Facing the New Business Reality and Making the Change

“Selling a business can be an emotional transition that involves fear, uncertainty, and adjustments to personal and professional relationships” Google

Many business owners refuse to face their new reality:

? Some excuse themselves that their parents founded the business refusing to acknowledge that times have changed and what worked in the past will not work in today’s reality.

? Often business founders have emotional investment in the business, feeling it’s their life project and keep investing in the business until they run out of funds.

? Others make the necessary business changes that enable them to “ride the storm” by making drastic changes to their business model or agreeing to be purchased by their competitor. This helped them salvage their investment and sometimes the become part of the company that acquired them.

The article is based on real life cases studies of some people who could not face reality by refusing to let go of their business for various reasons while others faced the unpleasant reality, made the necessary change and found their happiness.

Our client who Couldn’t Face his New Business Reality

In the 90s I had a large textile client who encountered severe business disruptions resulting from the textile industry moving to China. Refusing to face the new reality, our client ignored the credit insurance warning that his largest customer had financial issues, refusing to insure his new large order. Wanting to keep the plant working, he chose to ignore the credit insurance warning, accepted the order and had his plant produce the products and ship them to his client.

His customer declaring Chapter 7 had a devastating effect on our client’s business. Refusing to face the new reality that his company financially could not survive, he convinced his wife to let him invest her one-million-dollar inherence in the business.

At first his wife was reluctant to give him her inheritance and the children, who chose not to work in the business, advised the mother not to do it.

Despite her children’s advice, she gave her husband the one-million-dollar inheritance, feeling the business was his pride and joy that he established 30 years ago.

Investing his wife’s inherence in the business didn’t help and my client found himself facing bankruptcy court. When he came to my office, he asked me to have our staff create the required information the Bankruptcy Court needed, hoping to be able to declare Chapter 11.

When I asked him how he planned to pay for our new services, since he already owed us $15,000 in unpaid bills, he broke down crying and said,

“I have been your client for the past ten years, paid you $50,000. I always had my controller pay your invoices the day we received them. You must help me. If you don’t, I will lose my business.”

Working on long term relationships, I instructed my people to provide the necessary information that the bankruptcy court required, incurring another $10,000 in additional bills. The bankruptcy court didn’t feel that our client’s company was salvageable, declared Chapter 7 and we encountered $25,000 in unpaid bills.

Five years later, I attended the IBM Business Partner Conference in Orlando. At night my wife and I took the bus to the amusement parks.

When we boarded the bus, we met my client, who was sitting next to his wife, children and grandchildren.

I realized he was uncomfortable. Despite this I walked over to him, shook his hand and asked how he was doing.

Relived I didn’t bring up the subject of the unpaid bills he said,

“I would like to thank you for trying to help me salvage my company. I am retired, and my family forgave me for investing my wife’s inheritance in the business despite our children’s advice not to do it. I am thankful I that have a supportive wife and children.”

Facing My Own Business Reality

A few years later I faced the same business reality our client had, having to make the hard decision about what to do with our 25-year-old computer consulting firm.

The only reason for this was that my partner refused to do his share of the work, coming to our 5th Ave office at 11am and leaving 6pm to meet his mistress at a motel.

They met four nights each week despite the fact they were both married.

He had five children; she was married to a schoolteacher and had a young son. Helping her pay her mortgage, my partner gave her $200 every week.

My partner and his wife lived a lavish life had 2 horses, four 4-wheelers for the children, waters beds for everybody, Grandfather clock and expensive diamond ring he bought for his wife when she complained about him coming home late four nights a week.

This resulted in him always being broke and I often had to lend him money to meet his monthly mortgage payment.

Our highly paid employees followed in his footsteps, coming to work late. Despite the fact that I knew we should part ways, I couldn’t bring myself to do this feeling we had been friends who founded the company 25 years before.

Speaking with my business mentor about this, he kept telling me that I must terminate the partnership, let go of my old business model, and accept the offer from the CEO of the software company I am currently representing.

For two years I ignored his advice about giving up my business model, parting ways with my partner, and laying off the highly paid employees, feeling guilty about how it will affect their livelihood.

My business mentor, trying to convince me to give up my business and part ways with my partner and employees, kept telling me.

