Boss Life (8 page)

I ask her to e-mail me photos of the damage. They arrive the next day. They're terrible, taken at very close range with a shaky cell phone, but I think I can see something. In the universe of scratches, they rank about 1.5 on a scale of 1 (undamaged) to 10 (chewed by wolves). In other words, marks that are normal for any table in actual use. Meanwhile, I asked Dave Violi: did anything go wrong? Not as far as he knew. He built up a very thick layer of finish to get the look the client wanted, but the process had gone well.

It looks as though the client is overreacting to something that they did, but they don't see it that way. They still owe me more than $7,500. Blaming them isn't going to make them happy or get me paid. But it's impossible to repair a finish like this on-site. The chemicals in the sprayed finish are noxious, residue would end up all over the room, and if you don't recoat the entire top, the newly sprayed section will look different. If I am going to respray it, we will have to ship the top segments back here. Despite the logistical headache, I'm leaning toward agreeing to respray. Any alternative is likely to turn into a Stalingrad—an endless, damaging battle, most likely ending with bad feelings from the customer and an unpaid balance. A respray will cost a little bit less than the balance due, but at least I will have satisfied the customer. Unless, that is, they damage the table again. I really need to figure out what happened out there.

I make the trip on March 27. My journey begins at four-thirty a.m. For the convenience of nobody, Philadelphia TSA has decided that all travelers from four terminals will have to go through one security line. That's an extra forty-five minutes that I didn't plan for. I end up jumping to the head of the line and sprinting to make my plane. Two flights and a long drive later, I walk into the boardroom, the executive assistant at my side. From the doorway, the table looks perfect. “You have to look from a certain angle,” she says. I look from a certain angle: nothing. “You have to get up close.” I get up close. When my head is inches off the tabletop, I can see some fine scratches. Normal wear. But I make sympathetic noises. “Do you think the finish is defective?” she asks. The honest answer is “No, you did this and it's your fault.” Instead, I ask her what had been on the table. She goes through the inventory: glassware, placemats, folders with notepads. She's been very careful. I ask about unglazed mug bottoms—common culprits—and she tells me she thought of that and sent their mugs to a local potter to be reglazed. At this point, the CEO comes in. He says he's disappointed that this happened. He really loves the table; in fact, one of his board members even asked who made it because he's interested in having us make him one. And as soon as we fix this, he will tell me who it was. (CEOs of billion-dollar companies don't get there by being stupid.) I surrender. I agree to retrieve the pieces in mid-April and return them three weeks later, before their next board meeting. The boss offers to pay for a rental truck, but we have to fly out my shipping manager to manage the packing and loading process and drive the truck back ourselves. It will be a huge, expensive pain.

I am still mystified as to what caused the scratches. We take out all the dishes and identify the culprit: it's the mugs, after all. The local potter didn't reglaze the bottoms, only painted them with varnish. I dragged one of the mugs around on the table, and voilà! Tiny scratches.

I'm back by midnight, exhausted. I feel like a chump for knuckling under, but arguing would have resulted in a much bigger mess. When I get home, I find a surprise. On our front door, my wife has taped up one of her drawings—a cartoon showing me with my arms raised in triumph over a kneeling businessman, who is handing me a large stack of dollar bills. It didn't turn out that way, but it's nice to have some family support.

This is a business book, but you can't understand a boss without knowing what he goes home to. I have been blessed with a happy family life. I met my wife, Nancy, in college, when she was eighteen and I was nineteen. Immediately after graduation, we moved into our first apartment together and I opened my shop. Nancy has been my bedrock during many turbulent years. She grew up in a family with intermittent income and she can deal with a life of financial uncertainty. And she has proven equal to the challenge of raising a child with special needs.

We have three sons: eighteen-year-old fraternal twins, Peter and Henry, and a younger boy, Hugh, who is sixteen. Hugh and Peter are typical kids and attend the local high school. Henry is severely autistic. We knew something was wrong quite early, as his twin brother developed normally. Henry lagged behind in every way. He received an official diagnosis at the age of two. After that came years of therapy, special classrooms, speech therapists, and behavior experts. Nothing cured him.

At age eighteen, Henry still has the mental development of an infant. He cannot speak—he tries, but the brain development that allows the tongue and lips to form a full range of words never happened. He cannot read. He has little interest in other people. He won't watch TV. He likes only a few things: to be driven around in a car, to listen to a particular Beatles CD over and over (turned up as loud as the boom box will go), and to eat. He is 6-foot-3, 205 pounds, and still growing fast.

