The following story is true; the names have been changed to protect their confidentiality. Glen and Mary have been married for over 15 years (a success in itself).
Glen is a sole proprietor in the heating, ventilation and air conditioning industry (HVAC). For over 7 years Glen has provided HVAC sales and service throughout Whatcom and Skagit counties.
During the last year, Glen and Mary started having cash flow problems and were having a hard time paying their personal bills. Mary had been without work for over a year due to some medical issues and Glen was working harder than he ever had before. They came to the Small Business Development Center at Western Washington University on the advice of a friend to seek help as to how to solve their problem – not enough cash to pay their business or personal bills.
In meeting with them, it was clear that Glen did superior work, had a great reputation and was well liked by his customer base of contractors and individual clients.
Glen, however, did have a number of problems: he was using deposits on future jobs to pay for materials to complete the jobs he was currently working on; he was borrowing from their retirement funds to help pay the bills and those funds were tapped out and they had no more money to pay their debts; he had no idea of what his job costs were or which jobs he made money on; his bookkeeping was in total chaos because he did everything himself and with him working so much more he didn’t have time for the financial maintenance of the business; his pricing was also below what his competitors were charging; and lastly, Glen and Mary were spending most of their time arguing and fighting over money.
After accessing what the key issues Glen and Mary were facing, we developed an action plan to turn the business — and their relationship — around.
First we needed to get a handle on what the financial situation was: how much money did they owe their suppliers and how much money was owed to them from customers. They couldn’t afford to hire a professional bookkeeper to come in and help them; they were too far gone.
Luckily, Mary had had some experience with QuickBooks and she volunteered to take over the financial aspects of the company. This approach would also free up Glen to spend more time on the revenue-generating side of the business.
While Mary was cleaning up the books, Glen was doing some competitive pricing analysis despite his reservations that he couldn’t charge any more than he already was.
A few weeks later, Glen walked in happy and chipper, while Mary was quiet and reserved. They brought in cleaned-up financial statements that really helped identify the breadth of the situation and their competitive findings.
Glen had quickly realized that he was undercharging for his services. Glen also realized that he was worth more than what he was getting paid, so we developed a new pricing strategy to be immediately implemented.
Mary, on the other hand, was very depressed and angry with Glen as the numbers clearly showed that they were on the verge of losing their house because they couldn’t pay their mortgage. She had no idea that things had gotten so bad. They also shared that the marriage conflicts between them had gotten much worse since our last meeting. They were in a crisis mode.
We discussed their options of bankruptcy, friend or family loans and traditional loans from a lender. Bankruptcy was dismissed as a last resort and they didn’t have anyone that could loan them the almost $100,000 they needed. Traditional bank financing was unrealistic. We then reviewed their assets, for both the business and personally. The business didn’t have any borrowing ability, but they did have a large sum of equity in their home that could be refinanced.
We agreed to pursue this option. Due to their financial problems it was very difficult finding a lender that would work with them, but we eventually were successful in getting their home refinanced and pulling enough money out of their home equity to pay off their debts and allow them a new start. This strategy wasn’t an easy decision for Mary and Glen. They discussed closing the business, getting second jobs and even divorce.
In order for this restructuring of their debt to work, they both had to be committed to a plan of action and to working together, no small issue when you’re constantly fighting.
It was agreed that to avoid getting themselves into the same situation as before, that Mary would control all the personal and business finances while Glen would focus on sales and service. This change of roles caused a large amount of conflict with Glen as he was used to buying whatever he needed to do his jobs and now he had to ask for approval from the finance department (Mary). Structurally this worked well as spending controls and billing processes were in place and being followed, but their relationship continued to deteriorate. It was clear that if their marriage and their business were to survive innovative efforts were necessary.
In order for a relationship to survive, it needs to be nurtured and tended to. If it is taken for granted and ignored it will fail, just like a business.
Mary and Glen were so wrapped up in the muck of their financial problems their relationship was close to failing. With Mary now working in the business and side by side with Glen, tensions were at an all-time high as they worked through this period of pursuing refinancing.
To top it off, both were working over 80 hours per week on the business. They were burned out, frustrated and challenged to see any hope. One huge challenge they faced was that their business was based in their home. They lived and breathed it 24/7. They could never get away from it. Even when they tried to relax one or the other would bring up a business issue and tensions and conflict soared.
In one of our meetings they decided to make the relationship a higher priority than anything else, including the business. They were recommitting to each other. To support this we set up an innovative way to separate work time from home time. One of the problems Glen and Mary faced was that when Glen came home late from working on a job he would walk in and start talking about the business while Mary had “clocked out” hours ago and wanted to relax and connect with Glen as a spouse.
Glen never knew what role Mary was in when he came home, Mary his wife or Mary the Bookkeeper. This problem was a major source of conflict for them. To solve this dilemma, we developed a game; when Mary was the bookkeeper, she would wear a shawl or hat and when she wasn’t wearing either, she was Mary the wife. Glen could easily tell which role Mary was in when he walked in the door and act accordingly. We even decided to take the game further by “firing” Mary the Bookkeeper and “hiring” Marge the Bookkeeper even though they were one and the same. They even went so far as to call Mary “Marge” when she was in her bookkeeper role.
The success of this strategy was revealed a few weeks later when Glen and Mary came in and when I asked how things were going, Glen said, “I’m having a really hard time getting any money out of Marge. She’s being a real pain. But I’m getting along great with my wife and we’re taking a vacation together in a week.”
After the laughing subsided it became evident to all of us that it is possible to work wi
th your spouse and have both your business and your marriage thrive, but it takes a lot of work, commitment and sometimes thinking in innovative fun ways.
Two years later and Glen and Mary are still married. Glen’s business is prospering and the company was able to hire a real bookkeeper who is named Paula. Mary is back to work in sales and their marriage continues to grow in positive ways.
Tom Dorr is the director of the Small Business Development Center at Western Washington University.