Bankruptcy - an elephant in our living roomIn the past few weeks I have chatted with three Bizniks about the possibility of them filing for bankruptcy.
Each of them has been working their a*s off to make a go of their business, and each has reached the edge of a financial abyss and have found themselves exploring tough options to save their futures.
A thing about bankruptcy is that it is real, and useful, and common--but like abortion and jail time--most who have been there don't make that information known. So, when someone is facing bankruptcy it can feel like they're there all alone--the only one in their circle who has reached such a tough spot.
So, I thought it might be "nice" if some folks here might chime in and expose ourselves--publicly saying, "I've been there" and maybe sharing a bit about what was learned in the process. I mean, bankruptcy filings are public information anyway ...
And if you haven't been there but are close to someone who has, perhaps you could share their tale. Of course, names must be changed to protect the innocent :-)
I'll go first ...
Been there, done that--something like twenty years ago now, and funny thing is, it was after helping other businesses work their way out of bankruptcy.
What I learned--never ever ever fail to pay to the federal government your employee tax withholdings, never ever ever believe that you can "borrow" that money for whatever small length of time.
I find that my bankruptcy has been devastating on a number of levels. To state the obvious, I have been financially wiped out. How could such a good venture, as assisted living facility to take care of those that can not care for themselves, not prospect? Forget the build it and they will come nonesense. I put all the ca$h I had in the world into this project. I put my IRA into this project. Half my mother's net worth went down the toilet too. I am living with this financial devastation and glad it will be over the end of the year.
Now for unforseen co$ts. I feel like a Smothers Brothers routine but mom always liked my brother more. When he heard mom was helping me and he was not receiving any benefit, he stopped talking with her. Utterly unexpected. Now my mother only has one son. Goes to show you no good deed goes unpunished. I know why I am not a parent.
As bad as these experiences were, what is even worse is I have lost confidence in myself. Failure in the business was not an option but it failed anyway. I feel like I failed too. My bankrruptcy wasn't something that just happened. I wasn't sick and lacked insurance. I created my situation. I am not young and can't walk away from this experience and chock this off as merely part of my learning curve. I don't get to walk this off and try again. On the other hand, being old and wiped out financially, I know I can not just work a job and hope to retire. I live the bag lady nightmare. I will have to work until age 75 and then move to a third world country. It feels lie I am drowning in a sea where there is great wealth. I am forced to try doing a business again. Yes, I have the biznik community as support. I do not have the belief that I can succeed. I am doomed if I do not act. I am doomed if I act.
Marty
Oh Marty. It does suck.
After I filed my bankruptcy petition, I felt like there was a giant, red B emblazoned upon my forehead. I truly believed I'd never find a boyfriend (let alone a husband) because once a man learned I'd been bankrupt, they'd chalk me up as pure loser.
I had no job, no home, and no vision of my future. And the poor business decisions I'd made up to that point had affected dear friends ...
In the years since, my beliefs about bankruptcy have changed 180 degrees.
I used to think that people who went bankrupt were generally conniving losers, working the system to their own gain. But you know, I also used to believe in the "American way"--I used to believe that anything was possible if you worked a little harder, and that losers were losers because they didn't work hard enough (Boy!! did I ever buy into societal brainwashing.)
Now I know that people are human. We can only do our best. And sometimes, our best isn't enough to keep us from some kind of "failure".
All around me these days (in the U.S.) I see people running faster and faster to score more points--more money, bigger house, more education, tighter abs. I see more prevalent belief that scoring more points is the important thing. And I think that such notions contribute to the rise in bankruptcy filings, and to the "shame" we feel after we file.
Now I am not saying that you, Marty, were trying to "score more points". I'm not saying that at all. Sounds like you were working your tail off, in a field that needs a lot more love and attention--and you couldn't make it. But I am saying that it can be hard to make a go of a service such as assisted living, in no small part because paying a fair price for your service wouldn't help someone "score more points" ...
You're not alone out there. I know there are other Bizniks who have been through this, too. Let's see who else has the heart to expose their tattered side.
Leila... Been there, done that, on all accounts. Life doesn't end with ADVERSITY. What doesn't kill you makes your better.
The main focus of my current work is to help inspire other's that they can make it beyond these business challenges and find a happy and satisfying new career. Anyone looking for support through their journey will have a friend in me. ...Howard
I recommend the article I wrote about this. I fortunately have not experienced it, but I sadly watched this happen up close and personal. This was the reason I wrote the article. It can't help after the bankruptcy, and I feel the real pain bankruptcy brings when the whole business falls and breaks apart, but may help some facing this choice.
You can easily find it on my profile.
It's important to note that "bankruptcy" is complicated and frequently misunderstood. Anyone thinking about filing for bankruptcy protection, whether personally or for a business, ought to talk to an attorney--chatting with your friends is fine, but for the real skinny on what can and cannot happen in a bankruptcy proceeding, do talk to an attorney rather than take your friends' word for what's what. Friends mean well, but bankruptcy laws are complex and change over time, so unless someone is practicing in the bankruptcy realm, they might (accidentally) not have the facts you need to make a good decision.
