Every Debt is Paid – Richard Russell

I am not a business expert.  Most of what I have learned about being in business has come to me the hard way – by making mistakes and reaping the rewards of those mistakes through my bank balance.  What I can tell you is that paying for one’s own mistakes makes the lessons very dear.

From this vantage point, meaning my reading chair, set in a sun-filled New England living room on a bright February afternoon – a chair that I re-upholstered from the frame up by the way, which was a long adventure in tedium, frustration, precision cutting, sewing, and more tack hammering that I ever thought I’d do in a lifetime, but which resulted in a custom-built chair that turned out better than I imagined, and worn as it is, I doubt there will ever be another to fit like this one. So I keep it tucked in the corner and use it as my base of operations at home, namely for reading, studying, thinking, meditation, and pretending to write.

The reading chair aside, Borders has me thinking about some of the things I have learned in the 30-plus years of being involved in manufacturing.

This Borders thing is really bothering me.  I’m not sure why. I don’t have any particular affinity for the store.  In fact, the last time I went into a Borders store, they didn’t have what I was looking for, so I left empty handed.

I just fibbed.  I know what’s bothering me about this.

I’m sorry for Borders that their plans were foiled by the perfect storm of increasing costs of doing business combined with fixed prices and an ever increasing field of web-based and electronic competitors.

I would like ask, though, didn’t they see it coming?

And if they did see it coming, why did they continue to expand their bricks and mortar stores in a declining foot-traffic based retail market?  I have looked at their list of stores which are being closed and can’t help but wonder if they may have oversaturated some of their market.   What do I know?  Maybe I really do need to have eight Borders stores within 25 miles of my home.

Snarky, sorry.  In manufacturing we call it being “over capacity” and it isn’t a happy sound.  I like quiet in my back yard, not on the factory floor.

I’m sorry for the publishing companies who are out millions upon millions of dollars.  I’m sure it will take you all a while to absorb the loss, if you can.

I don’t know anything about how publishers and book sellers write their contracts, so I risk looking like a fool when I ask this – didn’t the publishers see that their receivables were slowing down?  Who didn’t notice that Borders wasn’t paying their bills on time?  Who let it slide?  Who didn’t read their annual reports and look at their cash flow and debt ratios?  Who produced and shipped their orders even though things weren’t looking so hot?  These things don’t happen overnight.

Any order that comes into my company and the customer is more than 30 days past due, the order is stopped until we can evaluate the risk.  It doesn’t make it off my desk until my business partner and I agree to move it along.  Most customers don’t know this, because we watch for patterns, and we know that payment for past invoices is soon to arrive, but being aware of the patterns is imperative to prudent risk exposure.

And I’m sorry for the employees who lost or will lose their jobs.  Jobs that they may have just recently gotten after a long hard search due to the last lay-off thanks to the crash in the financial markets.

I’m sorry for the developers who built shopping plazas who will now have to go without the rent that was coming from the Borders stores.  And for the communities who will have to look at another vacant retail location until a new business comes along and leases the space.

I’m sorry for Seattle Coffee, who loses a concession with the loss of every store.  And the already struggling newspaper and other periodical publishers who have lost yet another outlet with which to reach consumers.

How about the carpet manufacturers and installers?  The folks who make the book shelves and tables and counters for these stores just lost that portion of their business. The music industry and the sale of their CD’s.  The maintenance workers who every night, while we were all sleeping would go in and clean those very convenient bathrooms, vacuum the carpets, wash the windows, and do whatever else is necessary to keep a store looking good just lost some sweet cleaning contracts.

What about the authors  who are now facing a decreased distribution of their books?

For the consumer?  I guess I can feel a bit sad that you have lost a big book store near you.

May I suggest you find your nearest independent book seller and give your business to them?

To the independent book sellers, from one small business person to another, I hope you find this shift to be to your advantage.

I know what it’s like to be strung out by a customer only to open the mail one day to find out that our investment in time, materials, overhead, and labor are about to be flushed down the toilet because the customer, instead of paying as they promised to do, has filed for protection from creditors under Chapter 11 of the Bankruptcy laws.

Translation?  No lunch for you, sucker.  Every debt is paid, by someone, sometime, somehow.