How I almost went bankrupt - and then had our best year ever

Small businesses are fighting for survival right now. And my heart is sinking.

Because I get it.

My company REfficient, a resale and recycling firm in the telecom sector, had a record first half of the year in 2020. But it wasn't always this way.

I started REfficient in 2010 with one vision — no technology should ever go to waste. 

I knew that technology would be key to ensuring electronics were reused, so we built a software platform to help us match old commercial equipment with new owners. By 2013, REfficient was rapidly growing, almost doubling our revenue that year. 

We were contemplating taking on outside investors to scale the company.

And with the dreamy potential of investors in my company, I took my eye off the ball. I wasn’t running the day-to-day company like I needed. Coupled with my incredible bookkeeper becoming unexpectedly very, very, ill?

Suddenly we were experiencing an unexpected $100,000 loss.

That was a lot of money and I couldn’t see a way out. 

I’ll never forget that chilly November day. My bookkeeper and I walked through the warehouse after hours, with her crying and me sobbing.

But I was not going to give up easily. Failing was not an option.

Don’t get me wrong. The cash crunch hit us. We ran out of money and I took myself off payroll. Next, I had a very awkward conversation with key sales staff, trying to rally them to sell more, anything really.

We watched every single penny that came in and went out of the business for the next several months. I had every line of credit and credit card maxed out. I even carried a balance on my personal credit card, the first time in my life. Privately I was so ashamed. 

Those months were a fog to me. I was devastated and emotionally drained, but determined to stay positive and get my company out of the red. I did my best to keep up a front so our staff, suppliers and customers did not worry.

We plugged away, executing on our plan and desperately looking for new opportunities.

And eventually the fog did lift. Seven months after the tearful walk in the warehouse, we won a large contract, which put us back on track. I paid myself again and our debts were wiped out by July. By December 2014, just over a year from the time we hit rock bottom, we had recorded our best year ever.

Here are the key lessons I learned during that time

Find your confidantes and ask for help.

Have a few people with whom you can share openly — and cry if you need to. For me, it was my business advisor and best friend. 

You need to process your thoughts and emotions with someone trusted for your own mental health.

Don’t be afraid to ask for help, from anywhere. On the upside, it's no secret a vast swath of the economy has been devastated by the coronavirus. Most people want to help where they can.

Get to the bottom of your numbers.

Before my company crisis, I didn’t fully understand my business (or personal) finances. I didn’t even like looking at our bank account, afraid I wouldn't like what I saw. So I faced up to the fear and dug deep. 

• How much were we making on various items? 

• How much were we spending, and what value did it provide? 

• How much money did we need to cover the next 15 or 30 days?

Once I started looking at our numbers this way, several great things happened. 

• We became a much leaner, agile company. 

• I learned all about our finances, and even began a love of personal finance which continues to this day with DIY investing. 

• I saw numbers as actual numbers... and not some reflection of how good I was or wasn’t.

Communicate with those you owe money to.

Rather than hide, we made plans with suppliers on when to expect our payments, whether full or partial, to arrive. We kept them in the loop, especially if we couldn't meet the original timeline.

This was a stressful time. However, our openness had some surprising benefits. Not only were others willing to work with us, we gained a deep respect from them that strengthened our relationships long term. 

Our openness also encouraged others to share about times they too had struggled significantly. We weren't the only ones.

Ask “what is the worst thing that can happen?”

I dared myself to look at a worst case scenario and what I would do. 

If I had to shut down the business, I realized I would simply talk about it so others could learn. I would use my now expansive network to find a new job. Financially I could sell my condo if I really needed to generate cash.

Once I got clear on this, a tremendous pressure was lifted from my shoulders. The worst thing was not that bad after all. It would be a new beginning.

With this clarity, I wasn’t afraid anymore.

Execute on your strategy and stay open for something new.

Once we realized our dire situation, we revised our strategy and executed it, day after day.

But there is always a golden opportunity in life's toughest moments. There could be key lessons for you to learn, getting back to basics, a pivot to your business, or going in a whole new direction in life. Let yourself be surprised.

Something that blew me away was how quickly things turned for us. We had been struggling for survival for seven months and suddenly we weren’t one day. One contract put us on a new path.

We went from having a big loss to a big profit in a matter of months. There was a strange equilibrium to it, a phenomenon I’ve seen repeated elsewhere.

So if you're struggling, remind yourself: you just never know what could happen. Just as we didn’t see COVID-19 happening either.