Henry is volatile. Since he can't talk, he has great difficulty communicating what he wants. We've learned to anticipate his needs, but sometimes he weeps with frustration, or slaps his own head repeatedly, or jumps up and down bellowing at the top of his lungs. And if someone gets too close while all this is happening, he will attack them—grab them around the neck and try to throw them to the ground.

Before age twelve, Henry was usually very calm and cooperative. When he started puberty, the violent behavior appeared. By age fifteen, he would attack my wife out of the blue, once or more a week. Now, at eighteen, the hormonal surges are abating and the tantrums becoming less frequent. But he is much, much larger. The episodes are harder to handle. Nancy is wary about being alone with him, but even so she'll take him with her in the car as she does errands, and he behaves well. He likes driving and going to the grocery store—it's like a food museum for him.

At first glance, he's a tall, handsome teenager. It takes a moment to see that something is off. Fortunately, people are quite tolerant of him. Even if he bellows or bursts into tears, they take their behavior cues from us. If we treat whatever he's doing as normal and expected, everyone stays calm. It's embarrassing, though, to be in public when he's difficult. It doesn't keep us home all the time—he gets bored, and so do we. Not to mention that two hundred pounds of autistic boy jumping up and down has cracked our plasterwork and loosened our stair treads. So we take him out, and take our chances.

Henry's twin, Peter, is a direct refutation of both astrology and the notion that Nurture is more important than Nature. Born two minutes ahead of Henry, he couldn't be more different. He's been accepted to the Massachusetts Institute of Technology on early decision and has inherited his mother's gregarious nature and easy charm. Our younger boy, Hugh, has different interests, but he is smart and a very diligent worker. Maybe we've been compensated for the difficulties of raising Henry with these two.

I'm not a hero for running a business while raising a special-needs kid. Everyone has some kind of trouble in their life. Every boss needs to make a decision as to how to deal with pressure. Work all the time, drink, cheat on your spouse, yell, road rage? Or more benign choices? Take your pick. If you can. High levels of stress drive you to your worst behavior.

I had some tough days before the twins arrived, but in retrospect those years were a lark. The day you have children, you enter a different world. Mix parenthood with the problems of a business that doesn't actually make money, and stress is a much bigger issue. I've tried to keep the work problems at work, but sometimes I'd bring the stress home and would suddenly explode over some stupid thing. It was usually an innocent request made by my wife, assuming that
of course
I would be able to supply the money or time required. Then the fight would start, with me shouting that she had no idea what was going on at work, and she replying with equal vigor that I was always promising that someday the business would go well and I would have more time and money for the family, and it never happened. Every couple has a fight that just keeps coming back, and this was ours.

When the recession arrived, and I was struggling every day to keep the doors open, the stress returned to unbearable levels. I decided that the only way I could deal with it would be to tell Nancy everything that was happening at work, good or bad, every day. She hated hearing it at first, as it reminded her of difficult times in her childhood. But we ended up getting along much better. Keeping a barrier between my work and home lives was a mistake. When my wife had a clear picture of the situation, she became an ally instead of an adversary.

My kids are old enough to take care of themselves now, and Henry is away from home much of the year. When he comes back, life is harder. But as long as the business does well, I'll be in decent shape.

—

ON THE LAST FRIDAY
of the month, I review our sales numbers and they aren't good. We end up selling just $135,732 in March, drastically undershooting my $200,000 target and leaving us well short of our quarterly target of $600,000. Sales for the first three months are just $543,003. Nick had the worst month, booking only $25,502 in orders. Dan did better than January and February, closing deals worth $49,783. Neither of them sold anything after the eighteenth. I am the champion of the month, with $60,447 in orders. “Best Salesman” is a prize I didn't want to win. Watching Nick and Dan falter makes me feel very uneasy.

The sales pattern for March is odd. The number of orders hasn't decreased—it's actually grown from eleven in January and twelve in February to sixteen in March. More customers should be a good thing, but in this case, the additional orders don't amount to much. The value of the five smallest orders adds up to $5,854. Peanuts. And the remaining eleven average just $11,807. This is well below our average order for the first two months of the year, which was $17,688.

