Category Archives: Death

The Business of Life Chapter 32 – when death becomes inevitable

 When death becomes inevitableWith Richard gone I appointed Tim as MD, we started the hunt for a finance director and commenced the process of producing a new business plan for the next twelve months.  However, we quickly discovered that, such was the mess in the accounting systems, it was not possible to establish the true working capital position.  Our auditors hired us the services of an experienced accountant who quickly set about the process of investigating the current state of the company’s books.  The management accounts transpired to not be worth the paper they had been printed on deemed more like a work of fiction.  Worse, the VAT was overdue and the VAT accounts had not been reconciled for months; indeed it looked as if they never could be. Whatever vestiges of empathy I had for Richard quickly evaporated.

With a twelve month plan completed, Tim and I presented this to our finance company to plead for additional time.  We then visited every one of our key suppliers to explain the current situation and to present our plans.  Luckily, we gained the full support of everyone.  Tim proceeded to do a remarkable job as the new MD, working tirelessly to rally the whole team, whilst I started the process of seeking a new finance director. With the aid of 3i, we met and appointed a very experienced FD who quickly set about bringing the company’s books up to the required standard.  With the correct information guiding us and the whole team working effectively, sales and margins slowly started to improve.

By mid year (our second) we were trading profitably but cash remained as tight as ever.  Further close examination revealed that our finance company were slowly but surely reeling in their loan by reducing their advances against our invoices.  It was galling in an extreme to realise that, had we not suffered the actions of the vendor and his illicit cash strip, we would have been in a healthy cash position with no liquidity concerns.  However, with Offhand (the vendor) again doing a disappearing act at my latest attempt to arrange a dispute resolution meeting, it was clear that we were running out of time before we had to go to court.  Although we were sure of the odds of winning on our main claim (the cash strip), there was unfortunately (due to the poor state of the books before our purchase) a degree of uncertainty over the smaller claim.  With the prospect of enormous legal bills even if we won the main claim, it was clear that drastic action was needed.  My first foray into business ownership looked like it could hit the rocks.

With the business trading in two entirely separate markets, with two different product ranges, it was apparent that potentially we could package one half of the business and sell this to a competitor.  One of the product ranges had lower margins and poorer quality debtors but had potentially a higher strategic value to competition.  With a range of cautious estimates for a sale price, it became clear that the rump business, operating with lower overheads, could prosper even without the reducing invoice discounting facility.

I initiated a series of discrete discussions with our competition for the more saleable business.  Out of the calls I made, two produced meetings that showed interest and I progressed these.  Further discussions led me to believe that we could achieve a price at the upper end of our estimates.  Nevertheless, whilst we were now trading profitably, we were far from being out of the woods in terms of liquidity and in this uncertain situation we lacked the cash to pursue the legal action.  I drove the long way back home that week convinced we could make the plan work.

Given the somewhat vague legal definition of insolvency, I wanted to be sure that we were on safe ground selling off company assets and sought specialist advice from one of the big four accountancy firms.  It transpired that to be certain that we were seen to be acting in the best interests of all the creditors, we needed to advise them of our plans and gain their agreement.  As I was returning from that meeting I received a call from one of the two interested parties advising me that they were withdrawing.  This robbed me of the opportunity to have two parties bidding against each other but all you need is one willing purchaser; so, press on.  When I got back to the office I found that sales in the previous month had failed to reach our projection.  Immediately, the finance company reduced advances against our invoices still further.

Good news came at last in the form of an encouraging offer for the part of the business we had put up for sale.  We only now needed to gain the agreement of our creditors to a new overall plan, realise the sale at the agreed sum and we were home and dry.  With the sale achieved, we would be able to pay off all overdue creditors and finance court proceedings against Offhand.  We carefully revised our rolling twelve month business plan and Tim & I started the arduous task of again travelling the country to meet with our creditors.  We presented the full story including a fall back position (if the sale failed or we did not receive the full backing of all creditors) of having to place the business into administration.  In the event, we achieved 100% acceptance of our plan.  This proved to be of no avail.

The hammer blow came several days later, when I received a call from the CEO of the competitor that had made the offer; he had heard of the precarious state of the overall business and was withdrawing his offer.  It subsequently transpired that the credit control manager of our largest supplier (who had pledged full support to me face to face) had revealed our situation to our competitor.  We discussed the situation as a board but there was no way out.  With the working capital financing now almost depleted (and soon to disappear completely) and no way of raising further finance to continue trading and fight our legal case, we had run out of road.  That same day I appointed the accountancy firm I had met as administrators and arranged to meet them at the office the following morning.

The next day I was relieved of my duties as an employee and director.  Tim was kept on for a few weeks more whilst the administrators tried to sell the business as a going concern.  The part of the business we had originally received a healthy offer for went as an asset sale for a fraction of that which it was worth immediately prior to the administration.  I lost a great deal of money and the creditors never received a penny.  Our wonderful administrators then managed to string the process out for ten long years taking all of the money they raised in their own fees.