Many attorneys do not charge for an initial consultation.
I love how Biznik is the kind of place, with the kind people, that one can feel safe to be this honest, to find out one is not alone, and to grow from the process. You guys rock.
There are so many things which can keep us from succeeding. (I'm talking about business/career success here, not spiritual success.)
One is the understanding that the higher we soar, the bigger the (possible) crash.
Another is the notion that only people of a certain (super) ilk can ever truly succeed.
My biggest blessing in my earlier years was seeing the failure and human-nature of people I had viewed as "successful"--thriving businesses, club memberships, pretty houses.
There was the amazing genius attorney with the 42nd floor corner office, whom I discovered had an empty marriage and maybe two real friends.
There was the day I visited the home of the woman who owned a glamorous business with multiple locations ... for reasons beyond her direct control, her thriving business was on the brink of financial disaster. She still lived in Seattle's toniest neighborhood but things were so bad that her family was huddled around the kitchen stove for heat (because the electricity was turned off but the gas company hadn't shut that off yet).
Before these encounters, I really had thought that business success of their scale was beyond me. But then I saw that super successful people were human, like me. Maybe I could be super successful, too.
But the possible plummet from great heights? Well, I saw these people fall, recover their feet, and take their lessons with them to build something new.
I have had the fortune to see such "failures" many, many times, and have learned and taken solace from them. But I think my exposure is a little rare, which is why I launched this little conversation--hoping the stories and encouragement from other Bizniks might benefit some of us who might be feeling alone in our struggles.
Dear Leila:
It is hard t seperate the external from the internal. Many people put on a show for themselves and others. I read in the millionaire nextstore that there are a lot of blue jeans millionaires and the people wearing the rollex watch, driving the expensive German car, have a closet full of designer clothing are manytimes financially under water. For those who achieve their financial goals, at what cost did the pay? Did spending their time at the office come at the expense of their spouse and children?
I dream of financial wealth but also crave success in my personal life. The lucky ones achieve some kind of balance in life.
Marty
Bankruptcy exists for a reason-its how our society deals with certain issues. It is part of the safety net we provide our people.
It is especially important to the self employed and is actually a hidden subsidization of entrepreneurs. Of course, it would be better just to make more capital and assistance available to the self employed small business person, but unfortunately big business has a better lobbying presence.
Even more frustrating is the impact of non-profit and quasi governmental organizations taking actions that sacrifice or destroy the small entrepreneur.
Being self employed is a high risk proposition. Risk is further escalated by insurance affordability and reliability and the costs and availability of credit.
Bankruptcy is painful but necessary. Recovery is possible. Don't be so hard on yourself-it will get better.
I have close friends who went through bankruptcy. Some recovered and some are recovering. It’s difficult at the time and the experience made them all stronger.
Life is full of bets. Even people working in the office can fail on the bets they make on the investments and cause financial hardship. My neighborhood drug store was recently sold. The new owners are a group of investors with all professionals. They can lose their shirts if the drug store can’t balance the rent and the traffic. They chose to bet.
It does not happen often, or you don't hear about it, but people with successful lives can have their personal lives in ruins - or so extended that although their monthly income would serve the best of times for several of us, that monthly income doesn't cover their spending by miles and miles. We all have seen it in one form or another.
I just happens even to the best and wealthiest people.
I have seen a few short sale cases recently that sellers may have other options. When people are emotional, they may find the fastest way out instead of selecting the best option. I recommend those people discuss with bankruptcy lawyers. Bankruptcy might not be the only way out. Lenders can look into over 10 years financial record although their guideline may only required 3-5 yrs history. CNN Money(Money magazine) has a pretty good online debt reduction planner.
God bless and good luck!
Winnie Lau-Heath, EcoBroker
It is soooo difficult to make good decisions when it feels like all around me my world is falling apart. The immediately obvious "solution" is not necessarily the best--as you point out Winnie--but a panic-state can clamor for a-solution-any-solution.
Which I guess is another reason that I wanted to bring "failure" out into the open. If I can find the courage to recognize imminent failure and contend with it before things start collapsing, I can make more rational and better choices.
And I can find that courage more easily if I know I'm not facing "failure" in a void, that there are others out there who've walked in similar shoes.
It is hard making mistakes when they cause large sums of money. When I filed BK, I didn't feel like I had made a mistake but that I was a mistake. Like Hester Primm (or whatever her name was) in The Scarlet Letter I wore a black B on my forehead besides L. I did not have the luxery to think this was related to not having insurance. I made decission that did not work out and sunk me to the ocean floor of debt. I hate myself for failing and have lost confidence I can do it right next time. Ultimately the lack of trust inmyself is the greatest cost of this experience.
