How This Entrepreneur's Staff Saved His Business...and His Life
This small business owner almost went bankrupt, but his employees rallied to make sure he didn't quit -- or do something worse.
When things go bad in entrepreneurship, they go very bad very quickly, and who you have standing by your side when things go south is of paramount importance. That was the case for Reddit user RocketSeaShell, who posted a personal story on the site recounting his experience with losing everything, and the people who stood by him when it happened.
According to u/RocketSeaShell, his small UK software company ran out of cash in November of 2007. The company had a $1.2 million contract on the table with a U.S. business, with the deal due to close before Christmas.
With no pay for himself, he took out a second mortgage on his home, maxed his credit cards and asked for another line of credit at the bank, knowing he could make it work for a few more weeks. Fast forward to February, having endured stall after stall, with hours left before they closed the deal and less than $1700 in the bank to pay his 15 employees, the deal fell through. The U.S. business they had been counting on was in the throes of the financial crisis, and didn’t have the capital to make it happen.
The small company’s CEO was sick with grief:
It took me until around 3:30 in the morning to shop shaking and stop throwing up. At 3:30 I wrote an email to my staff. . . Their pay was up to date but I still owed them accrued holidays.
I also owed [pay as you go] tax to Inland Revenue, the office lease had 14 months to go. Over all, I realized I had around £60,000 in debts in the business and as the sole director, quite a few of them were guaranteed by me.
Worse yet, my family was close to bankrupt. We had zero liquid assets and the house had a close to 100 percent mortgage and all the credit cards and lines were maxed out. There was a good chance that we may be out on the street in 60 days. But my wife worked part time and that would put some food on the table.
The shame of having let down my staff and the family was overwhelming. I kept throwing up or just dry retching.
I had a life insurance policy, which would pay off the mortgage and leave a bit more money for the family. I seriously contemplated getting in the car and having an "accident". There was no payout for suicide. Thoughts of my children[s] faces when they found out daddy was not coming back and my wife having to break the news to them was what brought me to my senses. The outlook was very grim and I had no idea what to do.
At 6:30, I got the first call from one of the software engineers in the company. He first words were "Are you ok?" followed by "Do you need some where to live?" Most of them had figured out I have been using personal money to run the business since last year and realized I have now run out of money.
By 9:00 I had had five other calls of a similar nature. By 10:00am, seven of the team were in the office cleaning it out. All of them felt positive we [could] get another deal from somewhere else. They were happy to be available/work for no pay until they could afford not to. All of them agreed I should take the last £1200 from the account to make my Feb mortgage payment.
With his employees on board, u/RocketSeaShell closed the office and was able to talk to his landlord and the bank into 90-day extensions. In April, the company landed its next client. Ironically, the financial software the company produced was created to measure financial risks just like the ones that caused the 2008 financial crisis. By 2009, they had a three-year head start on the market, poised with software everyone wanted, the company started making serious cash.
More importantly, all of those seven employees who stayed on board a sinking ship were given 12 percent of the business. And when the company sold in 2014, they all made roughly $2.8 to $3.8 million.
As an entrepreneur, you certainly don’t have a guarantee that your business idea will succeed. But you do have control over who will be working side-by-side with you through the trials and tribulations you will inevitably encounter.
u/RocketSeaShell had hired some great employees, but hired some bad apples too:
On that Saturday morning, after closing the business, I also got quite a few abusive emails and phone calls as well. One guy said, "How can you keep living in that house when I cannot pay my rent next month?" We did live in a good house . . . what most did not figure out was I owed close to 100% of it's value to the bank.
Other than that call, I don't remember much of the abusive emails and calls I got. I wonder if I got them before the call from my friend at 6:30 if I would have reconsidered the life insurgence [sic] policy.
There are many things to consider when hiring for your new business. Qualifications, pay rate, experience. But don’t forget to look long and hard at the character of your team -- it just could be the thing that saves your life.
To read the whole story, go here.