A day in the life of a small businessman

I'm the first to tell you that being a small businessperson in 2009 is not a lot of fun. We started off okay, but as the recession works its way deeper and deeper into people's everyday lives, it's impacting the way people behave with money.

Like may businesspeople these days, I've had to deal with a few months where making payroll was sometimes in jeopardy. When a small business makes money, there's no feeling like it in the world. You can make as much money in a month as people make in a year. However, when a small business loses money or struggles, there's few feelings like it. You can lose money tens of thousands at a time. Unless you're exceptionally wealthy, losing 5 figures hurts.  Especially when you know there's no guarantee you won't lose another 5 figures next month.

So, we've been struggling. We've still never made a late payment. We've still never missed a payroll, but in the new recession-induced economy, those statements are a lot less certain than they were even as recently as a year ago.

To make matters worse, credit of all types has dried up. No lines of credit or small business loans are available for the vast majority of small businsspeople. It's a highwire act without a net. One substantial stumble, and you are insolvent.

That sets the general tone for the story that is about to unfold.

We had a customer who had us clean his contents, which were smoke-damaged by a fire. The customer had no job, nor did his wife. He's not unlike a lot of folks around here. He did have a fire, though. This gave him access to the entirety of his policy limits, which he used every penny of.

In our industry, whenever possible, we ask the insurance companies to pay us directly. Second best is a two-party check to both us and the homeowner, which needs the homeowner's endorsement to be cashed. Worst of all is a one-party check to the homeowner.

This may seem like a small thing, and usually it is. The vast majority of people who get a one-party check made out to them pay all their vendors promptly and fully.

Trouble is, some do not. They surmise, correctly, that anything they don't pay to vendors, they get to keep.

That's bad news to us because some customers will then attempt to weasel out of paying us. The bottom line is, the law has precious few provisions that require a person to pay their bills. If they don't want to, they really don't have to, unless you're the government or a secured lender.  Even then, there just aren't many ways to MAKE a person give up their money.

Or, the customer can go bargain hunting. Wanting vendors to cut corners and cost. Trouble is, my business offers warranties of up to 5 years on many types of claims, and our policy is that if it is a quality issue related to our workmanship, my personal policy is that there is no limit on how far out a customer can call us to remedy something we might have done incorrectly.

If I'm on the hook for quality for a period of time measured in years, I can not afford to cut corners. I don't want bargain hunters. I want people willing to pay a fair price for superior service.

The customer gave us some indication that they were going to be difficult. Combined with what we knew of their personal situation, we asked the insurance company to issue payment to us, single-party.

They refused, but said they would send a two-party check to the home-owner for our services. That way, the home-owner would have to endorse it and hand it over for us to get paid. However, the home-owner could not, for instance, cash the check and deposit it in their bank account.

Because we felt secure that the check was going to be two-party, we delivered the home-owner's furniture. They had some confusion on their invoice (for instance, they thought that we charged them over $800 for a month of storage. In reality, we charged for 7 months of storage. but the way the invoice came out, it simply had one line for storage.)

We asked if they had received the check, and they said they had not.

After a while, we got a call from their adjuster who said he was closing the claim, He said he had sent the entire check to the home-owner, one-party, weeks prior.

What???!!!

He also told us that the home-owner had already told him he didn't intend to pay the bill because he felt he didn't have to.

Oh great. If I could just emphasize the environment here for a moment, I'm trying to keep a dozen people employed in the State of Michigan. This isn't as easy as it may look. Our creditors get paid whether we do or not. They don't cut us slack just because we don't get paid.

I called the adjuster and spent some time trying to jog his memory.

"Don't you remember when we asked if you would send us a single-party payment? You said no, but you'd send two party to the insured?"

We explained that if we had known he wasn't going to honor his word, we would not have released the furniture to the home-owner until they paid us. We'd have kept it in our warehouse, allowed a thorough inspection (which we had already done with this home-owner) and delivered the restored furniture when they paid us.

The adjuster was unapologetic. Said simply that we needed to get the money from the home-owner.

I tried again to jog his memory on our previous conversations and he simply cut me off, saying I needed to discuss it with the home-owner. The home-owner had the money. The adjuster didn't remember anything I was saying and couldn't do anything about it, anyway.

I was frustrated and after the second time he cut me off, I said, "Well, thank you for your time. Unfortunatley, we'll know from now on that we can't take you at your word."

A moment of weakness on the part of a guy who, again, is trying to keep a ship afloat in the sea of the great recession, at ground-zero in Detroit's shadow.

We then tried to get hold of the customer. He would not return our calls.