Against the backdrop of this sad and frustrating failure, I was by this time also heavily committed in what was to become an even longer running and equally challenging saga in the other 3i investment where I was now chairman and part owner.  Whilst up in Newcastle, the Metal spinners investment was also becoming more challenging by the day.  Was it all going to end in a disaster?

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The business of life (Chapter 20 – from a dark place)

Although I was no stranger to the death of loved ones, having already lost both my sister and my father and other close relatives, nothing had prepared me for the loss of my wife.  Yes, I had mentally rehearsed the situation over and over in my mind in the preceding months as her health continued to deteriorate, trying to imagine how I would cope. At the same time I had been desperately hoping that somehow she could survive and return to her former self.  But the reality of her death, the awful, aching sense of loss, was something horrifyingly new.  Without Jean and with the certainty that she would never return the house seemed emptier than ever.

Work seemed an irrelevance and I stayed away for several weeks, never phoning or attempting to keep up to date with what was happening.  There was a human side to Gregg after all and he made it known he wouldn’t push me to return before I was ready.  With my son away at school and my daughter often out doing the sort of things that teenage girls do, life seemed hollow.  I prowled the empty house in the evenings half expecting to receive some sign from the heavens that I was not alone but all that remained were reminders of the life we had shared.  One morning, sometime in October, I awoke to find the sun was shining and I set out on a new bike I had bought not long before in an effort to distract myself.  It was one of those magical, calm days when the sun shone as it only seems to do in autumn and I cycled deep into the Dales, soaking up the beauty around me.  The world was carrying on and I had to join in.  The next morning I returned to the office.

A welcome distraction came in the form of an invitation to run a session at a pan-European meeting of our HR directors in Geneva.  I decided to take a few days holiday, took my son out of school and together we drove to Switzerland.  Already a skiing enthusiast at the age of fifteen he cajoled a visit to a ski resort from me and a new ski outfit.  Following my session we drove to Les Diablerets only to find that the snows had yet to arrive and the sun was shining brightly.  “No problem,” beamed Alex, “there’s a glacier that’s open all year round.”  The following morning, subjugating my fear of heights, I joined him on the cable car that took us to 3,200 metres.  Alex quickly disappeared on a set of hired skis while I was content to sit on a terrace in the warm sun.  Surrounded by high peaks set against a deep blue sky, I read an old copy of Women in Love for the second time and felt at peace.

When I became Managing Director I had joined the industry trade association (the Lighting Industry Federation) sitting on the governing council (comprising some 16 CEOs of the largest members).  I had been a little over-awed initially, not only as the youngest member on council, but being the only one who had not spent his entire career in that same industry.  I felt I had been talked down to and treated very much as the junior.  So, having kept a low profile for the first couple of years was then astonished to be asked to take up the role of president.  At first I couldn’t work out what had raised my profile to warrant the appointment.  But by the time I made my acceptance speech and took the chain of office in one ofLondon’s oldest clubs overlooking The Mall and with a Government Minister as my guest, I had worked out what lay behind it.

Long held, polarised and explosive views were held across the membership on a range of partisan issues.  The association (which set technical standards for the whole industry and ran a highly effective parliamentary lobby group) was facing a particularly critical issue at the time that threatened to pull the association apart.   I perceived that none of my largest competitors wished to be seen to preside over an issue that could be a PR disaster for them.  Ranged against them were a large number of members (of smaller firms) in the association holding the opposing view.  Had I been elected as a scapegoat?  Was I being set up to fail?

Deciding on a policy of diplomacy for my year of office, I felt I had to ensure that all views on the subject were heard and taken into account before a decision was made.  I had clear views of my own as to which route the association should take but reasoned that making these views known was only going to make my task harder.  And anyway, I calculated that my own company could exist equally well under whatever regime emerged.  Attempting to force my views on council was not going to work given my image as an outsider who was believed to know less of the industry than anyone else around the table.  Therefore I decided that the process should take priority, be seen to be inclusive and fair and should lead to whatever the membership ultimately decided.

I ran my council meetings in the classic chairman’s style, ensuring that all views were fully explored but never revealing a viewpoint of my own.  I found that by a policy of correct process, questioning and ensuring everyone’s opinions were sought, all relevant opinions and options could be uncovered.  I carried this process through to the wider membership, travelling to regional meetings up and down the country.  At these meetings, where I again chaired the sessions to ensure that every aspect of the subject was explored, I also never revealed an opinion.  I also held one-to-one meetings with the holders of the most entrenched views (large and small companies), always travelling to meet them in their own offices.  At the end of the year when the time came for a decision, the vote was almost unanimous, with everyone feeling their view had been heard and considered with the right decision made.

One surprising and pleasing outcome for me was that several of those who had held some of the most rigid views at the outset felt able to cross over to the opposing side without losing face.  Additionally, the few members who voted against the final decision, came to me later and said that although disappointed they felt that the process had been fair and the decision was one they could support.

