Never Co-Sign A Note
All previous business I did with this person resulted in prompt payment. My contract called for payment within 30 days of completion. Additionally, I received a “downstroke” of $10,000 before the job started. What more could one ask for? Doing business with a good personal friend and customer who always paid his bills on time — no reason to suspect that anything might come crashing down.
While the above project was taking place, my company was performing service calls at my friend’s six supermarket food stores on an ongoing basis, getting paid all along. Heck, this relationship was the next closest thing to doing work for a brother, sister or a son.
Ultimately, the $50,000 project came to an end and the final bill was sent out with great dispatch. Several weeks later I received a call from this gentleman advising me that he had what he described as the “cash shorts.” Have you ever heard that one before? I’m sure most of us have. He wanted to make sure I did not have to wait for my money and proposed that I co-sign a note with him for the tidy sum of $40,000. The note was executed and held at the bank I had been doing business with for 10 years. What a great way to be paid, so I thought. In my mind, there was no reason to mistrust a great friend.
Disappearing Act: About 10 months later, I received a call from my friendly banker advising me that the principle on the note was not being paid, only the interest. I called my “friend” and advised him of the call. He said there was nothing to worry about and he would commence paying off the principle and interest. I breathed a sigh of relief. As time went by, I received a number of calls from the bank regarding the same problem — interest being paid, but no principle. It suddenly hit me between the eyes: I was the banker loaning the money because I was responsible for the payment of that note if the co-signer reneged on it.
The crushing blow arrived in the form of a letter I received from my “friend” stating he was no longer in a position to fulfill his financial obligation. My follow-up letters and phone calls brought no response. He disappeared into thin air. I could not even sue the bastard. What it boiled down to was that I paid $40,000 to do a job.
Did I exercise my lien rights? Hell no! He was my friend and trusted business associate.
Was I a Slug? You bet I was, spelled with a capital S.
Lesson learned. Don’t make the same mistake I did.
Multiple Lessons: I would like to share with you another very important lesson I learned at the young and tender age of 13-1/2. I was ready to enter high school. Among the high schools in the area was one, Milwaukee Boys Technical Trade School, that offered a five-year plumbing curriculum, which, upon graduation, allowed credit of three years toward a five-year apprenticeship.
At that time, my father was working for a local plumbing wholesale house as a salesman. Naturally, he called upon the local contractors and was very impressed at what he observed. He tried to convince me that I should become a plumber. Attend Boys Tech and you’ll become a journeyman plumber when you reach the age of 21.
There was only one thing wrong. I didn’t want to go to a high school that prepared one for a career in plumbing. My mind was made up. I wanted to go to Messmer High, a Catholic school, so that I could play football, hockey, boxing, basketball and all other possible sports. I wanted to become an all-star. (I ultimately did achieve that status in boxing, football and hockey.)
Keep in mind that Catholic high schools charge tuition. My beloved father tried to convince me one more time by stating that he would not pay the tuition. My response, “I’ll earn my own tuition.” Throughout my high school years, I always had a part-time job. During summer vacation months, I had no problem procuring work as a farm hand, which helped me keep in shape for the upcoming football, hockey and boxing season.
I learned four important lessons from the above:
1) I learned to be self-sufficient at a young and tender age.
2) I learned to become competitive through my participation in athletics.
3) I learned that if one establishes goals and works hard to achieve them, you will achieve them.
4) I learned to eliminate from my vocabulary the words, “can’t” and “won’t.”
One More Lesson: There have been many lessons I’ve learned during my lifetime. Some, like those just cited, have been learned in the school of hard knocks, i.e., experience. That’s not a very good way to learn because there is too much to learn in a lifetime and life is too short. Consequently, relying only on experience, one is likely to die stupid.
Reading trade magazines is a better way to learn, but unfortunately not many in this trade have the time to read because they are too busy “buying themselves a job.” Additionally, very few people have sufficient comprehension levels to succeed through reading alone.
The best way to learn is find out who the successful people are, stay close to them and then try to do it better than they could. A word of caution: There are many impostors out there who bear false messages, especially those who tell you that they are financially successful and have achieved that status by charging the “normal and customary rate” in their market area. Believe me, they are full of it! I’ve seen enough profit and loss statements that have shown me that the vast majority of PHC contractors are underpaid and they are not very profitable.
There is only one way to find out if they are financially successful. Ask them to share their profit and loss statements and balance sheets with you. If they refuse, move on. Successful contractors love to share that type of information with one another because they are proud of their accomplishments. They are willing to help.
I wish everyone happiness, good health, long life and success in 1999 and beyond.
God bless.
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