In June 2005, Art and I were riding high. We had just opened our business, Golf Etc. Fairfield, and were celebrating with family and friends. We had taken out a second on our home in order to finance the venture (Art’s parents had also taken out a second on their home), but we were convinced we were doing the right thing.
And for the first year and a half things went very well. We hired a manager and bought a new truck. At the end of 2006, our first full year in business, we were named Rookie Franchise of the Year by the Golf Etc. corporation. We were on track for 2007 to have gross revenue of over a million dollars.
Then, in early 2007 we fired our manager after discovering he had been stealing from the till since the beginning (for a total of about $6000). When he left, he took many customers with him. Business started a slow drop off and then the TARP bailout happened and people started defaulting on their mortgages. Our biggest customers had been real estate agents and mortgage brokers, who suddenly had much less expendable income than before. We struggled to cover our payroll, let alone our loan payments. Art’s parents sold their house and moved to a less expensive housing market. Art & I refinanced to combine our first and second mortgages. Finally, in May 2009, we hit the final straw. A break-in had taken a good deal of our merchandise and we had missed a payment on our insurance, so we could not afford to replace the stolen items. We decided to hold a going-out-of business sale and closed the doors permanently on May 30, 2009.
Next came the bankruptcy. In retail, most people are required to sign a personal guaranty in order to get credit terms on merchandise. A personal guaranty meant that even though the business was defunct (no assets), Art & I were still personally responsible for all the debt the shop had incurred. In addition, due to the second and subsequent refinance, our house payment was now double what it had been before we opened the golf shop and we had almost no income. I had a part-time job as a bookkeeper bringing in about $1000 a month and we had saved some money from the golf shop closing, but that was it. The bankruptcy eliminated everything except our sales tax debt which we are still paying off at $100 a month.
But out of the ashes of a failed business, some good things did happen. Check the story of how a business failure brought renewed relationships.