The size of our orders varies widely. The majority of our jobs fall in the five- to twenty-thousand dollar range, but their aggregate dollar value is less than half of our total. Big jobs are important, and the biggest—more than fifty thousand dollars—have a disproportionate effect on our fiscal health. Land a few whales, all is well. Catch only minnows, and it's hard to make our target. And March brought us only little fish. Nick and Dan assure me that they are working on some jumbo orders that will arrive soon. We could be back on track any day now.

One thing is undeniable: undershooting our sales target has affected our cash flow. If we'd hit our goal, we'd have another thirty-two thousand in cash right now, from deposit payments. A couple of months of strong sales followed by a weak month is not unusual—I've seen that pattern many times. But I have also seen sales shrink for several months in a row, and that's a disaster. The shop is staffed for a certain production level, with all the attendant costs of payroll and machinery. If we fail to bring in work at the same rate we produce it, we get hit two ways: incoming cash falls below our spend rate, and eventually we will run out of work to do. Then come layoffs.

I'm not sure what I need to do right now, but my confidence that I could back out of my sales role has evaporated. I can't rely on the other two, and don't want to take a chance that they muff a deal when we are behind our quota. I am going to work more deals myself, starting with sucking up to Eurofurn. Maybe they'll throw more business my way.

D
ATE
: M
ONDAY
, A
PRIL 2
,
2012

B
ANK BALANCE
:
$136
,
260
.
92

C
ASH RELATIVE TO START OF YEAR
(“N
ET
C
ASH
”): -
$893
.
40

N
EW
-
CONTRACT VALUE
,
YEAR
-
TO
-
DATE
:
$543
,
003

This is the twenty-fifth April since I opened my doors, and the weeks before tax day have always been quiet. But Nick and Dan, who haven't experienced this swoon, are confident that something will arrive soon. The phone rang steadily in March, and we have a lot of solid proposals out there. And there are always clients who say they'll place an order if we'll revise our earlier quote.

Nick is preparing his twenty-third proposal for a buyer at the Kaiser Family Foundation—a new record for us. His first quote went out a year ago, and now he's racking his brains to come up with another variation. He's stuck with the same basic design, a ten-foot round table with some combination of wood and marble on the top. Every couple of weeks, the buyer in Manhattan calls back, swears that his bosses are about to make a decision, and asks for one more change—a different wood, or a different number of data ports, and always a lower price. It isn't a cheap design and it won't be a cheap delivery. We've bottomed out at twenty-two thousand dollars for the whole thing, but the buyer won't stop. Nick has asked me repeatedly if he really needs to send another proposal. Patience, I tell him. I have been through this before. Usually they disappear, but sometimes they end up buying, and we can't let any potential jobs slip away through our own laziness.

Nick has been on the same merry-go-round with an Air Force facility in Virginia. They've been very specific about what they want, and it looks like a forty-thousand-dollar order. Again, he's submitted multiple designs and spent significant time responding to requests for small changes. The flyboys tell us that they are
very
impressed with the proposals. Using their photos and our modeling software, Nick has made a perfect simulation of their room and finally come up with a table they love. They reassure him that he's doing great, but that they need to put the job out for bid—federal contracting rules. I tell Nick that this won't be an issue if we can persuade them to let us help write the bid specifications. That way we can make it very difficult for anyone but us to fulfill the requirements. This trick has worked in the past. Not this time. When they post the job on the federal contracting Web site, the table is described in generic language. And there's a requirement that bidders must attend a public briefing at the base—a six-hour drive from our shop. I tell Nick to make the trip. He's done a ton of work, and we don't want to lose the opportunity by not showing up.

Dan is working on his own big order, worth more than thirty-five thousand dollars: three tables for Cali Heavy Industries, a large engineering firm in California. Along with the designs, we have provided the buyer with a complete plan of our tables and offered to help him lay out the floor drillings for all the power and data wiring.

I've been communicating with the facilities manager at a local bank. They are renovating their headquarters and trying to decide whether to repair their existing table or replace it. Of course I have an opinion about which of these would be the wisest choice, but I can't even get the guy to respond to my e-mails.