“You feel your company is your child and you can’t give it up.”

“The reality is that you have employees who get paid $100,000 per year and do you a favor working. Your partner, who is a womanizer and spender, is always broke and you often bail him out. Eventually he will ruin you financially.”

Not making headway with me he said:

“What you do is a common issue business owners who founded their business face. They are emotionally involved and unable to face the reality and let go of their old business model.”

Leap of Faith and Find Your Safety Net.

In the summer of 1990, my wife and I attended a 7-day photography workshop in Northern NH starting at 6:30 AM and finishing at 10pm.

Speaking with Nancy, our favorite photography teacher, about my business dilemma she responded by saying,

“I am going to conduct an 11-day photography workshop in Alaska on a 50-foot boat. You should attend the workshop. Being away from your business will give you a different perspective about what to do going to conduct an 11-day photography workshop in Alaska on a 50-foot boat. You should attend the workshop. Being away from your business will give you a different perspective about what to do.”

My wife agreed with Nancy and told me I should attend the photography workshop. My reaction was that I couldn’t take another 11 days’ vacation.

To this my wife said,

“For the past 10 years you have been talking about going to Alaska and photographing wildlife. You should attend the photography workshop.”

When I called the Alaska tour office manager asking about the workshop itinerary, her response was “Nancy, your photography teacher, called me and said you might attend the photography workshop. I have one spot left and will hold it for a week giving you the right of refusal.”

I called Continental Airlines, spoke with the reservation agent and asked what the Alaska air fare would be and told her that my wife insisted I should take the 11 days photography workshop on the 50-foot boat. Discussing the fact that my wife and I attended a

7 day’s photography workshop every year, I gave her my wife and my websites telling her she can save whatever photographs she liked for her desktop at home.

She thanked me and then said, “I agree with your wife that you should do the Alaska photography workshop. What is your frequent milage number.?”

After I gave it to her, she said, “you have enough milage for a free business class round trip ticket. Listen to your wife and enjoy the 11-day photography workshop. Alaska is a beautiful place. I visited it few times.”

The Photography Teacher’s Background

Attending the 11-day photography workshop in Alaska’s Inner Passage on a 50-foot boat, I chose to sit by myself on the lower deck away from other participants on the upper deck photographing the magnificent glaciers. Some were floating in the water and had sea lions sunning themselves and making noises, and dolphins who kept circling the boat.

Being away from my business environment gave me a new perspective of my reality, realizing that I must change my business model.

Obsessing about whether I was making the right decision, I spoke with Nancy and Ron the boat captain about my dilemma. Their response was:

“When you are ready, you will know what to do.”

I kept obsessing about giving up my business model and parting ways with my partner and employees and decided to speak with Nancy about it.

Listening to me she had a concerned look and finally said:

“I can’t advise you what to do but will tell you how I became a photographer. For many years I was a psychologist treating women with terminal breast cancer. Being upset about my patients losing the battle with cancer and dying, I could no longer continue to be a therapist. It resulted in giving up my practice, opening a chocolate store in the heart of the Toronto business sector and becoming a successful businesswoman.”

“One day a National Chocolate Chain Store approached me and said they would like to purchase my business. At first, my reaction was that my business is not for sale, enjoying the interaction with my clients. When I heard the offer, I almost fell on the floor and agreed to sell my business.”

Not being able to make up my mind about my business model I asked:

“Was it a difficult decision selling the business despite the fact that you received the offer you couldn’t refuse?”

“Emotionally yes, but I decided it was time to make a change. I always wanted to become a photographer. I told my two children that I paid their undergraduate college so they will not have student loans, but the MBA tuition would be on their dime.

Selling the store enabled me to spend the next two years taking workshops with the most renowned photographers around the world. Today I am a successful photographer, and my workshops are booked a year in advance.”

When I told her that I feared what the future would bring without the current business model I had, she said:

“I learned from my terminal patients how to love life, and not let obstacles stop me from doing what my heart desires.

“‘Take a Leap of Faith and You Will Find Your Safety Net.’”

The Boat Captain Faced his Personal Reality

After we finished talking, Nancy suggested I should speak with Ron, the boat captain, about my business dilemma.

