Daniel Jalkut wrote an excellent piece on his blog entitled Only A Game. He talks about how running an indie business is like playing a game — you have to make decisions that you know might make you lose. Unfortunately, that's what happened to me last year — I made a gamble, and I lost.
Things are getting better. Slowly. Nine months ago, I wrote this post essentially about how I sucked at being a businessman, and since then things got much much worse before getting better. This post is an account of what I've been through in these past few months. Everything I talk about was caused directly by the fall in income I suffered due to the my gamble failing.
The plan was this: Release Music Rescue 4.0, then write and release a kickass iPhone Geocaching app. After that, we'd take a month or so off before working on a huge project that's been brewing for years related to racing and track driving.
What happened: I hired a friend of mine to work with me. We wrote the Mac and Windows versions side-by-side, and released them as planned before working on the Geocaching app. Music Rescue did really well, so to thank my friend for doing a great job on Music Rescue I bought the car we'd need for the track driving project early and let him have it as a company car. When we started the Geocaching app, he was writing the server side webapp, and I was writing the iPhone app. The server-side was taking longer than the iPhone app, which was ok because it was a ton more complex, so in the meantime I wrote and released Clarus to boost the budget a bit. Then, as the code for the Geocaching apps was nearing completion and I started booking time to get the final set of graphics done… my friend quit.
Up until this point the budget was tight, but working. There was enough saved in that company's account to cover slightly negative cashflow until the Geocaching app was released, at which point the sales from that would push the cashflow back into the positive and replenish those savings. Suddenly, there was a huge red hole in the cashflow that I couldn't even come close to being able to fill without taking the huge (70%) pay cut for a few months.
Getting Back on Track
Now, if I could have taken a three-month break in paying my bills and debts, all would be fine. Unfortunately, that's not how it works. The Council got bored of waiting and sent out bailiffs. Credit cards halted my accounts and started to ask why I decided to stop paying them, at times refusing to believe I didn't have anything to pay them with. Everyone else just asked me to make up for the arrears I'd generated by paying a larger amount each month, which is a hard ask when I'm earning a lot less than I used to.
Note: From here on I talk about the importance of a debt. Obviously, they're all important. However, when you don't have enough money to pay them all, the one that keeps a roof over your head is more important than the rest. Please, no knee-jerk reactions to this statement please. Especially if you're still living in your parents' basement.
Another Note: Everything I discuss here is personal unless explicitly stated - the company's bills get paid first, so I'm not having much trouble on that side.
One thing I've learned is that the amount of grief you'll get from a creditor when you start struggling is inversely proportional to the importance of the debt.
Mortgage
My mortgage company has been nothing but supportive, and the worse it got was when they phoned me up to tell me they were sending someone round to see me — not to demand payment, but to sit down with me and help sort everything out. At one point, they were telling me that if I didn't start turning things around soon they'd have to start looking at repossessing my house, but at the same time stressed that it wasn't in their best interests to do so and gave me enough time to sort everything out — as of January, I'm not in arrears anymore. Hooray!
Credit Cards
Credit card companies seem to be the worst. The worst of the companies I've dealt with over this period are MBNA, who run Virgin credit cards and a ton of others.
I got a phone call from an "Account Manager" one day, asking why I hadn't paid the money I promised I would pay the previous Friday. I explained that 1) I didn't promise anything and 2) I didn't have any money to pay with. Then:
while (1) {
Manager: "Sir, you can't make a promise then not pay it."
Me: "In that case, I can't say when I'll be able to make a payment."
Manager: "Why not?"
Me: "Because I don't know when I'll be paid next."
Manager: "So what you're saying is that you don't intend to make the payment you promised?"
Me: "No, I'm saying I'll make a payment when I can. That's what I promised."
Manager: "I can only help you if you keep your promises — when can you pay?"
Me: "Like I said, I don't know."
}
After a few loops like this, the guy started getting aggressive to the point he was literally yelling at me. In the end after trying (and failing) to convince him to stop going round in circles, I hung up. A few days later, I got a phone call from a "Senior Account Manager", who started out friendly but quickly devolved into the shouty loop above. I didn't even bother trying to argue with this one, so I just hung up on her mid-sentence - the first time I've ever done that to someone.
Eventually, I had to go through an organisation called the National Debtline to get MBNA to see sense - more on this later on.
Council Tax and Their Bailiffs
Unfortunately, Mid Beds Council suck at helping people who struggle with Domestic Council Tax. Unfortunately, since Council Tax is in its own special legal bracket, they just turf it off to a bailiff after two missed payments and refuse to talk to you after this is done — "It's out of our hands", they say.