At that point, I had little recourse but to line up our collections agency. I left one last message explaining that if we didn't hear back, we would have no other choice but to turn his account over for collection.

He called back. Funny how that happens.  (The other funny thing that happens is that once it's turned over to a collections agency, who then assesses penalties, interest and collections charges on top of the debt, people call the office ready to pay the original bill.  Unfortunately, at that point, it's too late.  But I digress.)

He said he wasn't happy with the services. That's the first words out of a person's mouth when they're trying to avoid a bill. We had signed statements from his wife that everything had been cleaned to her satisfaction, but once they had a check in their hands, we were no longer diligent cleaning people doing a needed service.

Of course, we never, ever leave a customer with services they are not satisfied with, and I was ready to offer that we would re-clean anything he had until he was pleased with it.

I asked what he wasn't happy with. He said the storage charges were excessive. We stored a whole house's worth of contents for 7 months, and charged about $200 a month, which, for heated indoor storage, is exactly what the market-rate is. However, I said I was willing to work with him on that.

He said he might be able to pay the bill immediately if we would work with him. He gave me a number that I could live with.  I gave him nearly 30% in discounts if he would agree to pay that day.

In this situation, after all these years in business, you take what you can get. Turning people over to collection benefits nobody. If the customer can come close, I'll work with them.  Not just pragmatically, but because I always, always want to give a customer what they want if it is reasonable to do so.

The customer, did, indeed, come in and pay his reduced bill, at a savings of over $2,600.

Life is good. We dodged a bullet. Yet one more payroll we will meet.

I went to lunch and when I got back to where I had cell-phone reception, I had a message from the adjuster:

He had gone over his paperwork to close out the claim, and discovered that, yes, indeed, he had promised us that he would pay us separately, via a 2 party check, He had set aside the amount, separate from the rest of the customer's claim.  He apologized and said that he'd be sending the check to us.

Good news right?

Not really. We already negotiated away $2,600+ as an inducement for the customer to pay his bill.

What's particularly frustrating about this was that I was very pleasant with the adjuster on the phone. I only got frustrated when I kept trying to jog his memory on our agreement, and he kept cutting me off.

The adjuster called again when he realized that we had given a reduced price to settle the debt.  In the end, the adjuster is trying to make up to us, some of the mark-down that the customer got. However, it's still an error that will cost us more than $1,000.

One might reasonably ask, what is $1,000 to a company that does about a million dollars of business in a year?  (Oddly, nobody wonders why the electric company will get snitty about a hundred bucks when they make billions a year.)

The bottom line: it's $1,000 directly out of my pocket.

My employees get paid whether I make a profit or not. Same for our suppliers. Same for our franchisor. Same for the tax man.

What's left over is what I earn.

In the end, this is more of a humorous incident than anything. If you couldn't laugh about stuff like this, you wouldn't last long in small business.

I'm actually more pleased that we seem to have an opportunity to create a good relationship with this adjuster, where previously, it looked like things had gone sour. He's a good guy. Like most adjusters, though, he's overworked, with a lot of files to clear. It was easy for him to forget this small detail about one of his claims. That's why I wanted to try and jog his memory.  He had previously been a very likeable and reasonable fellow to work with, which made his conduct at the end so utterly surprising.

Overall, I'm reminded of something my friend Patrick says from time to time: "Let them make their money". There are all sorts of businesses out there. As a consumer, I want the best bargain I can get.

However, there comes a point where you're really impacting a person's ability to earn a living. I'm not advocating paying or supporting businesses that provide bad service or inferior products.

But when a business holds up its end of the bargain, it's only fair that people pay a fair price. It's amazing how many otherwise moral and good people somehow don't feel this is true.

I'm trying like the dickens to keep a dozen people employed here. There are no other jobs for them or myself around here. Granted, there's a profit motive in this for me, too, but time and time again, I've made the decision to keep people on the payroll, full-time, when it would have been just as easy for me to lay them off. Owning a business doesn't just boil down to dollars and cents. Not to me, and not to any good businessperson.

I have obligations to my customers, my employees, my community.

I tread a lot more lightly on small businesspeople now that I am one. We're providing needed services or products, but also forming the economic foundation of our communities.

Every day, I wake up with the goal of keeping people working. To keep this community from turning into Detroit, proper.

The bankers and insurance companies who use my tax money to give themselves seven figure bonuses would not so much as blink if I were to become insolvent next week.

The car companies who use my tax money to keep making cars people don't want to buy couldn't care less my collections slowed down to the point that I could not meet payroll.

If you hire me, I'll give you the best possible service at a fair price.

All I ask is that when I'm done, you help me keep this company and its employees on their feet by paying a fair price for superior goods and services.