because you can play multiple hands at once. Table limit $200? Play 3 hands! And don't forget to double down on any 10 or 11 and split when you can.
Don't give up if you find yourself winning early on. Even if you're up $6,500 from hitting a straight flush in four card poker, I've found you can give it all back AND SOME by staying another ten hours or so. Remember, the house always has the edge, if you're up, keep playing and statistically it should work its way out by the end.
Another way is to start messing with people you really shouldn't mess with. The IRS suddenly comes to mind. Make sure to draw extra attention to yourself by stretching out business income taxes as long as possible. Even if you tried your hardest...say by hiring a bookkeeper who was nearly disbarred from extorting money from a public school, continue to irritate the IRS. Other ways to draw attention to yourself is by having noone on the payroll--remember if it's a family business you can have your family work for free. Also be sure to keep erratic records. Don't record a few days of revenue. Who cares if last year you reported over 200% more revenue for the month of March, let the IRS split hairs.
And at the end of it all...
Finally you've reached the point of complete insolvency. You've got the IRS on your back, employees are due back wages, distributors are owed tens of thousands and your credit score is lower than your IQ. Pause for a moment and give yourself a pat on the back! You've done it, but remember you still have some work left to do. Go back to your office/place of business and console some of the workers. Make sure to say encouraging words, bring promise and hope.
Offer current employees future employment in your up and coming 'new business.' Be sure and have an easy scapegoat to blame for why your current business has failed. Something like an audit from the IRS or an eviction notice always work well. Those are things outside your scope and cannot be solved no matter how hard you try. You'll look like a victim instead of the true victimizer (this is important).
And at the end of it all...try, try again. Because darnit, noone is going to tell you what you can't do!
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boden11
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boden11 loves gambling...errr investing in the stock market and and doing his own taxes
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