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Published On: Jan 27, 2005 08:32 PM
Total entries in this category:
Published On: Jan 27, 2005 08:32 PM
Robbing a man with a fountain pen...
I have had a lot of time to think about some of
these things and some pretty crazy contexts in which to compare what I have seen
and what I know with what I have lived and what I've heard. This is just one
concept we'll need for later...
I have been thinking about an old Woody
Guthrie song in which he mentions that he has seen a man "rob another with a
fountain pen." He's talking about the banks and the dustbowl farmers who lost
everything, but I have been thinking of it in the larger
sense.
In business, especially when things start going poorly, it seems like the rule of nature is that the one who thinks of a dastardly plan first gets to win. In business, things can go very wrong and can remain hidden for long enough that the "little guys" who trust the larger or seemingly more fit business end up taking up a small portion of the larger business's disaster.
It isn't a shock that a business can have several loans and, in that way, a business that dies a terrible death can lose a sum far in excess of any one of the liabilities of the individual bank. The banks, however, have so much historical data that they are pretty good at reigning in a business well in advance of its demise. Further, a bank makes it the bank's business to either secure the loans, review the qualifications, or even to call them due when or as the business starts to fail.
If a business starts to slide, it is at first hard to know if the slide is a long term problem. First come the cutbacks on staples and pens, and then on producing product that can be postponed, and eventually there are lay-offs or at least skipped pay raises for the steadfast employees. Pressure is put on the company to perform better but the rewards are saved for the ownership and repayment of critical debt or overhead.
If the slide starts to look more and more dire, a good business will alter course and try to stave off the worst case. If the business makes a mistake or is run by uncareful leadership, they will pour on the coal and head directly into the eye of the storm. That is when the creative financing (which is ultimately the topic here; the rip off) begins.
First it is important to note that, by this point, the leaders who have put the entire business in danger will NOT admit to any more troubles than the usual "economic" fluctuations or a bad period or even some isolated problem. If they have spent a lot of money buying new accounts or merging or making big deals, they will point to short term problems as though that is all there is to fear and as if there is a guaranteed turnaround. In cases where there is not mismanagement of the company and lying within the ownership, these short term problems are bumps along the road. In the case of a business in trouble, they are excuses and scape goats.
As the business experiences cash shortages, after expanding to produce more and more, the employees and vendors seldom see how serious the problem is until it is too late. The business pushes all credit to the maximum and then begins the slide into bare minimum maintenance of that debt. The credit lines become useless burdens and the vendors are all pushed to their limits. In some cases, the business may begin to reject products or demand rebates based on false quality issues or the business may begin to rush large quantities of work at once to create a bubble of debt that will then have to be "chased" by the vendor in the event the turnaround comes too slowly.
Employees may be asked to skip raises or cutback hours willingly or they may be terminated. Ownership may be asked to capitalize the company. Vendors may be pushed for even lower prices and longer repayment terms. All of these things can come as legitimate moves to bolster a short term pinch, but when the short term becomes the norm, this bubble eventually bursts and the business begins a cancerous decline into dysfunction and decay. The debts are often never repaid and eventually the business begins to search out multiple vendors as to spread around a small amount of debt per vendor, but an over-all larger debt to the company. The company may begin to break ties with vendors as a way to stall or even to default on payments. The relationships decay as new vendors are found and the vendors eventually are forced to give up their claim to the money or to fight a dying company for money it doesn't have.
Other earmarks begin to materialize. Typically, a strapped business will begin to over-tax and overpromise. The individual parts of the company become so burdened that they too begin to fail within themselves. Where phenomenal efficiency once reigned, chaos and errors that can ill be afforded move in. Accounting and book keeping employees, who tend to have the pulse of the company, begin leaving or searching for more stable or less frightening work. The ownership may begin to fight within itself as the pressures of funding the company mount. In the case of disagreement within ownership about the causes of this stress, the board may begin to re-evaluate the leadership and direction of the company and a change at the executive level may happen.
In short, a business that is driven into the ground through blind ambition and selfish greed can quickly find that treating the little guys poorly is the easy fix. They may find, too, that the little guys will eventually get wise and will begin, like the banks, to limit the power of this abuse by the company. The monster business that once grew by leaps and bounds and seemed unstoppable, soon shows the true colours and reveals that the growth was at the expense of the business relationships in which the company was the superior to start. As the small guys begin to pull the plug, the big business is faced with defaulting on deals made under the guise of the false sense of success that came before.