Hearing my ambivalence about changing my business model he said:

“I can relate to your dilemma. For 25 years, I have been a professor and the head of the Biology Department at a well-known university in CA. Not being happy with my reality resulted in having a severe car accident that could have been fatal.”

“After spending two weeks in hospital and recuperating at home from the injuries, I decided that I can no longer continue working at the university.”

“When I was fully recovered, I went to the university in the morning, quit my job and gave up my tenure, packed my personal belongings and was on my way home two hours later.”

“Not wanting to teach again, I bought the charter boat and never looked back. In the spring and summer, I run tours in Alaska. When I come back my friend and I, who also left her job at the university, will do the maintenance that the boat requires. After we finish, I run fall and winter weekend tours in the San Francisco Bay taking people to see the sea lions and any other wildlife the Bay has.”

Changing My Business Model

Flying home from Alaska to NYC, I kept thinking about Nancy’s words,

“Take a Leap of Faith and You Will Find Your Safety Net.”

Realizing that she and Ron changed their careers and found their happiness gave me the courage to give up my 25-year business model as the computer consultant who met the IBM executives in 1985 at four days round table meeting discussing the IBM DMAS Distribution Software.

When I entered our apartment I told my wife,

“I am going give up on the computer consulting and accept the offer to represent the ERP/WMS Software Company.”

When I told my associate, who has been with me 25 years, about my decision to give up on my business model and represent ERP Software that I still represent today. He got upset and asked,

“Why didn’t you give me advance notice so I could look for another job? My brother-in- law who is in the computer field has been out of work for 11 months.”

When he asked my wife why didn’t I tell him, she said, “I didn’t know about Dani’s decision until he came back from Alaska.”

I assured him that the part of my agreement with the CEO of the company I represent was to hire him at the same salary and medical benefits I provided.

My associate left on July/31 and started working for the company I represent on Aug/1.

Before he left, I gave him his annual $2000 Christmas bonus. As of today, he still works for the company I represent as a project director.

Remembering Where I Came From

The reason why I insisted my associate would not have to look for a job, and gave him the Christmas bonus, was remembering that in the 70s I worked for a company 10 years and the CEO was kinder to me them my family.

He paid my SUNY undergraduate tuition in full saying, “Dani I don’t care what you study. Just get good grades.”

He was upset that I had to leave, sent me a letter thanking me for doing an excellent job for 10 years, and wrote, “you will always have a home here. If you decide to come back all you need to do is call me.”

In the envelope was a check for $1000.

The CEO who was Kinder to Me Than my Family

The reason I left the company after 10 years was because of Dr. Flynn of Brooklyn Polytechnic, who awarded me 50 college credits for my self-study of computer programming and business knowledge.

When we met, he told me that based on the computer paper I submitted, he realized that I ran the computer department and the computer manager, who had outdated knowledge and refused to learn the new technology, was holding me back.

Dr. Flynn’s parting words influenced my decision to leave the company where I had been happy for 10 year:

“If you don’t leave your job, you will miss the last train. Your computer manager who is outdated makes you fall behind the times.”

One Should not Forget where he Came From

As a self-made person my famous last words are:

“One should not forget where he came from.”

That was the reason why I made sure my associate was hired by the company I represent and gave him his Christmas bonus on July/31 not forgetting people who were kinder to me than my family.

I don’t regret mistakes I made. I regret listening to people’s “good advice” that prevented me from doing what I wanted to do.

***

This story is dedicated to Nancy, our beloved photography teacher who passed away from cancer.

The 11 day photography workshop that was taken in1990 can be found on my website gallery https://smcdata.com/gallery/

My wife and I returned to Alaska on a Royal Caribbean cruise 20 years later and were disappointed. The glaciers I photographed on the 50-foot boat are gone due to global warming.

It reconfirmed the fact that you can’t go back to a place you visited and enjoyed years before since you will be disappointed.

About SMC & Dani Kaplan:

Since 1980, Dani Kaplan https://www.smcdata.com/ has worked with Manufacturers, Distributors, and Food companies as a trusted advisor helping them lower their operating costs, streamline their operations, and control the inventory.

Dani can be reached at [email protected]