Building Business

Cash Flow: How I Wrecked My Business, Screwed My Friends, and Almost Destroyed My Marriage (Part 2)

comments (8) October 10th, 2011 in Blogs

Official Fine Homebuilding Post, editor

1 | 2 | 3 next> View all

Add Comment
Print

BY MR. X

The housing-market collapse pushes one struggling homebuilder's business over the edge, but it doesn't break his spirit

As the federal government and the media started to use the term recession, a cash-flow crunch made business as usual impossible for our company. By fall of 2008, bills were late, accounts were frozen, employees were stressed, and relationships were strained. But we still felt that the recession would be short term and that we could power through. We had one spec house under contract to sell at the end of the year, a couple of others verbally spoken for, and several hard leads.

RELATED ARTICLES

Change orders can help avoid dreaded lawsuits

20 considerations that help a project run smoothly

Remodeling trauma

The business case for ‘smaller is better’

We met with the majority of our subs and suppliers to create survival plans, sort of an informal Chapter 11 reorganization. Those conversations were some of the hardest I have ever had in my life. Everyone was in the same boat, struggling day to day with their own economy-related issues. Folks were obviously disappointed that we couldn’t pay our bills in entirety, but for the most part, they seemed glad that we were communicating with them and trying to save the business.

Unfortunately, the spec house didn’t close in December. The appraisal came back 15% below our contract price. People who were close to contracts backed out. Leads dried up as potential buyers decided to wait out the recession. Because our credit accounts were mostly frozen at that point, we couldn’t get materials, and without materials, we couldn’t build, which made it impossible to get draws and pay our accounts. The company could no longer operate. We had to lay off the remainder of employees (including myself), except for the office manager, who stuck around to pick up some of the pieces and sweep up the dust. I had to fire my best friends.

Out of all of this doom and gloom came a beacon. Our second daughter was born. I had some real concerns heading into her delivery (my concerns were rightfully dwarfed by my wife's, who was doing the heavy lifting). I was worried about the potential collapse of the business. I was terrified about how I could possibly well up more love than I already had for my wife and first daughter. At the moment of delivery, when I was tasked with determining the gender of our new baby, these concerns and distractions dissipated. I focused on obvious priorities.

I kept trying as hard as I could for a couple of months more, but it became obvious into 2009 that I was fighting windmills. We decided to close, and that was pretty much the end of the business and the end of communication with my partners. This part is especially painful since one of them was my freshman roommate in college and a very good friend. I've had a lot of varying emotions about the loss of that particular friend and colleague. We had been through a lot together.

1 | 2 | 3 next> View all

posted in: Blogs, business

Add Comment Print

D.R. Horton Division to Market Its HERS Index Scores

Back to List

Solar Raises Its Voice in the Job Market

Comments (8)

CarlSeville writes: Great articles, Organicthink. I consider myself extremely fortunate that I was able to extract myself from the construction business without the acute problems you experienced. However, looking at the ups and downs of 25 years as a contractor, I definitely had my share of physical, mental, and financial health problems over the years. I think we both found our true passions and ultimately, our best career paths through being contractors. While sometimes I am angry that it took me so many years to get here, I suppose that I probably wasn't ready and earlier. Hang in there, we have lots of good years ahead of us.
Posted: 10:56 am on November 7th

DanMorrison writes: I am really glad that you all seem to have enjoyed the article. Initially we were going to publish the author's name along with the article, but as it unfolded, i realized that publishing annonymously may make it easier for other folks to come forward with their stories of business mistakes.

We would love to help you organize your thoughts and convert that into an article that we can publish here. JoeStilwell (and any others) -- if you'd like to put one of these together, contact me (dmorrison[at]taunton.com) and we'll get to work on it.

Dan
Posted: 10:22 am on November 7th

carpentater writes: sorry about your hardship mr.X these last few years have been a struggle for everyone. I live in a suburb of D.C. often considered to be recession proof. well it isnt! we havent put an addition on in 3 years and thats all we did. if it werent for the FDIC this would have been a DEPRESSION.
Posted: 2:10 pm on October 29th

jonscholl writes: You are to be commended on collecting your thoughts and presenting them to us all. I have been on the short end of a backruptcy...as an employee...and if the ownership had communicated the difficult situations as the business began to spiral down the tubes...instead of lying and cheating to try and save "their" company until the very end...all of us ....friends, employees, creditors, bankers etc...would have at least had a bit of compassion for those ownership people. Instead, it all went up in flames and we all got burnt.

I am sure that this process has been cathartic for you and perhaps some of those former friends and collegues will have the opportunity to read your prespectives and also find it in them to forgive...not to forget...but at least to understand?

As you say...your Family and your Health are the things that really matter. Keep on moving forward!
Posted: 10:25 pm on October 27th

organicthink writes: This is the real Mr. X. I can't convey how helpful writing this article was for me. It felt so good to organize my thoughts and log what happened at one of the most incredible times of my life. It was cathartic, healing and therapeutic to say the least. I mean, we all have life experiences, but in this fast-paced life, we rarely have time to compute what the hell is going on to us and around us. I'd encourage those with similar experiences to WRITE IT DOWN! Get it out of you, so that you can move on. It helps emotionally and physiologically. I have a stronger family, marriage, career and character because of my experiences, strengthened by the writing process. The biggest gains that I have achieved through this is a healthy dose of humility and reorganization of my priorities both personally and professionally.

A HUGE thanks to the incredibly professional, human and compassionate editors at Fine Homebuilding (Kevin Ireton and Dan Morrison) that helped to pull this out of me. They actually made me sound like a good writer! I really don't like writing very much. It takes too long.

Thanks also for all of your comments here. I was feeling a generous amount of trepidation about putting all of this out here in the public, but the reader comments have made the process all that more incredible. There was not a solitary motivator for writing this story. Yes, I wanted to tell about what happened to me, but I also wanted to let others know that everything can be ok, that we can go through some of the darkest periods of our lives and careers and come out better for it on the other side.

I can't wait to hear what others might write.
Posted: 7:07 am on October 14th

patrick_mccombe writes: This is great stuff. Many thanks.
Posted: 10:58 am on October 10th

alan sullivan writes: Thanks for sharing your story.
Posted: 10:33 am on October 10th

JoeStilwell writes: Good stuff, thank you so much for sharing. I have my own tale that I'd love to be able to share sometime. I'm still in business but it took a path of destructive mistakes to get back to what brings me peace in life.

Take Care - Joe
Posted: 7:49 am on October 9th

You must be logged in to post comments. Log in.

Stay connected with Fine Homebuilding