By this time I had found love and companionship again and had married Denise.  A hilarious and old fashioned event took place some months before our marriage that showed yet another face to Gregg.  Having taken Denise with me to an industry function in London, I had duly filled out my monthly expenses sheet and sent it off to Gregg for authorisation with receipts attached (why MPs and civil servants can’t go through the same simple procedure still eludes me). A few days later I got one of my lunchtime calls from Gregg, who proceeded to pose questions about the industry event and my accommodation arrangements in more delicate terms than his usual style.  After a lot of beating about the bush, and in a decidedly embarrassed manner, he shared with me his concern that taking a woman who was not my lawfully married wife to a hotel for an industry function would damage my reputation!  Even when I shared the date for our impending marriage he expressed his delight but wouldn’t budge from his ‘grave concerns’ in the interim!

I was happy at the good fortune that life had once more bestowed upon me. However, I began to recognise some fairly profound changes in myself that seemed to have occurred since Jean’s death.  My entire being had previously been focussed upon achievement of my business goals.  I was always clear and focussed upon what needed to be done and prided myself on logical and rational decision making.  The exception had always been my immediate family but looking back I realised that even with them I seemed to have been somewhat removed from a real understanding of their feelings and emotions.  I understood anger and rage well enough, having always been quick to be roused but as far as others outside my close family circle were concerned, nothing had ever really touched me. People must have felt me to be cold and lacking empathy in my decision making when they themselves felt understanding and compassion was called for.

Now, since Jean’s death, I found myself crying for the first time whilst watching films.  I remember sitting sobbing uncontrollably through Truly, Madly, Deeply.  Even music began to touch me on a deeper level than ever before.  Knowing my love of Bach Denise bought me a CD of the Brandenburg Concertos.  As I listened to the opening allegro of the 6th for the first time, tears flowed down my face at the sheer joie de vivre the music conveyed. It touched me in a way that I had never experienced before.  On these occasions it was as if a veil had been lifted from my senses and I was experiencing the colours, sounds and sensations of raw emotion for the first time.  I knew it was connected with Jean’s death but it was some ten years later before I could finally begin to understand what had happened.

In an effort to improve selection of candidates for key roles in the businesses I was then running, I started a process of qualification for a range of psychometric instruments.  In the qualification process for one, the Myers Briggs Type Indicator, I was assessed as an ENTJ (Extraverted Thinking with Introverted Intuition).  Without going into a lengthy explanation, I found that there was a ‘shadow’ or hidden side to my behaviour.  As it was the fourth and least preferred of my four key behavioural functions, my preference for ‘Feeling’ in decision making was underdeveloped.  Whilst someone who has ‘Feeling’ as a preferred function for decision making would be sympathetic, tender hearted, assessing impact on others, compassionate, guided by personal values and be striving for harmony, these were not behavioural qualities I had ever used.  These underdeveloped aspects of behaviour (which differ from person to person) are referred to as the ‘shadow side’ of behavioural preference, usually only being revealed at times of great stress or under the influence of drink or drugs as behaviour completely unnatural to the individual.  Being unfamiliar in using this side of my personality it was manifesting itself in almost childlike ways.  I can still cry at films that reveal emotion but over time I have also learnt to understand others in ways that would never have occurred to me previously.  Life is richer as a consequence but sometimes much more complicated now I can see more than one perspective!

When Martyn left I hadn’t replaced him feeling at the time that none of his team (good as they were) was ready for the role he had carried out and I didn’t wish to bring an outsider into the company.  I already knew the majority of our medium and large customers well and built on these relationships with regular visits.  I maintained a regular schedule of visits to major customers by accompanying our regional managers or sales people on their visits.  In this way I was able to demonstrate my commitment to customers and sales force and, importantly, ensure I was hearing directly from both on their views concerning our strategies and service compared to competition.

One of the strangest situations I ever had to manage was that with our largest customer.  The owners (tax exiles) worked initially from beautiful offices overlooking the lake a few kilometres outside Geneva and then moved to Monaco where the tax regime was even kinder.  They had built one of the largest electrical distribution businesses in the UK and were spreading across Europe but had the strangest (and possibly the most Machiavellian) management structure and systems I had come across before or since.  There was no one person in charge of the UK and buying was spread between four regional general managers.  The buying process (designed to drive price down) was in fact so fragmented that, despite their size and potential clout, they were paying prices considerably above anyone else of their size (and many smaller firms).  Whilst I enjoyed the profits that flowed, at times their purchasing was so out of line on price I had to feed the senior management with a series of hints that would then lead them to ‘put the squeeze’ on me.  I just couldn’t run the risk that they would find out how terrible their prices actually had become!

I was now totally immersed in and enjoying every aspect of my role.  But whilst I was widening and deepening an understanding of my colleagues, our customers and the industry and steadily improving results, events were quietly and inexorably moving towards the most challenging set of circumstances I had ever had to deal with.

The business of life (chapter 19 – the end of a dream)

With my wife recuperating from her major operation and my business life far from stable, I had to develop a strategy that would allow the greatest chance of keeping everything together.  Once again I cancelled business trips and kept close to home until Jean could achieve what she considered was sufficient strength to resume some semblance of daily life.  Work was now out of the question for her and with it the dream of a degree that she had tasted all too briefly. I found strength for myself in a process of compartmentalisation.  By dividing my life into discrete segments I tried to preserve time for the things that were important in my life; time for Jean, for the children, for work and lastly for myself (cycling and playing trumpet in a terrible but enthusiastic band).