I know this isn't deep stuff. It is the setting into which the main character fits for this story. Our businessman and failed leader (the one with the initials RS) starts on top of the world and ends up stealing from the mouths of those less fortunate than himself. He wakes up to find that someone has realized what kind of guy he is and that the "resources" are very well aware of their danger.
In business, especially when things start going poorly, it seems like the rule of nature is that the one who thinks of a dastardly plan first gets to win. In business, things can go very wrong and can remain hidden for long enough that the "little guys" who trust the larger or seemingly more fit business end up taking up a small portion of the larger business's disaster.
It isn't a shock that a business can have several loans and, in that way, a business that dies a terrible death can lose a sum far in excess of any one of the liabilities of the individual bank. The banks, however, have so much historical data that they are pretty good at reigning in a business well in advance of its demise. Further, a bank makes it the bank's business to either secure the loans, review the qualifications, or even to call them due when or as the business starts to fail.
If a business starts to slide, it is at first hard to know if the slide is a long term problem. First come the cutbacks on staples and pens, and then on producing product that can be postponed, and eventually there are lay-offs or at least skipped pay raises for the steadfast employees. Pressure is put on the company to perform better but the rewards are saved for the ownership and repayment of critical debt or overhead.
If the slide starts to look more and more dire, a good business will alter course and try to stave off the worst case. If the business makes a mistake or is run by uncareful leadership, they will pour on the coal and head directly into the eye of the storm. That is when the creative financing (which is ultimately the topic here; the rip off) begins.
First it is important to note that, by this point, the leaders who have put the entire business in danger will NOT admit to any more troubles than the usual "economic" fluctuations or a bad period or even some isolated problem. If they have spent a lot of money buying new accounts or merging or making big deals, they will point to short term problems as though that is all there is to fear and as if there is a guaranteed turnaround. In cases where there is not mismanagement of the company and lying within the ownership, these short term problems are bumps along the road. In the case of a business in trouble, they are excuses and scape goats.
As the business experiences cash shortages, after expanding to produce more and more, the employees and vendors seldom see how serious the problem is until it is too late. The business pushes all credit to the maximum and then begins the slide into bare minimum maintenance of that debt. The credit lines become useless burdens and the vendors are all pushed to their limits. In some cases, the business may begin to reject products or demand rebates based on false quality issues or the business may begin to rush large quantities of work at once to create a bubble of debt that will then have to be "chased" by the vendor in the event the turnaround comes too slowly.
Employees may be asked to skip raises or cutback hours willingly or they may be terminated. Ownership may be asked to capitalize the company. Vendors may be pushed for even lower prices and longer repayment terms. All of these things can come as legitimate moves to bolster a short term pinch, but when the short term becomes the norm, this bubble eventually bursts and the business begins a cancerous decline into dysfunction and decay. The debts are often never repaid and eventually the business begins to search out multiple vendors as to spread around a small amount of debt per vendor, but an over-all larger debt to the company. The company may begin to break ties with vendors as a way to stall or even to default on payments. The relationships decay as new vendors are found and the vendors eventually are forced to give up their claim to the money or to fight a dying company for money it doesn't have.
Other earmarks begin to materialize. Typically, a strapped business will begin to over-tax and overpromise. The individual parts of the company become so burdened that they too begin to fail within themselves. Where phenomenal efficiency once reigned, chaos and errors that can ill be afforded move in. Accounting and book keeping employees, who tend to have the pulse of the company, begin leaving or searching for more stable or less frightening work. The ownership may begin to fight within itself as the pressures of funding the company mount. In the case of disagreement within ownership about the causes of this stress, the board may begin to re-evaluate the leadership and direction of the company and a change at the executive level may happen.
In short, a business that is driven into the ground through blind ambition and selfish greed can quickly find that treating the little guys poorly is the easy fix. They may find, too, that the little guys will eventually get wise and will begin, like the banks, to limit the power of this abuse by the company. The monster business that once grew by leaps and bounds and seemed unstoppable, soon shows the true colours and reveals that the growth was at the expense of the business relationships in which the company was the superior to start. As the small guys begin to pull the plug, the big business is faced with defaulting on deals made under the guise of the false sense of success that came before.
I know this isn't deep stuff. It is the setting into which the main character fits for this story. Our businessman and failed leader (the one with the initials RS) starts on top of the world and ends up stealing from the mouths of those less fortunate than himself. He wakes up to find that someone has realized what kind of guy he is and that the "resources" are very well aware of their danger.
Posted: Tue - January 4, 2005 at 08:02 PM