Too Little Too Late

I got a call recently from a business owner who was in trouble. First we got through the stories about his big mean bank. Then we talked about how great and glorious his business would be if only he could borrow another $800,000. Then we looked at his balance sheet and discussed the lack of rich uncles or friends who might lend him the $800,000.

His bank is actually a little mean bank but they can't be blamed for his situation. Two years ago they made reckless and short sighted decisions but lenders are entitled to do that. The owner predicted exactly what would happen - his business would tank. And then he let it happen.

When your lender retracts credit you have to react, Yesterday. It really is that abrupt even though the results of not doing anything won't show up for maybe 90 days. But after 90 days you've lost, well, 90 days. And if your lender wants to snap the leash once, they're likely to do it twice.

Bad things don't really happen all that often, maybe only a few times in an entrepreneur's career. Not getting paid $300,000 by K-Mart was one that got me. A natural disaster was another. It's the rarity of these events that catches us off guard. We weren't trained to deal with them, they're often a surprise and entrepreneurs are incurable optimists. To date, no business owner has ever over-reacted when hit with really bad news. Even with my scars I'll probably still hesitate a few valuable days the next time I'm blindsided by bad luck. But it won't be 90 days.

As a managing director of Dorset Partners LLC, Jeff Sands specializes in helping CEO's navigating the choppy waters of our new economy.