By the time Brian had moved on leaving the role of managing director of GTE Sylvania vacant, I felt I was holding the constituent parts of my life together.  Jean had encouraged me to apply for the job and I was awaiting news of the procedure.  My probing had revealed that there were at least 4 other candidates from within the global company but evidence of a selection process appeared non-existent.  Finally, I got a call to advise me that Gregg, the European President was coming to the UK, would interview me and then join the rest of the senior UK team for dinner.

I collected Gregg from the airport and drove him to The Devonshire Arms, a beautiful country hotel in the Yorkshire Dales that he enjoyed.  I had known him for approximately 6 years, although not closely.  I was aware he was a lifelong employee of the company, possessed of a mercurial attitude to the business (you never knew where he was going next) and a volcanic temper.  Seated in the elegant lounge with our coffee, Gregg got around to what passed for an interview and demonstrated that, whatever other skills he possessed, interviewing was not one of them.  It was like playing a game against a competitor who had no real experience or skill and didn’t want to be on the court.  Frustration (and more than a little doubt) was beginning to rise in me when we were interrupted by a call for Gregg and he excused himself to take it in his room.

What seemed an eternity passed while Gregg was on the phone and it gave ample opportunity for my fears and doubts to surface.  By this time I had spent 6 years with the company and had achieved significant success but had not returned to a full general management role. I was also 41 and one year behind the schedule I had set myself of attaining an MD’s role.  The thought of working under any of the other candidates filled me with gloom and I realised that I was going to have to leave if this appointment went against me.  Gregg then returned and shared with me that one of his oldest friends had died suddenly.  “Ah hell, you just never know what life is going to throw at you.” he said shaking his head and then, slowly looking at me with tears in his eyes, “Look, I’m going to give you the job.”  The evening went by in a blur shared with my colleagues at least two of whom had emerged unsuccessful.  Celebration at home later that evening was a quiet and emotional hug.

Margaret Thatcher was elected to a third term and Ronald Reagan was challenging Mikhail Gorbachev to tear down the Berlin wall when I took up my new appointment.  One of my first duties was to sign a flurry of papers legally registering my appointment.  I don’t know if it was an error or a quirk of the corporate structure but I realised before I got to the bottom of the pile that I had also been appointed as MD of the ultimate UK holding company encompassing the complex web of businesses we then owned.  Technically I was now Brian’s boss.  I did a quick mental exercise and realised that, despite this, there were still ten layers of management between me and the president of GTE!  Flat management we did not have.

Life working for Gregg was never easy.  As he was based in our European headquarters in Geneva, I might go for several months without a meeting with him.  When we did meet either on one of his UK visits or at a pan-European meeting he always wanted a formal presentation.  He always travelled with one of his team and he would simply never sit and discuss subjects with you.  His style was that you either submitted to an inquisition on a subject of his choosing or, if you went to him with a proposal he would either attack it or ensure that you made a decision and not him.    He had a combative style, which may have been associated with his lack of height (around 5′ 5″) and, given he had one glass eye, you never knew if you had his attention or not.  The only time you ever got an easy ride was when he fell asleep in a meeting after lunch.

The time I loathed most was the day following one of Gregg’s board meetings in Italy.   We had a joint venture with Thorn in a manufacturing company there and Hamish, the Thorn MD, would usually succeed in winding Gregg up with a pack of half-truths or downright lies about our UK business.  I would then get a call the following day that interrupted my lunch in the staff canteen and would have to suffer Gregg for the next half hour bellowing down the phone at me on some issue that had been fed to him.

Being promoted ahead of my colleagues within the company I had worked within for years was a new situation.  All of my peers knew me well but not as their boss and I realised that, even putting the situation with Martyn to one side, they may not have welcomed my appointment.  I decided that this was irrelevant as my new role required a fresh start.  I had admired Brian and worked hard for him but I had to pursue my own style.  The first change I made was in not moving into Brian’s old corner office suite but staying put in my own.  Our margins were under pressure at this stage and it provided me with an excuse to not replace my previous position of Marketing Director.  The format of our management and board meetings I changed and was scrupulous in playing the role of chairman / facilitator.  I found that, with a combination of ensuring everyone’s full contribution and a variety of problem solving tools, we could resolve previously difficult issues with the team invariably making a unanimous decision without me having to reveal an opinion.

Worried about morale within the company, I instigated a company wide climate survey.  Results showed that the number one issue was a distrust of management, with a widely held belief that employees were not being consulted or informed on key issues.  Following discussion amongst my senior team, we agreed that I should speak to the entire company, share the survey results and ask for volunteers to join teams, to address each of the key issues (they had all recently been trained in problem solving techniques).  On the day of the meeting I made the assembled employees a number of promises.  Firstly, I would only hear the findings or recommendations at the same time they did.  I would also agree to any recommendation the teams made so long as the cost did not exceed our local country budget level, or contravene international corporate policy (if a recommendation did, I undertook to sell it to our company president).

