Running a Business I Didn’t Want
by Adam Freelander
My friend Matt became the owner of a small bus company when his dad died suddenly about 5 years ago. We spoke about what that entailed.
So tell me about the business your dad ran when you were growing up.
When I was little, my father got a part-time job working the front desk at a hotel. Eventually he and a business partner got the idea to start charging people for rides between the airport and the hotel. First there was one van going back and forth and then the business grew to a few other, similar-budget hotels in Midtown. He eventually bought out the partner and the business was his. By the time I was in high school he had 10 buses and as many drivers working for him.
Did you see yourself running the company one day?
Never. Not for one minute. I lived primarily with my mom and didn’t have much knowledge or interest in my dad’s business. I knew the general contours of what he did and I knew some of his earliest employees, but I was never aware of the ins and outs, and that was fine. I was always on a different path personally and my plans never included being involved with the business.
So what happened?
Well, in June of 2010 he had a sudden stroke and died. Completely and positively out of nowhere. As in, dirty dishes still in the sink and stuff still at the dry cleaner. This happened about a month before I finished graduate school. I’d accepted a pretty good job offer and was supposed to start at the end of the summer.
The first call I received was from my mom, giving me this terrible news. A few hours later I got a second call from a Manhattan number I didn’t recognize: my father’s accountant. He basically wanted to know what the plan was. “Somebody’s gonna need to step up.” I didn’t really understand what he was talking about.
What was the first thing you had to deal with?
The accountant told me that payday for the employees was on Tuesdays. My father died on a Saturday. So the first thing I had to do was pay everyone, at least for that first week. I started getting calls, before the funeral even, from some of my dad’s employees asking what was going to happen. And I honestly didn’t know. My dad’s accountant gave me the name of a lawyer, who I cold-called from the waiting room at the hospital. My father didn’t leave a will or any instructions, and there was no one else who was capable of taking over his affairs. So the lawyer and the accountant told me, you’re in charge for the time being.
When did it sink in that you were the only one in charge of this?
When the initial sympathy calls turned into practical questions about urgent business things. The accountant and lawyer told me that the first and most important thing I should do was to assure everyone that business would continue as usual: buses would keep running, invoices still needed to be paid, and we would still pay our bills. But the flip side of that is, “OK, in that case, the bus was late this morning and the A/C wasn’t working and this one driver worked overtime last week and where is the money?”
How did you know what to do at that point?
Basically my choices were: Shut this thing down immediately, close the doors, ignore the calls, don’t pay anyone or collect payment from anyone, walk away and never look back. My mom was an advocate of this course of action and I don’t blame her for feeling that way.
Or try to sell it. But that takes a lot of time! Finding a buyer, deciding what it’s worth, etc. And it would need to keep running in the interim for it to be worth anything to a buyer.
Or, give up my white-collar ambitions and jump into it with both feet, becoming a second-generation owner of a business about which I knew almost nothing. This was the most stirring and inspirational option, but I really didn’t want to do that. And the constant phone calls from angry customers, employees and creditors pretty much convinced me that it wasn’t a long-term plan.
The default option, then, was to “step in” on a temporary basis and give myself some time to come up with a longer-term plan. Still, this was a choice that basically felt like no choice at all, just a scotch-taped continuation of the status quo.
Wasn’t this also kind of a windfall though? You inherited a company. Couldn’t you just have sold it right away and had some fast cash?
This is a reasonable assumption that I, too, shared. Alas, it’s WAY more complicated than that. The “value” of a company is basically comprised of two things: current assets and anticipated revenue less expenses.
UGH BORING. Sorry go on.
The assets, I learned pretty quickly, were the vehicles he (we? I guess I?) owned. Basically, a bunch of old buses, many of which were still being paid for anyway. Also, cash in the bank, which I would also quickly discover amounted to less than 1 week’s payroll. I knew the business “made” money but we had a lot of expenses too. In a nutshell, this thing seemed to never be more than 7 days away from complete insolvency, i.e. worthlessness.
I also had immediate questions to figure out, including “what bank is the money in?” and “what’s the log-on to the computer?” So there was no short-term windfall to be had, apart from maybe $200 in cash he had lying around the apartment. I remember using some of that to buy Indian food.
So this did not make you rich.
No. Whatever “value” there was in the business would take a long time to become real. I 100 percent did not become rich. There was so little cash on hand; so much that he owed and that people owed him.
Did you have a previous sense of what small businesses in general were like that this changed?
I definitely assumed that a business = $$$. But I think a lot of small businesses are like this, especially ones run by 60-year-olds who don’t have MBAs. It was always a week-to-week kind of thing. You don’t have the luxury of hoarding cash for a rainy/dead day, or of writing an instruction manual for someone else to run it. You’re just constantly in motion and, if you’re exceedingly lucky, it works.
So let’s jump ahead. How long did you end up running the business for?
Altogether this temporary arrangement lasted for almost four years. First I put off my job offer for a few months and used that time to stabilize a few things, trying to get it to where it could run without my 100 percent attention and time. And then I put in about 15–20 hours per week for the next three and a half years. I ultimately presided over a sale of the business last spring. And am still not rich somehow.
Are you satisfied with that choice, that instead of walking away, you kept at it for 4 years?
I’m 75 percent satisfied with that choice. I was able to extract more value from the business by holding onto it and tightening some things up than I would have if we had just shuttered it in a fire sale. I also, as MY accountant and lawyer tell me, got a lifetime of experience out of it, and that is very true. I learned a lot about how businesses actually work, or don’t work.
But it was really fucking hard sometimes. I lost a lot of sleep and maybe some years off my own life. Worth it in the end? Maybe? Probably. There were many many moments I hated it. I threw my own iPhone through the windshield of my car in frustration over some stupid credit card issue; that was at, like, the 6 week mark.
Still, I used money from the business to replace the phone. And the windshield. So there’s that.
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