Today, March 22, will mark the ten year anniversary of my termination at Eagle Sign, a small manufacturing company in Des Moines, IA. I worked at Eagle in two different stretches separated by eight years and, coincidentally, it was also twenty five years ago today that I left Eagle Sign the first time.
I’m sure that, upon reflection after several years, a lot of people who have experienced a termination assess things pretty positively. They may even say that it was the best thing to ever happen to them. In my case, ten years have now passed, and I am not at all prepared to say it was the best thing to ever happen to me. I still think it was really bad.
I clearly learned a lot during my second turn at Eagle. I went back there in 1999 to be General Manager. The CEO of the company was a good friend of mine, and unfortunately had what turned out to be terminal cancer. I hadn’t been back a year when I found out he was attempting to sell the company. His first deal fell apart and so I subsequently worked to find a group of investors that I could be a part of. On my second try, I got connected with the right people. We bought the company in November of 2000.
Going back there turned out to be a big mistake. Given the job I had just left, probably the biggest mistake of my career. Being part of the investor group was also a huge mistake, but for entirely different reasons.
We were in trouble business-wise almost from the beginning. The economy officially went into recession in March of 2001 and our sales had already begun to drop like a rock. We didn’t lose any customers, they simply stopped buying. And we didn’t have that many customers, either. It was a weakness that we were fully aware of when we bought the place, but we thought that the diversity of the businesses our customers were in would help insulate us from recession. We couldn’t have been more wrong.
We went from $4MM in sales in 2000 to $2.6MM in 2001. ’02 was our worst year, where we dropped down to $1.9MM. You can imagine what our losses looked like given that our breakeven point that first year was north of $3MM. We were burning up cash at a rate that was beyond alarming.
Somewhere in 2002 or 2003, we had a meeting of the investors, and I had come prepared to present some ideas to dramatically scale back our operations in order to stop the bleeding. To do this meant moving to a much smaller facility, eliminating numerous positions, and the possibility of growing highly profitable again would be pushed back far into the distant future. When I brought the matter up, no one said much of anything. I let it go and we moved on to something else.
I should have pushed it, and pushed it hard. I had been in our business long enough to know how difficult it was to get new accounts that were of the size and type that we required. The investors needed me to tell them that even if it was something none of us really wanted to hear. I failed to communicate to them sufficiently just how difficult the road ahead was going to be. In retrospect, this was the greatest failure in my management of the company and my biggest regret.
Once it was clear that we were moving forward, I took the position that our number one goal was pretty simple: We had to increase our sales volume, and to do that we needed to get more customers. We were going to pursue that goal extremely aggressively. We hired more salespeople and a sales manager. We also got very aggressive with our pricing. The idea there was we would take business at very little margin if we had to, build the relationship with the new customer, show our value, and then raise the pricing as soon as we could over time. I have lots of regrets about my management of Eagle, but this isn’t one of them. I would do it again if I had to do it over, regardless of how controversial it may have been at the time.
It all actually began to work pretty well over the next two years, as we increased our sales volume and the number of customers rather radically. It just wasn’t working fast enough to make us profitable soon enough. By the second quarter of ’05 we were routinely making money after operations, but it was averaging less than 5% of sales. It wasn’t sufficient to keep the investors interested. They had had enough, and I couldn’t blame them. They had lost a lot of money, and I deeply regret that to this day as well.
In February of ’06 we sold the company. In March I was out of a job, having been let go by the new owner. I was four days short of my 49th birthday.
Next installment: Starting Over