I seemed to hold my breath for the next month, staying away from any of the team meetings and did not quiz any of my direct reports as to progress.  We assembled in the staff canteen on the day the results were due and the atmosphere I can only describe as electric.  Would the employees pressure for unrealistic changes?  Would my team leaders have handled the process democratically?  One by one each of the four teams presented their analysis and their recommendations.  I need not have worried.  The changes requested were surprisingly modest and reasonable and after asking further questions I was delighted to say, “OK, go ahead and implement everything and you will all receive regular feedback on progress.”  I learnt that together we could build a much more decentralised style of management, enabling us to make significant progress.  It also taught me a lot about trust and it taught me to empathise more with the feelings and views of the entire company.

We made rapid progress and my first year as MD ended strongly and over budget.  The new structure within the sale team seemed to be working better and emphasis on refining the customer groups we worked with was producing improved margins.  However, despite this and the more harmonious climate amongst the management team, I was sad to receive Martyn’s resignation.  He had received a good offer and had made up his mind to go; all I could do was to wish him well.  I missed him but it was almost fifteen years before we met again and resumed our friendship but that’s another tale.  Sad as I was to see Martyn depart another event proved shattering and changed me forever.

Despite battling on and regaining some semblance of normality following her operation for a brain tumour, Jean had entered a slow decline.  One Sunday morning driving herself back from church just half a mile down the road she lost control of her car, hit the kerb and came back complaining of severe pain in her neck.  Urgent investigation showed that the cancer had spread to multiple sections of her spine, which then severely restricted her ability to be mobile.  We made enquiries and managed to move Jean into a Marie Curie hospice a short distance from our house where she spent the remainder of that summer.  The staff were angels, caring for her constantly but her decline was relentless and one night in late September whilst I was by her side she passed away.

We had been married for twenty years and neither my two children nor I knew how we were going to face life without her.

The business of life (Chapter 13 – hubris strikes)

The once enjoyable relationship I once had with Akai colleagues in Japan as their distributor, was changing quickly into a nightmare now I had joined the new business in the UK as an employee.  Constant requests for information and action came fromTokyo at all hours and I learnt quickly that the Japanese would simply not accept the failure of any plan or compliance with mere instruction.  Decisions seemed to take forever and I found that the much vaunted system of collective decision making in Japanese companies wasn’t because it was more efficient, or more motivational, or whatever the text books were claiming; it was simply to avoid personal responsibility if things went wrong. Seppuku may have been no longer practiced in its literal form in 1980 but it certainly lived on in a metaphorical sense.

The promised further injection of capital never materialised and more than once I was required to present a re-working of the financial budget at a week’s notice or less and to jump on a plane toTokyo to present it.  The journey to the bank also became a well trodden path delivering regular cashflow projecions.  On one occasion when I met Yokose at Heathrow one Saturday afternoon for yet another trip he looked like death.  It transpired that he had last slept on Wednesday evening and had continued to work through the next two nights merely allowing himself a change into pyjamas and slippers.  He worked all through the flights toTokyo and again through Sunday night following the inevitable initial rejection of our latest business plan.  Witnessing this I began to feel increasingly uneasy over my decision to join a company with such an alien (and to me inhuman) culture.

I was beginning to become selfish when it came to working beyond 18 hour days and the stress was rising.  One evening arriving home yet again extremely late and completely exhausted, my phone rang and I answered it to find  it was one of the Japanese on the phone demanding I return to the office to deal with something minor.  “It is your duty!” I was informed when I suggested that it was not an emergency. I snapped, said something inappropriate and slammed the phone down. Grabbing a bottle of Scotch, I slumped in a chair and knocked back a stiff shot.  The next thing I remember was finding myself on the floor clutching my stomach feeling like I had been stabbed through.  Although not diagnosed precisely as such at the time, subsequent events led me to realise that this was the start of stomach ulcers.  My doctor gave me stern instructions to take three weeks off, stay away from alcohol and to take things easier in future.

Gordon was supportive but more than a little surprised when I declined a drink with the lunch we had together just before I returned to work.  The pressure from Tokyo to increase sales was growing weekly.  Our results were still improving strongly (and were on course for a 50% total increase since the new company started and would be trending steeply upwards at a running rate of £13m p.a.) but this was still not enough to satisfy our masters.  The problem for us in theUK was not profit but cash and they would not accept that the relentless pressure to increase sales was fuelling a demand for working capital we couldn’t finance from our own resources. Tokyo management had reneged on its promise of further cash injections and our bank was getting more and more nervous about increasing our facilities.

My large marketing budget soon came under attack and I fought back strongly with all the logic and all the evidence I had that our strategy was working.  I put forward the most robust evidence of the brand share increase we were gaining (especially against arch rival Pioneer, which should have been greatly satisfying to Akai) and the danger of reducing momentum.  I felt let down; Akai had agreed my business plans, promised more capital support and we had delivered everything and more that been promised in terms of results.  Our marketing mix was working and I wasn’t about to roll over and see ourUK position worsen.  My natural inclination to meet opposition head on came to the fore and I continued to resist.  Sorely in need of a break (and heeding the warnings about my health), I departed with the family for a glorious holiday touring California.

