Last week, a local Ottawa bakery abruptly closed its doors after 90 years in business. The story’s regional newsworthiness was perhaps magnified by the business’s incredible duration and equally sudden end. The owners also honorably did not hide in the shadows — as I visited one of the two closed Rideau Bakery locations on the weekend, I heard the unlatching of the door from the inside, only to see a local television crew emerge — and invite comment. (I declined to go on air, but caught an image of the interview with the person also at the site with me at the time.)
Post-mortems suggest the business almost stalled in time — retaining equipment, operations and procedures from another era long after these ways of doing things became obsolete. This “stay in place” obsolescence ultimately became a powerful marketing selling point — certainly it had a genuine claim to uniqueness (and its hand-made industrial quality products were quite good as well.)
But the primary owner/baker failed to adhere to the business adage: “Be capable of working on, not in, your business” — which meant for him starting at work in the middle of the night six days a week, virtually year-round. And when serious health issues occurred, he had no effective back-up. Rising costs and inefficiencies in processes also made the business marginally profitable.
I think of this business failure as my business has just passed its 30th year. There have been plenty of near misses, and I’m certainly doing much work that should be delegated if we had the resources and surplus cash. But I’m thankful for some qualities that have allowed it to survive, including:
Managing the debt
Yes, the business accumulated an onerous burden of debt, well into the six figures, but most of it was totally unsecured (and not-personally-liable) trade debt. There was some bank debt, but I put a firm cap on it — and when the bank offered more credit in good times, I declined. The bank limits set a limit on my business, forcing tough decisions when I needed to make them.
A few months ago, we completed a restructuring with the bank paid in full and the major unsecured trade creditors accepting a 10-cents-on-the-dollar payout, almost exactly the amount I would have had to pay a bankruptcy trustee to wrap things up. The settlement agreement included a creditors’ commitment to clear the credit record for the company and avoid any personal liability for me.
My business has only been sued once, and as noted above, I received some solid advice from the company’s lawyers on how to handle the creditor arrangements. Great professional advice is worth every cent. (I still remember “winning” the lawsuit some years ago, after my lawyer correctly and quickly interpreted the case, and offered me practical advice in preparing for emergency hearings.)
Adaption and change
The business started in the early years of desktop publishing and with the arrival of the labour-saving fax machine back in 1988. We published monthly newspapers then. Today, I publish a new daily newspaper — at least as defined by the Ontario Construction Act. Everything we do is digital now, and the successful transition from print to online has allowed the business to remain viable and profitable.
What does the future hold? I cannot answer that question easily. How will the business transition as I move to retirement age? I expect it will gradually be transferred to a couple of key employees and contractors who have paid their dues over the years. But I’m not in rush to leave because I’m plenty of fun