Meeting the Accountant

We met with the company accountant this afternoon. He said “the company cannot afford to pay any expenses that are not directly related to generating revenue”, and, “for anyone to get money the company must prosper”.

The accountant thought my figures looked right and most of Dad’s drawings would go against his loan account. That means that I’ve paid most of the loan account off and the business is almost fully mine. Even if my figures were off by $50K, I’ve got most of the loans paid out.

Dad claimed that the opening stock would be closer to $2 Million. The accountant told him we wouldn’t be in this mess if that were true, at best the stock will value at between $500K and $800K.

Dad blamed me for poor management. I ignored that. It turns out that he is really pisseedd off that I phrased option three as “the tap is turned off and there is no more cash for you”.

After some further tension we agreed
1) to stop paying non-core expenses (and therefore all costs associated with Dad and TWS).
2) I’d revise the opening stock count as at 1 July 2002 and we’d agree on an appropriate valuation with monthly payments to commence until the loan balance is paid out.

Dad thought I could do all this in 6 weeks. The accountant said it would take 3 months to see if we could turn the company around. So I have until the end of August 2003 to get this thing on track.

Dad said he wouldn’t approach any of my distributors, nor place any orders with my suppliers. He admitted he’d flown our Queensland manager down to talk and meet some suppliers (why?).

I called the office after the meeting and left a message for the manager to wait there until I got there. TWS spoke to my Dad and they decided it wasn’t a good idea, so she drove him away before I got there.

So I know Dad’s cooking something up.

What a Mustache!

I put faces to names this evening. I was at the launch Steve Navra’s of NavraInvest’s Navra Blue Chip Australian Share Retail Fund, (more on that later), when I met a bunch of neat people who hang out in the Somersoft Property Investors Forum

Interestingly one of the guys had a surname that could translate to be “mustache” – he was clean shaven. You know that his ancestor’s mustache must have been truly impressive and remarkable (in a nation of mustached men), for the surname to stick.

Just needed to note that somewhere. Tomorrow I’ll ‘blog some thoughts on the launch, the fund, the people.

Oh and I’ll update the latest in the succession wars.

Salvo 2

Dad, The Wicked Step-Mother (TWSM) and I met at the office today. I was acccused of stabbing them in the back and twisting the knife. I got called Judas and my actions were appropriate for Greek Easter.

They demanded I pack up my stuff and leave immediately or they would bodily throw me out. They were angry and it had to run it’s course.

After some rudeness and yelling Dad called the company accountant. He offered to meet with us on Tuesday at 11:30.

Dad: “Slit anyone’s throat in business but never slit your father’s, just as I’d never slit yours.”
TyroCEO: “But you have… to the tune of $300,000!”

Dad: “Get out. Get your shit and leave. The stock is mine.”
TyroCEO: “No it’s not.”
Dad: “Yes it is.”
TyroCEO: “No it’s not.”
Dad: “Yes it is.”
TyroCEO: “No it’s not.”
Dad: “Yes it is.”
TyroCEO: “Are we going to do this for the next two hours or is there some point?”

Succession Wars

I allocated Dad’s drawings to a capital account. For the non-accountants that means classifying his costs as paying for something of value (like inventory) or as a loan (which can be called in).

Once sorted and simplified, the number comes out to a $306K economic benefit over the last 12 months.

This morning he screamed on the phone that one of his credit cards was declined. Something inside me snapped and I told him to come to the office we need to talk.

Everything started ok. Actually it was going better than I expected. He challenged my calculations and allocations. I allowed that but said he’d have plenty of time to double check and correct any errors, but if my figures were right, he’d gotten a $300K benefit when our deal called for $125K. We had a problem and it needed immediate acion. He asked if I’d worked out my economic benefit($72K for the record). He just couldn’t see that the numbers came to $306K and if they did it wasn’t him.

Then I mentioned I’d given copies of the reports to his brother (and business partner). He lost it! Until then it was tense but civil (by his standards). He demanded I resign – I offered to if he paid out my company credit card expenses, plus $100K (my pay cut to take on this turnaround) and pays me a salary until that’s settled. He disrespectfully declined.

The only other option that I saw was to turn off the tap – cut him off totally. There wasn’t a lot of win-win focus at this point.

I believe that his drain on the company is the single greatest threat we face. I can’t see how I can deal with it and maintain a good relationship with my father if he cannot acknowledge reality.