Returning refreshed I found that the situation had worsened, finding Andy planning a frankly amateurish sales promotion campaign, which he had not discussed with me (and was now trying to avoid doing).  Yokose started in on me immediately, telling me that Andy had assured him that this promotion would compensate for cancelling the majority of our communications programme. I responded that the problem wasn’t one of our dealer network not buying enough, it was of chronic under-capitalisation.  At a time of intense competitor activity to establish leadership in the new VHS and racked HiFi systems, I reasoned that we would lose all of the ground we had won.  Worse, we would find it almost impossible to recover again.  Yokose simply would not listen and fell back on that logic resistant mantra that seem to be drilled into Japanese people from birth; “We have to manage somehow.”  I realised further discussion with him was impossible and beat a retreat thinking that perhaps I could yet convince him.

The following week I was working in my office one afternoon when I heard three hefty thumps on the dividing wall between my office and Gordon’s (his usual manner of attracting my attention).  I smiled to myself and walked into his office.  By then we had an easy going relationship (except when he was ‘in his cups’ after one of his ‘networking’ lunches) and I expected he wanted to chat.  “Boy, you’ve got a problem with the Japanese.” he said immediately and thrust a plain white envelope across the desk at me.  I went cold realising what was in the envelope.  “If this is what I think it is, is the situation negotiable?” I asked, looking him in the eye.  “I’m afraid not,” was the response, “but you’ll see it’s generous and, between you and I, I’m happy to tell anyone who asks that you resigned, needing a change or whatever you decide to say, and are still working for us on a contract basis.”

I hadn’t exactly put the sword in my own hands but the effect was the same.  I had been fired.

 

My life in business (chapter 2 – a false start)

You could say that I had it easy when, at the age of fifteen, I walked straight into an office job.  Many of my neighbourhood contemporaries followed fathers and uncles into ‘the print’ (nepotism was and is not the exclusive practice of the upper classes it is portrayed to be today).  Still they earned comparatively vast sums, sharing the cash proceeds of additional & fictitious men signed on for the particularly lucrative Saturday night-shift under such names as M. Mouse & D. Duck.  Little did they know their future as they waited unknowing for Messrs Shah and Murdoch to make dinosaurs of them.  Well, perhaps I did have it easy at first; with unemployment hovering around a genuine level of 350,000, competition for jobs was low.  But did it ensure I was set up for life?  Did it mean career success would surely follow?   That was something else, which as we’ll see was far from straightforward.

 Work in the swinging sixties started well for me.  Learning the basics of clerical work in the world of industrial and consumer finance at the Mercantile Credit Company was easy enough.  The language, culture and scams of the industry were quickly assimilated and I was soon made assistant to the office manager and commuting into central London on my first motor bike (my first experience of the NHS A & E service following soon after). The routine was stultifying and even the typists were boring.  One highlight full of excitement was being despatched to repossess an ageing Lambretta from an unsuspecting debtor.  But parallel to my commercial endeavours was a social world that was exploding into espresso bars, pubs, rock and roll, jive, miniskirts and a growing lack of deference to the establishment that was especially refreshing to an ex catholic organ pumper fluent in church Latin pronunciation.  Penguin’s publication of Lady Chatterley’s Lover did much to provide additional and extremely relevant study material.

London’s music scene was exploding.  My haunts soon became the 100 Club, the Marquee, the Flamingo, the 51 Club and Eel Pie Island.  Flush with money, or so it seemed, I lived a double life.  I spent money on sharply tailored bespoke suits for the office where I tried hard to appear successful, but office hours over, a carefully cultivated downbeat style was adopted for nights out.  I still drank with my old South London friends in various local and East End pubs on Friday nights but my alter ego would meet with a group of more eclectic friends in a variety of West End and Hampstead coffee bars and pubs. I was never much of a drinker though, and it would be a rare occasion when I was not sober.  A hard drug scene had also blossomed into the mainstream of the London club scene but it never, ever, even tempted me.  My avid reading of the lives of my jazz and blues heroes had taught me that it was drugs that usually destroyed talent.

Carried away with the London jazz scene, I bought a trumpet and having soon gathered sufficient fellow adherents to the New Orleans style, I formed a band, the Storyville Shakers.  With enthusiasm exceeded only by an execrable lack of talent, we tried hard to swing into the London scene with a Sunday lunchtime appearance at a pub in decidedly unfashionable Lambeth.  The experience soon provided my first encounter with an iron law of music; organising a band is worse than herding cats – leadership 0, anarchy 1. I continued playing, sitting in with any bands I could.  A highlight was an afternoon spent playing in a band on the Aldermaston CND March.  I still remember a soaring solo I made (cribbed note perfect from a treasured record) on ‘Just a closer walk with thee’ as we marched past the Houses of Parliament. I had rebelled enough to have made a statement (or so it seemed at the time).

Soon, a serious manifestation of the World’s risky existence settled on my consciousness in the form of the Cuban Missile crisis.  Huddled over a pint in the Lamb & Flag in Covent Garden with the Evening Standard trumpeting imminent nuclear annihilation, I feared my life was over before it had begun.  However, a few long days later, the crisis passed when Khrushchev blinked first.London resumed its swinging and I was able to concentrate on succeeding in both job and social life.  But, despite the success of the social revolution, there were still only 24 hours in a day and every one was taking its toll on me.

