Joe Six Pack America
You have a friend named Joe-Six-Pack. Joe’s life has really taken a turn for the worse. Joe was once a bright strapping young man, full of radiant energy and charisma. He inherited a large sum of money as a young man and rather than carelessly living off the resources he had, Joe invested in himself and in numerous ventures that turned extremely profitable. Joe and those who knew Joe experienced decades of prosperity. Joe took great care of himself and lived a disciplined life well within his means which we large to begin with.
Today, Joe’s life looks much different. Joe spends his days lounging around on the couch. His figure doesn’t remotely resemble his chiseled body of the past. His stomach has swelled, his energy level is low and his sharp witty sense of humor has gone away. Many of his once profitable business ventures have gone bad from neglect. Joe decided to outsource much of the management and production to others so that these ventures wouldn’t occupy his time anymore, he stopped coming up with new ideas and worse, gave up paying attention altogether. He had been funding the losses with his inheritance money as well as his savings, but for the last decade, Joe began funding the losses with credit cards and borrowed funds from his extended family and friends, one of these friends is you.
You begin to get really concerned about Joe. You notice that most of the money Joe has been borrowing has gone to purchase video games, big screen TV’s and comfy couches for Joe to relax in. The people hired to manage Joe’s investments have done a poor job and you are worried about giving them any more money as well. Joe is a good friend though and you believe in him. He asks you for some more money and says that his future will be brighter and he has a plan to turn things around. He spends weeks coming up with a plan and he presents you a budget and shows you how he is going to cut his spending by 1% this year. You look at him with raised eyebrows and wonder if this is the best he can do. At first you tell Joe no, but he breaks into a furious rage and you give into his demands and stroke another check.
Joe is now further in debt with you, and none of his bad habits have been purged. Even worse, you and everyone else around Joe is losing confidence in him. Joe will be paying more in principal and interest payments to service his debt and he cut his expenses by only 1%. Why would anyone ever invest in Joe?
If Joe represents America in this anecdote, why would anyone invest in our country? Maybe Joe is a representation of your business? Very often I speak with struggling business owners all over the country. Many are distraught, stressed, frustrated and drained of all passion for their business. They have spent too long working too hard for too little. They are on the verge of default with their creditors and they can’t understand why they won’t “work with me.” They believe their creditors should give them additional working capital or voluntarily slash the monthly payments. Why would any bank do this? This is the equivalent of investing additional money with Joe!
Rather than investing additional funds, the bank would want nothing more than for you to have a day of reckoning and shut down the business. Yes, the bank would prefer to see you remain in business and pay them off in full, but if this is not possible they would want nothing more than to see you wind down the business and pay them back the maximum possible even if it is short of the full amount. The orderly liquidation or sale of your business is a clear demonstration that you really understand the banks position and you are doing all you can to make things right. If you have personally guaranteed the debt, they will also give you much more consideration if you end up trying to settle this.
