Heart rule my head… Moi?

I saw my old car yesterday.

Very strange because I never thought I would be able to recognise it. I was walking down a local village high street when I spotted a small scrape on the rear of a wing mirror. It was caused when I drove up to a car park exit booth and the wing mirror just scraped the casing. So fine that it took a thin sliver of paint off, a scrape that you couldn’t replicate even if you tried!

And that was what I saw yesterday.

I got rid of that car, a Jaguar XKR cabriolet, because my head told me that it wasn’t financially viable. With the cost of petrol seemingly rising on a daily basis it had become just too expensive to run. So I over ruled my heart and quite sensibly said goodbye to ‘my car’ and replaced it with a very nice looking Audi A5 cabriolet with a diesel engine. Much more economical.

But it wasn’t until yesterday that I realised that actually I’m not very sensible at all!

When I saw ‘the Jag’ I realised that driving in the Audi had become boring. Don’t get me wrong the Audi is a very reliable car, very functional, very German. And the Germans have after all set the standard for cars.

But just…… boring.

I realised that I no longer enjoy driving….. anywhere. Driving has become an activity like walking up the stairs, it’s something you have to do to get from one place to another.

I no longer get up early of a morning ‘just to go for a drive’ with the roof down. I don’t jump in the car to pop up the shops when I don’t need to go shopping. And I don’t relish the idea of taking the hood down no matter what the weather.

So yesterday when I saw ‘my car’ I realised that I was right to let it go and get a sensible car, because financially I’m tons better off. But actually my heart still yearns for the joy of ‘the Jag’. A car that when you drive it you feel happy, you feel emotional, you experience joy at the responsiveness, the thrill as the exhaust burbles and the sheer delight of being ‘at one’ with ‘the car’.

So let my heart rule my head… Moi? Most definitely! (next time!)

Only just heard about Gary Speed. Shocke

Only just heard about Gary Speed. Shocked to hear. Very sad. http://ow.ly/7GaYM

Limited Company Abuse Still Rife

Bad debt can be personal

I’ve run a marketing agency with my wife since 1988. Through a combination of financial checking, a dose of good clients and a sprinkling of luck, we’ve managed to avoid too many bad debts.

Generally we’ve only had bad debts when clients have hit problems, that is, the bad debt had not been solely of their making but through external factors. But Limited liability company status still allows unscrupulous business directors to abuse this protection to avoid paying legitimate debt.

We had two bad debts over the past 5 years which illustrate that Limited liability status can be used the right way or the wrong way.

Client 1: was a property company. We had done significant branding, launching and ongoing marketing promotion activities with them over a 3 year period. They were always very open with us and always paid on time. Then the recession hit and property companies got hit hard, as did our client. The directors talked to us, asked if their current debt could be paid on an agreed schedule and halted any further work to ensure their debt did not increase. We agreed to this approach, but unfortunately the market got the better of them and they had to suspend trading. We ended up with a bad debt of a significant size, which we had to write off.

Client 2: was an art company. We had already carried out a lot of marketing activities for the art company managing director, but this was working with him in a different company. Our mistake was not carrying out a financial check on the newly created art company – we had already completed financial checks on the existing company. We started work after receiving an official order from the art company, completed the work, had it approved and then we invoiced. Then the company delayed and delayed and delayed payment. We had numerous conversations where the director promised payment both verbally and in writing. When the debt had become too old we started legal action to retrieve the debt. At this stage the director informed us that he was shutting the art company down and that they no longer had any assets. He then started a new company in the same business area with the same products but with a different name. When challenged about this he was openly callous about the fact that the art company was a punt that didn’t work out as it had been set up and he had no intention of paying the debt, then or when he first ordered. He became verbally abusive and taunting by openly inviting us to “just try and get money from the company”.  In essence he was using our money and other suppliers to fund a business that he knew was a risk and the risk capital was ours and other suppliers. He was abusing the protection of Limited company status and in the process affecting other businesses. Fortunately for us the debt was small and manageable. However, further investigation by us showed that this director had done this before, was a director of numerous companies and I would imagine will do this again.

It hurts – but not financially

Of the two, the debt from client 1 was the largest. The debt from client 2, was minimal but it hurt the most. It hurt because we made the fatal mistake of trusting someone from a successful business relationship, assuming that same trust would be carried through to the second company. We are not blameless because we didn’t carry out the financial checks. However, this company director’s blatant disregard to suppliers was a demonstration of how human nature can abuse the law. It hurt because the director openly and blatantly used our company with no intention of paying when the order was placed. Worse is the fact that the law enables a business person with this moral and ethical approach to start, run and close a business with no penalties. We could have chased him through the courts but he knew that the small size of the debt meant that we would have spent 10 times the amount on legal expenses and when the courts found in our favour (which the solicitor said they would) it would be unlikely that we would receive any money or that the director would be struck off. So in essence he knew and abused the law to his ends. Frustrated does not explain how we felt. Hurt does not always mean financially hurt, businesses are run by peopel with feelings as well.

But there are good directors out there…

While there must be hundreds of directors that have this same view and abuse other suppliers, there is hope as good human nature does shine through.

This week, three years later, the directors of client 1 contacted us. They apologised again for the debt that they had caused, even though the sudden and dramatic market downturn was something they couldn’t have planned for. Since their company closed they had started a new company in a different business area and were now in a situation to clear their three year old debt. They have no legal requirement to clear this debt, their company folded and hey we’re operating within the law. However, as  business people, with strong business ethics and commendable personal morals they have a personal requirement to operate professionally and a personal desire to clear the debt. All I can say to this is ‘how refreshing’.

I believe as I said that our business approach and not dealing with companies that have poor financial ratings has protected us through so many years of trading. But it is a lesson to be learnt that you can never assume or trust always check.

Memory calls…

As a final note I wanted to recall a memory that has sat with me which now becomes relevant. As a young lad I remember sitting with my parents watching Esther Ranzen on That’s Life. I was too young to understand but I vividly remember a business article that got ‘out of hand’. It was basically about a team of directors that had set up a company, transferred the assets and products – legally – to a second company, shut down the first company and told all their suppliers that they couldn’t pay. Their new company was called exactly the same bt with a 2 on the end of the name. Same products, same directors and no liability to their old suppliers. It got out of hand because the show introduced directors to their disgruntled suppliers.

The show ended with Esther saying that the law had to be changed to stop directors flouting the law…. seems that never happened.

Have you ever experienced this?

I can’t believe that we are the only company that has been abused in this manner.We are fortunate that a vitriolic debt has only occurred once since 1988. Have you ever experienced situations like this? What happened? And how have you recovered? I’d be interested to know