Chris Larsen describes losing $250,000 to a customer bankruptcy and the sleepless nights that followed. He learned that cash and liquidity matter more than profit margins when survival is on the line, especially before a recession hits.
$250,000
I can distinctly remember sleepless nights because we had a company go bankrupt that owed us a quarter million dollars and we weren't a big enough business to swallow that. So how am I going to make payroll on Friday? And I stopped paying myself and I started really getting in the war room every day, trying to crunch through the business. That perseverance lesson of when you go through a tough time getting through it, as you know, the statistics of businesses that survive five years or 10 years, there's statistics around that that are pretty dim. A lot of it is really setting your business up financially to be able to persevere. And the point you made right there about recession is critical because if you're able to have a strong balance sheet going into a recession, and by the way, don't know when a recession's coming. So basically that means have a strong balance sheet at all times. And understanding what a balance sheet is to way too many business owners, the P and L, and they're looking at the P and I go, I'm profitable. But then they look at their net operating cash and they're like, oh, that doesn't look too pretty. So maintaining a strong balance sheet was a critical lesson.