Expense Audits

I think I’ve mentioned my company’s cash-flow crunch. At a meeting this week, another business owner quoted her mentor “if you haven’t had cashflow problems you haven’t been in business”. I’ll draw solace from that.

Instead of throwing 100% of my efforts into fixing this problem, I have to divert attention to dealing with retired family members. My takeover agreement allowed for a generous set of… let’s call them retirement benefits.

I haven’t audited these expense claims too closely until this week. My casual check scared me to death. Dad’s credit card expenses are running at 15 times budget! Right now, all I want to do right now is plug that fiscal drain and scream a bit.

Instead I am auditing 12 months of expense claims and preparing to a bill for him (once he returns from South Mole Island. Christmas lunch may be somewhat strained if I ban my father from company premises. I expected this to be a win-win relationship. The evidence suggests I’ve been a schmuck. By initial estimates it looks like his drawing from the company over the last 12 months has been 400% of our agreement.

R.I.P. Hartleys (non-WA)

Well Hartleys is no more (unless you live in WA). Bummer really, as they were my full service broker and that’s how I did my options trading. I can move either with my broker to a new firm or go fully on-line and use Commsec.

Full service brokers are good for after-market trades and occassional heads up calls. I value being able to buy stock at 4:30 in the afternoon, but I’m not keen on their commissions. So the deal must be worth it. Heads-up calls are normally marketing guff designed to drum up business. I don’t like them too much but I have made some money thanks to them.

I’ll set up an account at the new brokerage but will trade options via Commsec (that’s assuming I like Commsec’s options trading interface). I’ll let you know when I do that. Meanwhile I have a huge stack of forms to fill in for the new broker 🙁

Cashflow mayhem

MYOB sucks!

Alternatively, my MYOB skills are severely challenged ;).

The company is coming out of its traditional New Year’s cashflow crunch. Our sales in January and February normally represent about 6% of annual sales. As a result I’ve been monitoring our cashflow more closely than normal. Making payroll and paying suppliers is a good thing.

Anyway I’ve been forced to track our main account in a spreadsheet to forecast our cash needs over a 2-12 week horizon. Specifically I wanted to juggle dates to pay certain bills. A spreadsheet is not the easiest tool for that as I need to enter every transaction twice — once in MYOB and again in the spreadsheet forecast.

If anybody knows a way of doing this in MYOB please let me know! You’d think a small business accounting package would have a tool to do what-if analysis.

Anyway Easter will be tough and then its a nice ride up to Christmas. This year I’m putting a bigger buffer in place for next year’s slow down.

Communication Technique

One of my distributors got angry at me today. Actually, my phone manner pissed her off. Specifically, she said the way I “hmmm’d” while she spoke sounded like I was eating an apple and reading a magazine. At the time I was trying to make her feel heard (!).

In a dispute use the communication technique that sounds least like a communication technique. That was the advice from Christopher Moore of CDR Associates, the internationally acclaimed dispute resolution firm. These guys are skilled, brilliant and cool. My summary is a poor understatement of their abilities (and I know and love these guys).

I must be getting rusty. Despite not agreeing most of her content, I did want to hear the complaint and acknowledge her reality. I also didn’t want to argue with her.

I could finish this entry with a pithy “you can’t win them all”, but that lets me off the hook. I don’t think my relationship with the distributor is viable. She will probably resign on Monday. But I need to lift my game in difficult times. It’s easy to win when everything is going my way. It’s the way I deal with complex and unhappy pressures that builds loyalty and inspires the extraordinary efforts of my team.

Incomplete BHP trades

I haven’t noted a few trading attempts that didn’t come off recently. Mainly because I was too busy to write something that didn’t happen. With hindsight I think that was slack — trades that don’t come off are still an attempt to trade.

As BHP fell to $9.07 (1 April) I put a buy order to close my BHP April 9.73 calls. I bid $0.02 but they found support at $0.03 (remember I’m buying so it didn’t reach my offer).

My broker called me Monday (7 April) to regret not getting out at $0.03 (April calls have been firming since). I was a little frustrated, my strategy allowed me to pay $0.03. If I’d closed out I could have written a new call for $0.20-$0.30 premium. I wasn’t too fussed as I’m still in profit.

Today BHP April 9.73 calls closed at $0.05, so I think they’ll expire worthless. Sure I missed an opportunity to trade and gain about $0.25 before commissions. However thou shalt not overtrade has been tatooed under my eyelids.