I do have one potential buyer ready to get started. A good friend of mine wants me to make him a bedroom suite. I am not eager to accept this order. I have built a fair number of beds and dressers over the years, and they are surprisingly complicated. I've warned him that I will have to charge a high price—about as much as a new car—just to cover costs, but he's persisted. I didn't tell him that I really, really hate working for friends. I have done it on a few occasions, without any problems, but I don't like the exchange of money tainting what should be a purely social relationship.

He's been after me for almost a year, and I recently sent him the designs for review, but I haven't given him numbers yet. He's asking for a lot of work—a large sleigh bed with matching nightstands, two large dressers, and a bookshelf, all built of solid cherry with details in anegre, an exotic veneer from Africa. Aside from the materials, this is a job that only my foreman, Steve Maturin, can complete in a reasonable time, so my labor costs are going to be very high. I ran the pricing and, even cutting him the best possible deal, I've come up with a shocking number: $28,797. I'm worried that my friend will be horrified by the price, but also too embarrassed to back out.

Signing any of these jobs would bring us back to where we need to be for the year, and signing two or more would put us ahead. And these aren't the only prospects. My gut tells me that something is bound to come in. Eventually.

I hope that orders arrive sooner rather than later, and not just for the cash injection. I'm also starting to worry about our backlog. That is the amount of work that we have lined up to produce. We don't start building a job the day it's ordered. It would be very bad to rush ahead and build a table before the client has stopped making design changes. So we have a procedure: we send a final set of drawings and images to the client with the warning that these documents show exactly what we intend to build. We accompany this with finish samples: pieces of wood of the species and color that the client had discussed. Then we wait for them to either confirm that everything is correct or suggest alterations. Sometimes it takes weeks while their company goes through whatever internal decision making is required. It always takes at least two weeks after order placement before anything hits the shop floor. And if the client is slow, it can take a month or more.

At the beginning of April, our backlog is just over five weeks. That's a rough calculation—my formula, which I run each Monday, doesn't make any compensation for jobs that are burning more or fewer hours than we estimated. It's an approximate view of reality at best. But I've found that flawed measurements, if performed consistently, can be helpful—it isn't the result itself that matters, but rather the change from week to week.

At the start of the year, our calculated backlog was a little under four weeks. We sold enough in January and February that we now have more work than we started the year with. But the trend is down—we had maxed out at seven weeks at the beginning of March. Our sales slowed down and the shop started working faster.

At least I think it did. I can easily see the total value of the jobs shipped each month, but not how much of that amount was labor, as opposed to materials. It looks as though we're building at a $40,000-a-week pace. If we have a week where we sell less than that number, we are eating backlog. With a little more than five weeks of work queued up, and assuming the shop runs at the current rate, we will run out of work in early May.

A shrinking backlog also means that incoming cash is drying up. We aren't getting any deposit payments. The total amount of cash we can expect in the future is dropping as well. At the end of the first week of April, the cash we will collect by completing our entire order book is just $107,410. It will take us five weeks to fulfill our commitments, and that will generate only three weeks of funds. In the other weeks, we'll need to pay for materials, rent, advertising, and electricity just as we always do. How can I cut our spending?

My biggest expense is payroll. Payday is every second Tuesday. The amount varies depending on the exact number of hours worked, but it has been averaging $36,000. This covers hourly wage, pension contribution, and payroll taxes for fifteen people, including me. It doesn't include the cost of health insurance, which is $10,140 a month (to cover nine of the fifteen workers and their families, including me). The pay rate for each worker ranges from thirteen dollars an hour to thirty-six dollars an hour. Add them up and the cost to employ all those people for one hour is $317. (That number excludes my own salary.) That's before payroll taxes, workmen's comp insurance, and unemployment insurance, which vary in complicated ways but add another 18 percent or so to the cost.

Payroll is a very difficult number to reduce, unless I get rid of some employees. I can't simply have everyone work fewer hours—not at this point. We lost a lot of time with Company S, and we are behind on our other work. And if we don't complete jobs, we won't get the preship or final payments, which is the only cash I am sure to receive.

I cannot ask people to work more hours without pay. That is illegal for unsalaried workers. And a reduction in pay rates is a drastic and morale-crippling move. In the fall of 2008, I cut my workers' pay by 15 percent, and it was not popular. I got away with it because it was obvious to everyone that we were in serious trouble, and they had no place better to go. In 2012, the woodworking economy is still rocky, but it's a lot better than it was. If I cut everyone's pay again, some of them will leave—most likely, my best guys. We still have work to do, and I'm hoping that we will turn this thing around, so I don't want to risk defections.