On a rare evening when I had actually gone to bed before midnight (if at all), I woke choking and coughing violently.  Switching on the light revealed a scene more a slaughterhouse than a bedroom; I was haemorrhaging. The coughing itself was nothing new; it had been with me for months along with a severe reduction in weight.  A few days before, finally realising all was not right, I had taken myself off to the doctor, been examined and referred for an x-ray that same day (things in the NHS worked back in the Sixties). Seated that afternoon in front of a fatherly looking consultant, he informed me that I had a shadow on my right lung and that it was TB.  The shock ratcheted up when he wanted to hospitalise me that same afternoon.  Blind panic set in; my world really was ending.  How could I just go into hospital that same day?  I argued and pleaded for a few more days to pull my mind and my affairs together. My pleading worked and I spent the next few days telling my girlfriend, band, other friends and employer that I was going to be away some time. That delay was a big mistake.

Whisked away in an ambulance with bells clanging (that’s what they did in those days) I was incarcerated in Grove Park Hospital, a TB sanatorium in South-east London, for what was an indefinite period.  Originally built as a workhouse over a century before, the building retained an all pervading grimness throughout.  The initial shock of restriction of liberty was far greater than that of the bloody incident itself.  Once I adjusted and gave myself over to my narrowed horizons, life was not too bad; apart from my backside which was fast becoming a pincushion from daily injections of the then wonder drug streptomycin (which was going to have very unfortunate side effects years later).

Daily ward routines were made tolerable by a delightful young Irish trainee nurse who used to chat to me (whenever Sister was safely out of sight) and share tales of her fumbling attempts to learn the art of injections with the aid of an orange.  Several days later Bridget arrived looking exceptionally nervous.  Sister declared that nurse would be giving me my injection that day.  Oh, shit! Her very first live attempt!  Buttocks bared, teeth & cheeks clenched and desperately trying to remember which of the many saints to whom prayer was likely be the most efficacious, I was most painfully impaled.  Slowly, over the next few weeks, the cough departed and weight started coming back.

My fellow inmates and I soon settled into a routine of sorts.  We all had to produce a urine sample on a weekly basis and much discussion and ribaldry centred on the varying colours and hues of our productions, lined up on the window ledge in the bathroom on Monday mornings.  Ours was a large ward with few patients, simply me and a young Jamaican lad, two Pakistani seaman and a middle aged Greek shopkeeper whose command of English seemed to be based around the ceaseless use of the interrogative “innit?”  One day a month or so into my confinement our tranquil existence was shattered by the arrival of an Irishman of the peripatetic persuasion.  Possessed of a particularly aggressive nature, he soon disrupted our harmony and confirmed the stereotype by disappearing one afternoon only to return late that evening.  He was not just drunk but roaring drunk, alternating bouts of atrocious singing with random acts of aggression.  The night sister merely attempted a feeble admonishment before locking the ward doors and leaving us to it.  A wretched and sleepless night followed.  My first encounter with the caring side of the nursing profession.

 One afternoon my old boss arrived and stayed long enough to tell me that I had been fired, leaving me with my ‘cards’ and a bag of grapes.  After several months I was informed that I would be able to take short walks in the grounds; oh, joy!  Clad in now ill-fitting clothes I wandered the gardens surrounding the hospital soaking in a state of semi freedom. Illcared for and downright scruffy the gardens might have been but to me they were a paradise found for reflective thought.  I soon decided that life was going to have change completely.

One bright winter morning some weeks later, I was discharged back into the world as a changed person with no career.  What now?

Image courtesy of FFFFound.com

When the Perfect Storm hits (part 3 The aftermath)

With Richard gone I appointed Tim as MD, we started the hunt for a finance director and commenced the process of forecasting the next twelve months ahead.  We quickly discovered that, such was the mess, it was not possible to establish the true working capital position.  Our auditors hired us the services of an experienced accountant who quickly set about the process of investigating the current state of the company’s books. The management accounts were not worth the paper they had been printed on and, worse, the VAT had not been reconciled for months. Whatever vestiges of empathy I had had for Richard quickly evaporated.

With a twelve month plan completed, Tim and I presented this to our finance company and visited every one of our key suppliers to explain the current situation and to present our plans.  Luckily, we gained the full support of everyone.  Tim proceeded to do a remarkable job as the new MD, working tirelessly to rally the whole team, whilst I started the process of seeking a new finance director. With the aid of our VC, we quickly met and appointed a very experienced FD who quickly set about bringing the company’s books up to the required standard.  With the correct information guiding us, and the whole team working effectively, sales and margins slowly started to improve.

By mid year (our second) we were trading profitably but cash remained as tight as ever.  Further close examination revealed that our finance company were slowly but surely reeling in their loan by reducing their advances against our invoices.  It was galling in an extreme to realise that, had we not had the actions of the vendor and his illicit cash strip, we would have been in a healthy cash position with no liquidity concerns. However, with Offhand (the vendor) again doing a disappearing act at my latest attempt to arrange a dispute resolution meeting, it was clear that we were running out of time before we had to go to court.  Although we were sure of the odds of winning on our main claim (the cash strip), there was unfortunately (due to the poor state of the books before our purchase) a degree of uncertainty over the smaller claim.  With the prospect of enormous legal bills even if we won the main claim, it was clear that drastic action was needed.  My first foray into business ownership looked like it could hit the rocks.

