Hello my fellow budgets-are-sexy readers! I’ve been getting a handful of emails lately w/ the economy being as it is these days, but rarely do i get one from actual business owners.
But as luck would have it, i was blessed with a comment from one of them this week and clung on for dear life! haha….A brother has questions, ya know?
And boy was i lucky! The business owners agreed to my very first interview, and i pumped them for all i could :) After all, employers and “Big Business” are usually made out to be the bad guys, right? They couldn’t be nice *gasp!*, could they? Well my friends, today we get to hear THEIR side of the story. Please to enjoy:
1. What sort of company do you own?
A 15.5 acre RV Sales, Service, Parts, and Restaurant company with over 275 RVs in stock at multiple locations. We employ anywhere from 80 to 125 people, and are one of the largest RV dealerships around.
2. When did you notice you’d have to make changes?
Like everyone, we have watched 2008 steadily deteriorate starting this early Spring. Winter was long, lasting well into spring, and chocked off the early part of our selling season. By mid-summer we saw our sales numbers not reaching previous years highs, then gas prices went out of control hitting RV sales hard. Presidential election years are always “iffy” too. People don’t like the unknown and are nervous. By mid-to late-summer, along with everyone else, we watched the stock and financial markets self-destruct, with the media fanning the flames.
3. What were some of the benefits you had to cut?
Watching the above unfold, we knew that we’d have to cut wherever possible to survive the company.
- We slashed our own salaries first – We only took enough for monthly expenses, that’s it.
- Stopped Christmas Bonuses this year – By Sep-Oct we generated a letter to everyone explaining in detail what we believe was happening with the markets (all of us see the real life results – few customers in the doors) and explained why, for the first time in 20 years, we would have no Christmas bonuses this year. [our Christmas parties have always been extravagant – bonuses from $100 to $5000, gifts in value from $50-150 chosen, wrapped by me throughout the year for every single employee; an excellent hotel Christmas dinner; hotel rooms subsidized by us for those who want to stay and play and those who should NOT be driving!]
- Stopped Matching portion of 401(k)s – Our next step was to send out another letter to each employee notifying them that we were stopping our matching portion of our 401Ks temporarily, but that employees could continue to fund their 401Ks with pre-tax dollars as usual. We will notify them when we can again start matching.
- Increased annual lay-offs – We have annual lay-offs normally (ours is a very seasonal business) so this year we have just included more staff. We are rotating staff in various departments and sending them into lay-off with a company letter stating to unemployment office that we want this person back by xx date.
4. How did you bring it up to employees? Was it crazy hard?
We notified our folks early because even though every year we say “now please don’t count on these bonuses because each year is different, these are a gift of thanks, not a promise;” we know folks count on the cash anyway (who wouldn’t, especially at Christmas!) So when we knew it was going to be a dangerously ugly year, we sat down and composed a letter to go to each person saying exactly what was happening, why we have to conserve every nickel for maybe a long time, etc etc. Then we held a company-wide meeting so we could reiterate the company’s situation. We asked for everyone’s understanding and help, right down to “turn the light off when you’re out of the room.” Communication is everything!
5. Did anyone go nuts when you told them?
Well, this is the interesting part of being an owner… you hear things from managers and employees about “somebody said this or that” but they NEVER name names! Human nature being what it is, there most certainly are a very few people we’ll lose over this. There are many others who fuss and talk behind our backs (not knowing we started like most folks – with NOTHING. All they see now is this big giant business and think we’re loaded! We’re not, but the banks are!) And then there are some who make it possible for owners to get up each day and face the battle over and over. The ones who support us and say, “good call, a tough one for tough times, but a good one, we support you” and “I’d rather have my job than a bonus if that’s what it comes to.”
6. Do you have any lifelines you’re holding onto in case 2009 is even worse?
A hope and a prayer! We have also secured a home equity line of credit as a last resort measure to fund the company until we’re back on track. This is nothing we like to tell employees because it scares them a little bit. While we want everyone to pitch in to get through the lean years, we don’t want to lose good people.
My husband expects Spring to be easier as gas prices are far better, the election is over, and our annual RV show starts in January. I expect a lean year because this is a recession and our fearless leaders (BOTH sides of the isles) are idiots. So… our home equity line of credit will be our last resort after some small savings we have set aside. We will negotiate heavily with our bank on flooring rates and even refinancing loans if needed.
We are both very financially conservative (sweet words for a Budget Guy?!) and we have gone to great lengths to pay off business building and equipment. We owe nothing on our huge custom paint booth, zero on our expensive Italian RV lifts in the shop, Zero on our new Clubhouse cafe we build this year. All we pay on are the initial loans for the ground which will be paid off in seven years, and now this year, the purchase price for our second location, but it pays its own way (so far).
7. Do you have any advice for those of us who have our own companies?
Stay the course, stay confident, smiling, and uplifting no matter how difficult. You MUST cut costs wherever you can. Negotiate hard with your bank; shop for a second “backup” bank just in case. Be honest and open with any employees who are afraid or worried. Answer their questions honestly and fully. (Fear of the unknown is the worst!) Those good people who understand will stay with you, those who don’t usually end up leaving anyway.
8. Do you find budgets sexy? ;)
Thanks to years of planning and BUDGETING, we grew this business from one ratty old building with a dozen people to a new, state-of-the-art facility with 80-125 employees and 1700 foot freeway frontage, 250+ RVs in stock, and the BEST STAFF on the PLANET! Yeah! Budgets are sexy!
And there you have it, my very first big boy interview – whew! Gotta give mad thanks to my RV owners out there for taking the time to share with us, and more importantly being so open and honest :) I’d proudly work for you all anytime!
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