Fortunately, there's one worker who will never quit. He's getting a good-size paycheck, too, so stopping his income will have an effect. I know from long experience that this guy will put up with anything I give him—work longer hours, do multiple jobs, reorder his personal finances, even loan money back to the company if necessary. Who is this patsy? You already guessed: the boss.

Over the years I have raised and lowered my pay countless times, using it as a throttle to increase or decrease our cash burn rate. Do I have enormous piles of gold coins in my basement, a vast store of personal wealth that I can tap when needed to fund my business? Not at all.

I'm not broke, but my business has not generated much wealth for me. Manufacturing custom furniture is not known as a lucrative profession, because it isn't. For example, take a look at how my company performed from 2003 to 2011. Sales for that period totaled $16,352,367. The profits? The total for those years is negative. The vast majority of those losses happened before the crash in 2008, when The Partner and I were doing a very bad job of trying to grow the company. From 2003 to 2008, our losses totaled $1,086,648. The Partner ate much of that when he left. My father, my brother, and I—the remaining shareholders—made emergency loans in those years just to keep the doors open. Since 2009, I have managed to stop the bleeding, and the company has made profits totaling $210,114. That still leaves an accumulated loss of $872,084.

I have managed, during some very rocky years, to pay my bills. First and foremost, all the employees who have worked for me got paid, on time and in full. All the taxes were paid, on time and in full. All the vendors and my landlord were paid in full (not necessarily on time, but I used most of the post-2009 profits to gradually eliminate the debt). While the company owes my partners and me a pretty good pile of cheddar, it owes nobody else.

Between 2003 and 2010, my annual salary averaged $78,484. That number includes the amount I had to pay for health insurance—taxable compensation for a company owner. My cash wage was lower. Each year I loaned, on average, $29,363 of that back to the company (after I had paid taxes on it). That left me an average of $49,121 a year. I'm hardly one of those predatory CEOs making millions while my workers starve.

I have a lifestyle to match my income. My wife and I live very modestly. We don't travel much. Even if we wanted to, Henry's unpredictable behavior keeps us from anything but family visits. I own two crappy cars: a 1992 Toyota Camry and a 1999 Honda Odyssey. Nancy is very frugal and gets most of our clothes at the thrift shop. And we don't eat out. Nancy is a very good cook, so we eat at home every night.

I'm not destitute, though. Leaving aside whatever the business might be worth, because it's not in any shape to sell, my net worth is a little less than $400,000. The equity in my house is worth about $165,000. My cars are worth nothing. I have $92,356 in a retirement account that I have been contributing to since 1998. I have $48,525 in emergency cash in a Vanguard account. And I have $78,525 in my checking account, as a result of my success in 2011.

That windfall came right on time. My oldest son starts college in September, and my wife, in preparation for the empty-nest experience, is getting a master's degree so she can teach. Her schedule will match Henry's so that she can be at home when he is, and I can continue to work myself. Tuition bills for both of them will start in September. The first year will eat through all my savings.

I'm not complaining. I am doing better than the vast majority of people in the world. But I do not feel secure. I have pledged my personal wealth to cover debts that the company has incurred. Aside from the $387,098 that the company owes me, the lease on our shop space requires payment in full, even if we fail. I currently have twenty-six months left to go before I renew. At $9,250 a month, I am committed to shell out $240,500. The business has two credit cards with a $65,000 line of credit—we generally have about $30,000 a month in outstanding charges. If I get behind, they will come after my personal assets. And, realistically, there is a minimum level of spending just to keep some employees on staff and the lights on. If I have to lay everyone off, and there's nobody to do the work, I am done. I have too much overhead to start as a single-man operation again. I need to spend $5,000 a day to be in business. If I have to reach into my pocket to do it, after sixty days I will have lost all my cash, and my house will be heading into foreclosure.

So owning a business, even one with millions in revenue, has not made me rich. I feel a great deal of shame at my lack of success. I can't tell you how many times I have attended parties and felt humiliated when doctors and lawyers describe fancy trips to Africa, rounds of golf, and nice cars. If I had joined my contemporaries who went to law or business school, and stepped onto the corporate treadmill, I would at least have a high salary to show for my efforts. Sure, you can live that life and fail in any number of ways, but you also don't have to invent the profession as you go.