Compare this to their Business Rates department, who sent the company a letter asking for full payment or nasty stuff will happen. I phoned up and asked if I could pay in instalments, and they sent someone round to apologise for the nasty letter, help me reduce my rates through the Small Business Rate Relief scheme and set up a monthly instalment plan. The difference between these two departments in the same building absolutely astounds me.
Anyway — the worst people I've had to deal with are bailiffs trying to get Domestic Council Tax. The worst thing to do with these people is to piss them off. I kept getting repeated phone calls from this guy from Rossendales, telling me that if I didn't pay right away he'd come into my house and take my stuff. I pointed out that breaking into my house is illegal. He smugly pointed out that he'd make peaceful entry into my home, and the only way to stop him doing that would be to assault him, which is illegal and he'd phone the police.
"Not opening the door to you isn't assaulting you, is it? There's no way you could gain peaceful entry to my home if I didn't open the door?"
"…Well, no." *Hangs up*
That was the first mistake.
A few days later, this guy turned up at my office, demanding to see all the receipts for the company's stuff otherwise he'd take it with him to help pay the debt. I proceeded to take him through every receipt I've kept (which is all of them) since the company started in 2005.
"Here's the receipt showing that the letterhead we used in 2005 belonged to the company."
That was the second mistake. Eventually he got tired of this and decided that the support iMac could be taken, since the receipt only had my name on it and the company's address (which is fairly normal, since I buy stuff for the company). Unfortunately, his threatening behaviour and my panic clouded my judgement and I believed him, phoning up my mother to beg her to lend me the money to get this guy off my back.
What I should have done is phoned the police. Not even the HMRC can take away equipment that's essential to a business' operation unless they're completely winding up the company in question, so a bailiff collecting a personal debt certainly can't.
Thanks to the humbling generosity of my mother and my girlfriend, I got the bailiff to go away. I'm currently placing formal complaints with the Council, Rossendales and the court which gave this particular bailiff his license.
HMRC
The HMRC have been great. Despite initial threats of taking all my stuff, once I got through to a person they've been absolutely fair in letting me settle my liabilities in a way that won't cripple me. Fairness is all I ask for.
The Turning Point
If you start struggling, phone the National Debtline (or your country's equivalent). Without a doubt, they are the reason I've been able to pull out of this relatively cleanly. They helped me with everything I was out my depth with, from dealing with that bailiff to sending me a big (free) information pack to help deal with the rest of my debts with a severely reduced income — and I swear I've never seen such a huge turnaround in attitude than the one I saw from MBNA once I got National Debtline involved. They went from yelling abuse down the phone at me to pretending to be my friend and being all caring and shit about my problems.
We Can Rebuild Him. We Have the Technology.
Things won't be back to normal for a long long time — hell, I won't be able to get credit for years so it's a good job I already have a somewhere to live. My plans have been irrevocably changed — I won't be taking any more gambles like this for years. Instead of taking risks with cool new ideas, I'll be maintaining my income stream by working on Clarus and Music Rescue and possibly seeking a more stable form of income to supplement that from KennettNet.
I'm down, but not out. In a few years, I'll try to expand and do cool new stuff once again — hopefully learning from the mistakes made this time. I'm already excited about doing that, but am fully aware that I need to spend a while recovering from this setback first. During those bad months, I seriously considered throwing in the towel and giving up — letting them take my house, my things, declare bankruptcy and go work at McDonalds.
However, the small gestures of mercy shown (funnily enough, by my mortgage company and the HMRC) towards me as well as the support given by certain people in my life have shown me that I'm not being punished for trying. Once the HMRC, for instance, found out I was running my own company and I explained what happened, they realised I wasn't trying to weasel my way out of paying and I got the distinct impression that the people involved in my fate were genuinely trying to help me get back on my feet. Along with this, the support given by my girlfriend has been absolutely astounding. In fact, I've been trying to think of something to do to say thank you to her, and all I can come up with is to ask her to marry me. That sounded a bit extreme, so I just said "Thank you" instead.
So, lesson learned? Screwing up sucks. However, it's not the end of the world — despite what the cynic inside me would like to think, my experience suggests that when you're genuinely in trouble and, more importantly, are trying to fix it, the human beings who reside inside "the system" will genuinely try to help you. Except the ones in the Domestic Rates department of Mid Beds District Council. Bastards.
Oh, and I'll never employ a friend of mine again for as long as I live.