With the business trading in two entirely separate markets, with two different product ranges, it was apparent that, potentially, we could package one half of the business and sell this to a competitor.  One of the product ranges had lower margins and poorer quality debtors but had potentially a higher strategic value to competition.  With a range of cautious estimates for a sale price, it became clear that the rump business, operating with lower overheads, could prosper even without the reducing invoice discounting facility.

I initiated a series of discrete discussions with our competition for the more saleable business. My approach was based on the premise that having recently acquired Riverbridge, I was conducting a exploratory review to ascertain if we should either expand the business by acquisition of a suitable competitor (were they interested in selling) or to dispose of one business to concentrate on the other (were they interested in acquisition).  Two such meetings sparked interest that I progressed leading me to believe that we could achieve a price at the upper end of our estimates.   Nevertheless, whilst we were now trading profitably, we were far from being out of the woods in terms of liquidity and whilst in this situation we lacked the cash to pursue the legal action. I drove the long way back home that week convinced we could make the plan work.

Given the somewhat vague legal definition of insolvency, I wanted to be sure that we were on safe ground selling off company assets and sought specialist advice from one of the big four accountancy firms.  It transpired that to be certain that we were seen to be acting in the best interests of all the creditors, we needed to advise them of our plans and gain their agreement.  As I was returning from the meeting I received a call from one of the two interested parties advising me that they were withdrawing.  This robbed me of the opportunity to have two parties bidding against each other but all you need is one willing purchaser; so, press on.  When I got back to the office I found that sales in the previous month had failed to reach our projection.  Immediately, the finance company reduced advances against our invoices still further.

Good news came at last in the form of an encouraging offer for the part of the business we had put up for sale.  We only now needed to gain the agreement of our creditors to a new overall plan, realise the sale at the agreed sum and we were home and dry.  We would be able to pay off all overdue creditors and finance court proceedings against Offhand.  We carefully revised our rolling twelve month business plan and Tim & I started the arduous task of again travelling the country to meet our creditors.  The full story we presented included a fall back position (if the sale failed or we did not receive the full backing of all creditors) of having to place the business into administration.  In the event, we achieved 100% acceptance of our plan but to no avail.

The hammer blow came several days later, when I received a call from the CEO of the competitor that had made the offer; he had heard of the precarious state of the overall business and was withdrawing his offer. It subsequently transpired that the credit control manager of our largest supplier (who had pledged full support to me) had revealed our situation to our competitor. We discussed the situation as a board but there was no way out; with the working capital financing now almost depleted (and soon to disappear completely) and no way of raising further finance to continue trading and fight our legal case we had run out of road.  The same day I appointed the firm I had met as administrators and arranged to meet them at the office the following morning.

Over the next 24 hours I was relieved of my duties as an employee and director.  Tim was kept on for a few weeks more whilst the administrators tried to sell the business as a going concern.  The part of the business we had originally received a healthy offer for went as an asset sale for a fraction of its worth immediately prior to the administration.  I lost a great deal of money and the creditors never received a penny.  Our wonderful administrators then managed to string the process out for ten whole years and took everything they raised in fees.

What had I learnt from all this?

Without a shadow of a doubt, we were robbed by our vendor.  When making an acquisition you can have all the guarantees and indemnities you and your lawyers can negotiate but you still take a hell of a risk.  Fighting legal claims is a very expensive process.  The only satisfaction I got was hearing some years later that Offhand’s mistress threw him over and his wife divorced him, winning most of his ill-gotten gains.

The references that had been obtained for Richard had been a fairy tale; I discovered that he had run a prior business into the ground in similar fashion.  Over the years I’ve found that references are frequently a waste of time, or at least, it’s not what people say that counts it’s the bits they leave out.

If our experience of appointing one of the big four firms is typical, the administration process does not seem to work in favour of the creditors.  Without exaggerating, I’d say we (and our creditors) were robbed on the way out as well as on the way in to this business.

Tim went on to form his own business and last heard was making a very good job of it.  Of all the people I’ve worked with, Tim ranks amongst the very best.  All of the team who worked with us through those trying months did their best; I only wish for their sakes we could have pulled it off.

Had I made horrendous mistakes? I could blame myself but apart from believing in Richard and supporting the acquisition in the first place, I think I made the appropriate decisions in a timely fashion.

 Yes, if you throw enough hot c**p at a blanket some of it will stick.  Shortly after acquiring Bridgestream my favourite VC and I did two more deals; one soon looked like it was also heading to the graveyard when we uncovered a horrendous loss and the other quickly threw up a very bad case of fraud (and years of legal fees).  These are tales for another day but I did learn to multitask as both of these situations occurred at the same time as Bridgestream!

Bye for now!

Image courtesy of seasonsofthemoon.com