What I have learned about debt

financial-debtHaving been through the mill of having the shackles of debt. I thought I would write-up my experiences of debt so that it will give you some pointers about when to use it and how to handle it. My experience with debt on the whole has been unpleasant, when I started my first business, I didn’t understand money or debt very well.

I have made all the mistakes, borrowing to get a new car, borrowing for luxuries and borrowing to fund a lifestyle. I have made most of the debt mistakes and borne most of the consequences.

Here is what I have learned…

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“Ain’t no thing like me, except me!” – Guardians of the Galaxy

I love the new Guardians of the Galaxy film. It’s Sci-fi, it’s funny and it’s a throw back to the 80’s.

Rocket is an interesting character. Small, furry and almost pet-like. It just goes to show you cannot judge a book by its cover as he is an engineering mastermind. In one scene be hatches and escape plan from Prison which is nothing short of genius.

At the same time as being a genius engineer he also is totally insecure about being a Racoon or whatever he is.

Back to reality now, equally it is true that we should never underestimate people because of how we perceive them. Racoon or otherwise. Someone who looks like a nobody could be the next world changer.

It’s also possible that the sharp suit, signs of success and confidence cover someone who is has nothing to offer. So many people pretend and copy other people when if they would just be themselves they may have a chance of getting on in life. Be who you are and do what you are good at.

So remember “Ain’t no thing like me, except me!”

Celebrate the good…

productHave you ever bought one of those model kits? You know the ones where you have stickers and glue and have the challenge of popping all the pieces out of a plastic frame and making an aircraft or boat? I remember as a child watching my brother build one. He’d take hours making sure it was glued correctly and the stickers were just perfect.

I tried to have ago for myself years later. I bought the set, read all the instructions and diligently tried to build this model. After a few hours and a steep learning curve, it was finished. I looked at all finished and realised it wasn’t as good as I hoped. I could see where the glue and some of the stickers were not straight at all. I was utterly disappointed.

You know the famous quote “good is the enemy of great” well for me, “great was the enemy of good” instead of marking my achievement at building a model for the first time. I was critical of it and disappointed.

Greatness takes time and skill, so sometimes you have to accept good is OK. You’ll here speeches from numerous motivational people who say don’t settle for good, reach for greatness. The problem with that probably the vast proportion of things we do are average, OK or just good.

Good is OK! Sometimes it’s perfectly fine to accept things are good, sometimes great is out of reach. I am in no way advocating being complacent, but if you only celebrate your great achievements, you may only have a party a couple of times in your life. Celebrate the good.


With great power comes great responsibility

Many years ago, I was working with a client who had grown rapidly through buying other businesses. In the usual M&A fashion it was all financed through debt. Within 2 years the company had grown to a £42m turnover by using £23m of debt. An empire had been built which was impressive by anyone’s standards.

There was impressive news articles, awards and the CEO was often quoted a as leader in the industry. This was just before the banking crisis and it looked like the best days were ahead. Then, one of the larger clients decided to downsize and cut back. Ouch that was painful, but, with a sales force of over 100 people, we were sure, more work would come in. After all, we were one of the biggest companies in our field. We could compete for the big work that smaller companies could not do.

We often look at people who have built massive business empire’s with a degree of envy. People such as Bill Gates and Rupert Murdock and imagine the high-life, private jets, being waited  on hand and foot. It sounds ideal. Unfortunately, that bit is accompanied with the pressure, constantly having to keep the empire functioning and developing.

Just like Captains of ships, Emperor’s go down with their empire. When the Titanic hit the iceberg, the captain was resting. As the ship sunk the Captain had a responsibility to keep the ship afloat for as long as he could. He also went down to the bottom of the Atlantic with it. Emperor’s and Captains are the object of envy but their duties can also be brutal.

The quote “With great power comes great responsibility” is so true.

Coming back to my client, a year into the business empire being built, it took a lot more effort to maintain than it was to build it. With such a big debt to pay back the pressure was on to get the orders, keep the factory busy and get work invoiced quickly. Sometimes we envision we want to build a big business empire we can preside over, but in truth, empire’s need a lot of attention. In the end, the empire was so wieldy and difficult to control, it collapsed, 400 jobs were lost and the emperor disappeared into obscurity.

I too have been guilty of empire building. I wanted freedom, the ability to work when I wanted to, escape the 9-5, but I thought the route was to build a big business – WRONG. I went from a one-man band to a 16 staff operation. I did stop doing the day-to-day work of order processing and being face to face with customers, but inherited a whole new set of tasks, cash-flow management, credit control, work flow management, HR and a million other things.

We can easily deceive ourselves into thinking building big and power mean less responsibility. In reality, the more power, influence the more responsibility you have. So, if you are trying to build a business for an easy life, it’s often easy to keep it smaller, less responsibility, more flexible working times.