Worst case scenario: Part II What you need to know when going bankrupt
Liquidity bottlenecks are causing more and more tool, pattern and mould making entrepreneurs to deal with bankruptcy issues. Johannes Brinkmann, managing director of form & function from Hesse, had to experience first-hand what it means to go insolvent more than eleven years ago. In Part 2 of an interview, the 51-year-old talks about his experiences at that time and shows which mistakes should be avoided as best as possible.
Mr Brinkmann, more than eleven years ago you had to file for insolvency for your tool and mould making company. What can you tell us about that?
Johannes Brinkmann: Quite a bit. I have had to lay off about 100 people in my life. I wouldn't wish that on anyone. The moment you file for insolvency, you become a driven man. That is often played down in the media. In the end, the damage to you personally in an insolvency is gigantic. I would like to protect others from this. Insolvency should always be the last resort.
What were typical mistakes that you would have liked to avoid back then?
Where should I start? The economic upswing and our good work ensured that we were able to grow continuously with almost no effort. So distribution was a basic weakness of ours. We were dominated by the slightly arrogant way of thinking that the customer had to come and place orders. No matter whether it was through Google, personal contacts or public relations — in terms of sales, we were far too weak at every level. At that time, I took over the family business as a junior. This constellation also has pitfalls ...
What do you mean by that?
My father was no longer the boss, but he also wanted to be involved. As a junior, I was sometimes consistent in my decisions. But sometimes not, when I feared that my father might be right after all with his opposition. For a company in crisis, it is very dangerous if no firm decisions are made.
That means you should have trusted yourself more?
Definitely. Also in general. As a mechanical engineer, I am a classic analyst. I saw early on that something was wrong in the company and took the necessary steps. They also showed their effect. But at the time, that wasn't enough to counter the Lehman crisis. At that time, banks provided me with management consultants who cost me a fortune. Today I know that an entrepreneur should not let it get that far in the first place.
Worst case scenario: “I never thought we would go bankrupt”
Why is that?
... because the difficulties in a crisis are usually obvious. You just don't want to admit them to yourself. As with the example I gave regarding distribution. One has orders. They will come. Yes, they do. That was the case in Germany for maybe 50 years. But no longer in the 60th year. In my arrogance, I missed this change in the past, just as many others do today.
So you don't blame the economic crisis alone for your failure ...
You are always partly to blame. If I recommend using as little management consulting as possible, that doesn't mean that you should do everything on your own. On the contrary. I should have opened up and focused on the few people you can trust.
Do you have a specific example in mind?
I often signed documents, liabilities and the like, which my wife warned me not to do. She said, Johannes, don't do that, that's going too far. At that time I was a young, ambitious man who thought he was strong and could do everything on his own. My experience taught me otherwise.
Opening up, getting confidants on board and speaking instead of remaining silent — so that's what matters?
In retrospect, I would say yes, that's right. The goal should always be to communicate. We were a long-established company and always had the attitude: What do others want from us? That's a very dangerous attitude, and one that completely exaggerates the situation. Being networked is what matters. But that requires that you take the initiative. There are a number of platforms that you can join.
Today I know that if I had been connected and exchanged ideas and had access to the benchmark, I, the company and everyone involved would have been saved a lot of trouble. It would have opened up new possibilities for me and brought some insight. The insight that it's time to stop.
Quitting always involves a lot of courage. Being courageous is not easy ...
But in a position of responsibility you are asked to be courageous. It is crucial to decide. Not deciding is the worst thing you can do. At that time, I should have admitted to myself much earlier that the company no longer had a chance because there was no more work and no more money. If I had been able to do that, I wouldn't have let it get to the point of insolvency. You have to face the situation in time with a very strong will to change.
What would have been the right course of action?
A company must be able to hold its own in the benchmark. And in the end, it's always the businessman's way of thinking that counts. So first and foremost, it is important to assess accurately. Assessing oneself: Am I even up to the challenge as a human being? What am I capable of achieving? How much pressure can I personally take? But then also assess your own company. One possibility is to participate in the benchmark initiative Marktspiegel Werkzeugbau or to use CIP systems like Time View.
If you only knew how many yellow letters I have received. At some point that alone gets you so psychologically down that you say: I don't want to go to the letterbox any more.
In other words, be aware of where you stand. Where do you go from there?
Once the data and facts are on the table, I recommend involving a confidant to objectify the results. Then the decision has to be made. Quit, sell, stick it out? One should define goals. Where do I want to take myself and the company despite the adverse situation? Then it is time to implement plans step by step. But from my professional experience with Time View, I know that precise measurement in particular often comes up far short.
Speaking of Time View. After the bankruptcy notice, you were lucky enough to be able to continue working as an entrepreneur. How do you look back on that?
Correct. As Managing Director of form & function GmbH, I was able to devote myself immediately to a new task and develop and professionalise a CIP system with Time View. At that time I didn't think much about it, I just stepped on the gas. It's the current crisis that first made me reflect intensively on my past.
What is your conclusion?
Johannes Brinkmann: Failure is part of the job. It's not worth being ashamed. I have grown a lot from my experiences and am also grateful that I was allowed to have them. Ultimately, I still feel a deep pain towards all the staff I had to dismiss. I have gone through a long process. Today, I have the maturity to publicly admit to my past. And because my heart beats for tool and mould making, it is my intention to help. I want to help and make up for a little bit.