For what I’m
paying her, I shouldn’t have these
problems!
God love him, my late brother-in-law was one of the most
charismatic, entertaining people I have ever known –
absolutely born to the world of sales. He had the most
wonderful sense of humor and an absolutely charming way
with people.
He started up a nurses’ registry in Oakland, California. He
signed up hospitals to call him for their temporary
staffing needs and he ran ads in the newspapers to recruit
qualified personnel to send out on the assignments.
Obviously, there was a mark-up between what he paid the
staff and what he billed the hospitals. He screened the
staff well and provided excellent service to the hospitals
and grew quickly.
Naturally, he began to hire office personnel to handle the
phones for staff orders and placements, billings, payroll,
etc. – all of the things that he and his wife had been
doing “hands on” in the start-up stages. As the agency
grew, there was simply no way for them to handle everything
themselves, so they needed a staff.
His wife was a very capable bookkeeper and handled the
books for the first few years, coordinating with the
company’s CPA as needed. Ultimately, the business was able
to afford an internal bookkeeper and his wife wanted to
enjoy the fruits of their business, so a “controller” was
hired.
This was a blessed day for my brother-in-law. No longer did
he have to “talk shop” with his wife and explain all of the
business decisions he was making. He could separate himself
from all those accounting/financial discussion, at last. It
was also wonderful for her, since she could spend time with
their young children.
Ah, the joys of having a dedicated, full-time controller,
whose only duties were handling all of the drudgery of the
deposits, payroll, accounts payable, etc., etc. Being a
born “people person” the last thing my Brother-in-Law
wanted to do was to mess around with accounting. That part
of the business was, to him, worse than the grease trap at
an industrial kitchen. He was thrilled to be finally able
to hire “a professional” and turn everything over to her.
She had furnished her office with “professional” furniture
and file cabinets, and everything was nice and secure – a
ll of the drawers locked up every night. Everything ran
smoothly when they opened a second office in San Jose. He
was really glad that the controller had all of the “nuts
and bolts” under control while he made his customer calls
throughout the area. Finally he could concentrate on what
he did best – take care of his customers!
Until one Thursday night, when he called me in panic. The
controller had been sick for a few days and when he went
into the office, the accounting mail had stacked up in the
bin for the controller. Casually, he thumbed the mail, and
noticed a number of colored envelopes from the telephone
company and the newspapers. He opened these, only to see
that they were threatening to cut off phone service and
cease running ads if his bills weren’t brought current
immediately!
For his business, phones and newspaper ads were the entire
lifeline! Without ads, he wouldn’t find staff, and without
phones, he couldn’t get staffing orders or call the
personnel to fill them! He would be flat out of business!
He got his master keys and went into the controller’s
office, then unlocked and opened that deep, lower-left
drawer. It was full of similar notices. For months, they
had been just ahead of being cut off buy their most
precious vendors, and the controller had kept it a secret
from him the entire time. He called me in a complete panic
and in despair. I flew in Friday evening.
Friday evening was a very emotional, personal time.
Unfortunately, I had not information with which to dispel
his anxiety that the controller had been embezzling and
that bankruptcy was his only escape. It was a very
difficult evening, mostly for him, not knowing what
predicament he was in. He knew he had problems, he just
didn’t know what they were.
Saturday morning, we dug into the drawer and all of the
company’s books. The good news was that there was no
embezzling going on – no one seemed to be stealing from
him. The bad news was that cash was a lot tighter than he
had been told. The company was just barely squeaking from
payday to payday, and that the controller was actually
doing a good job of keeping the creditors at bay
day-to-day. He had been “kept in the dark” about this
problem, possibly because he became hot-headed when cash
flow problems had been brought to him in the past.
Unfortunately, the company was set back in its cash flow
when the new controller had purchased that fine furniture
for her office. And of course, the controller never let on
to the owner about the cash flow problems. As he said that
Saturday:
“For what I’m
paying her, I shouldn’t have these
problems!”
So, my Brother-In-Law had pushed all of the
accounting/finance/cash flow problems onto his new
controller and then simply walked away. He relied, falsely,
on her to do her job completely and professionally,
including telling him the bad news when there wasn’t enough
cash to go around. But he never followed up on what was
going on. He absolutely, positively, failed to supervise
this critical function of his business.
He did not just
delegate, he
abdicated.
In the end, the controller was replaced, and my
Brother-In-Law tried to open a channel to the successor –
to have a dialogue with that stranger so that he would hear
about problems as they came along. Naturally, he had to
also not close off those lines of communication so that he
would hear about the problems before they approached a
fatal point. A few years later, he sold the business to a
new public “consolidator” of “mom and pop businesses” but
that is an entirely different story.
POINT: Money and finances is THE ONE
AREA a
business owner cannot lose touch with. You can delegate,
but must continue to monitor.