Marty
Marty, I get it. And I wish I could encapsulate my recovery and ship it on over to you to share and speed yours. But I can't, so I wish for you the strength to keep waking up each day and moving forward and leaving behind more and more of the self-doubt and such.
Howard, aren't you working on an essay or something about this kind of thing? Would this be a place to talk about that, or maybe later/elsewhere would be better?
Until my book that chronicles my journey on the path of recovery is released, I offer personal free consulting to any Biznik that will message me with a request for a one-on-one meeting before or after a Biznik event, time permitting. ...Howard
Greetings,
It just so happens I recently published an article on this. I learned that bankruptcy is something we should all be aware of and plan for. Ignorance is not bliss.
"The Brighter Side of Bankruptcy: How Small Businesses Can Survive Bankruptcy", By Jenny Lynn Zappala, Seattle Business Monthly, Sept. 2008.
The magazine is on sale right now where magazines are sold in Washington state. It's worth the pocket change and you can keep it forever. Cheaper than a class.
The two case studies and a list of resources, Web sites and businesses centers to you help plan or cope with a business bankruptcy are only available in the print edition in the magazine.
The article (without resource list or case studies) is available at: www.seattlebusinessmonthly.com
This link will show you the full Web site address of the article (which is enormous) and then take you there: http://preview.tinyurl.com/6prh2h
Quoted from my article: "William Bradford, professor of finance and business economics at the University of Washington and a member of several local bank boards, sees worrisome signs. Citing a statewide survey, Bradford says that about 30 percent of minority small-business owners and 40 percent of white small-business owners say their markets have been “deteriorating”—a noticeable uptick since January. The survey indicates the “uncertain economic environment” will continue for as much as a year, maybe longer, Bradford says. “We are not at the bottom,” he adds.
These may seem like chilling statistics, but with the right amount of planning, bankruptcy does not have to be the end of the line for a struggling entrepreneur. Bradford says every owner should think about bankruptcy as soon as possible—not as a goal, but as something to plan for.
“You ... can and should believe the business will be profitable, but you should be aware and protect yourself if the business is not profitable and fails,” he advises.
The good news: With a competent team, a responsive strategy and vigilance over records and discipline, a business can prevent a train wreck."
I hope that helps. -Jenny Z writer / journalist / content creator
Jenny, this article is a gem. You make many points that are important for small business owners to absorb.
I encourage every Biznik to take 10-15 minutes to read this (buy the magazine and support the effort if you can). From Zappala's article you will glean one or more tidbits that will prove important to you.
Thank you, Leila! I love to learn, write and share.
This is how my job works: People like you bring me questions, suggestions, tips, referrals, recommendations and story ideas. I research, verify, write and publish the best of the best. Then we all read, learn and win.
So if you have a great story idea -- a particular business problem, a hot new business trend, an outstanding business in the greater Seattle / Eastside / Washington state area to recommend or something else -- please contact me. Seattle Business Monthly and other publications I write for are eager to know what kind of articles you want to read.
Thanks.
-Jenny Zappala writer / journalist / content creator
Thanks, Jenny. It's helpful to know more about what you do and what you need in terms of tips and story ideas. I'll certainly keep you in mind.
A few months ago, I just started doing the equivalent in South King County for The Business Report (serves Federal Way, Kent, Tukwila, Auburn, Burien, SeaTac, Des Moines and Covington readership areas).
I'd love more people to pitch story ideas if they have a business in one of the above cities. In fact, I interviewed and quoted our own Joe Hage, marketing strategist, in an article on businesses offering gas promotions as customer incentives (in the September issue that just came out).
Biznik is a rich resource and maybe we can even get some publicity for some of you solopreneurs out there!
I'm glad to hear and to get to know you better. If something is a better fit for your beat, I'll be sure to let you know! I'm curious how many Bizniks I'll get in print, either as a story or quoted in a story, by the next Bizjam. There are so many neat people here ...
That would be an interesting stat to track, wouldn't it?
Hi Everyone, Bankruptcy can be avoided. Starting a business is a huge committment. It takes 2 - 4 years for a business to support itself, depending on the business and the person running it. People often assume that if they open their doors, costomers will flock in. Not true. I always tell clients to have a "day job" and to be willing to support their business for at least 3 years.
That may sound depressing, but it may be a better alternative to bankruptcy. Bankruptcy can affect marriages and children in ways that are hard to come back from.
Talk to someone before launching a business. Create a solid financial plan. If people want to take on a business partner, thoroughly research his or her background. Know his or her history with business and finances. Take care, Karen Hallis
That is is good advice. Karen is a wise attorney. 38 years ago I had an attorney advise me to file for bankruptcy when I really didn't need to.
In retrospect, I have experienced numerous times that I have been far worse off (and actually bankrupt) and have learned how to work through the situation WITHOUT filing bankruptcy.
My advice today, to anyone considering it, is to first get some help from those who have previously been where you are now. In most cases, you can solve your current situation without the long-lasting effects of a bankruptcy on your record, especially with the help of a good attorney, such as Karen appears to be.
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