My “Making Payroll” Story
You often hear of business owners who have had a difficult time making payroll. It seems that most entrepreneurs have a story. Here is mine.
During my first year of ownership, in 2013, we struggled with growing enough mushrooms to supply our market demand. We also had many equipment struggles. We had to purchase four new forklifts, complete a major overhaul on our steam boiler, rebuild a water tower for our chilling system, and numerous compost turner issues, which led to purchasing a “used” compost turner. To top it off, the line of credit from our bank was approaching the credit limit. The combination of these elements was forming the perfect cash flow storm.
I started extending my payments to vendors to improve cash flow for the near term. It got to a point where I was three weeks past due on many of our accounts. The time came where I could not extend these vendors anymore without paying long-term consequences. The time came for the perfect storm to hit our shores. We were not going to make payroll.
To make the next weekly payroll, I had to act fast. I liquidated all of my savings and lent it to the company as a loan from the owner. Next, I negotiated with one of the most prominent vendors to hold off on payment for an additional three weeks on top of the three weeks we were behind.
I never made a more significant sale than selling this idea to my wife. She needed to believe in me and the progress we were making at the farm. She needed to believe that I could restore our life savings in a timely fashion. She needed to believe that the company could recover. She believed.
We made payroll that week.
The following week, I negotiated with my bank to change the way the credit limit was calculated. This more favorable credit limit gave us the breathing room we needed to be current with our vendor payments and pay back my loan. To improve our production, we started increasing the number of trays for each mushroom crop, increasing our ability to meet the market demand and improve profitability. Our financial picture began to be more favorable.
My “making payroll” story happened over three years ago, and we are still recovering from the financial consequences, namely paying down the line of credit. I believe this experience was a test from the Almighty to see how bad I wanted it. Did I want this business to be a success? Was I willing to put it all on the line? Did I have what it took to sacrifice for my employees and business success?
Yes.