Every time I am negotiating Virtual CFO services, I inform the client that there will be times when we won’t agree with each other. I do this because I don’t want the client to be surprised when I tell them what I think they need to hear instead of telling them what they want to hear.
I owned a logistics company for four years in the mid-1990s. During the first two years, we were contracted to run a logistics firm owned by a person who also owned one of the larger truck lines in Tennessee. My partner and I had a handshake agreement that I would be given the first option to purchase the company if he ever wanted out of the partnership. Unfortunately, I learned that handshake agreements are worth the paper they are written when the business was given to my partner’s uncle and I was given twenty-four hours to vacate the premises.
As this was occurring, my father asked me if I wanted sit down with him and go over my company’s past performance and future plans (my father has owned, run, and helped run businesses since he was in his early twenties and I value his opinion and insight). I took him up on his offer and we spent several hours discussing the company I had built and my future plans. At the end of the conversation he recommended that I look at my situation as starting a new business, like I had done two years before. He also suggested that I lay off my employees and operate the company by myself until I knew the effect the changes would have on sales. He felt that I should plan to use my cash reserves to rebuild the company instead of it using it for employee’s payroll.
Even though I valued his opinion, I decided to keep my headcount steady. I had put together a good team and I didn’t want to lose them. Five months after making this decision, the bottom fell out of our primary market (imported raw commodities). Within nine months, I had laid off all of my employees. I didn’t take my father’s advice, but I have always respected that he gave me a neutral opinion that probably would have helped me avoid bankruptcy two years later.
I tell clients what they need to hear because it is the right thing to do. I have seventeen years of small business sales, operations, and financial experience and I feel I have a responsibility to my clients to share this knowledge with them in order to help increase the odds that their business will be successful.
