Author Doug Constable on Emotional Stuff

By December 7, 2016Doug Constable

What To Do When You Can't Pay Your Debts Doug Constable

Are you a procrastinator and wait until the last minute to get things done or worse put things off for so long so that it actually hurts your business? When all is said and done, there are two types of people when it comes to stereotypes in times of crisis. There are the ones who are burdened at an emotional level by the life crises, be it sickness, relationship breakdown or business failure and who get stuck in recrimination, anger, bitterness and inertia. Then there are the ones who take full responsibility for what has happened, absorb the losses and move on.

#DougConstable #EmotionalStuff #OstrichPhenomenon #OstrichProblem

There are many reasons to act quickly. Your creditors will be treated fairly, you can protest your personal assets, you don’t get grumpy with those you love but most probably the biggest reason for acting quickly is so that the saga does not become a complex web of stories. If the husband is hiding some of the facts of the business by denying their existence or under-playing the serious extent of losses or debts then this behaviour of non-disclosure will erode trust and eventually break down a relationship with your partner. Worse; it actually changes personalities.

There are many reasons to act quickly. Your creditors will be treated fairly, you can protest your personal assets, you don’t get grumpy with those you love but most probably the biggest reason for acting quickly is so that the saga does not become a complex web of stories. If the husband is hiding some of the facts of the business by denying their existence or under-playing the serious extent of losses or debts then this behaviour of non-disclosure will erode trust and eventually break down a relationship with your partner. Worse; it actually changes personalities.

That once fun loving person that was full of hopes and dreams becomes secretive and evasive as they become skilled at evading creditors in many ways. This is the most important reason for acting quickly the very spirit that had the drive and ambition to start the business in the first place can very easily be lost when years of just surviving take hold.

I have a situation where I sat with a husband and wife who were going through a business breakdown. The husband didn’t tell his wife the biter reality of the state of the business. She knew he was withholding something from him. It was eroding trust and the relationship. Once the truth and facts of the state of the business were revealed she was almost relieved. She said “Is that all it is I thought he was having an affair.”

The Ostrich Phenomenon

As mentioned in my Introduction, that’s when people, afraid of learning bad news, avoid information about their progress (or lack thereof). Sometimes people don’t step on the scales because they’re scared of what they’ll see. In our schools now our kids play sport without keeping score I wonder where and when they learn that their performance relates to the end result.

Consider The Story Of Farmers, Brian and Emily.

Brian and Emily were farmers. They had a small family milking farm operating – what you might call a ‘Mum and Dad’ business – it provides enough to pay the bills but not enough to employ staff or expand. We all know that life for farmers hasn’t been easy. There’s been the drought, floods, supermarket wars and a multitude of factors beyond their control impacting on the viability of the farming sector. The newspapers are full of these stories.

Brian and Emily were hard workers. They didn’t make rash decisions. Like most farmers they exercised caution in their business habits and took each day as it came. Things weren’t too bad. Brian and Emily were holding their own, managing to pay their bills and keep their farm going along relatively smoothly. Unfortunately, a change of feed for their livestock resulted in a number of the milking cows developing health issues and they ultimately died.

Their carefully calculated milk cheque suddenly depleted. This happened very quickly and the ramifications would have been felt sooner had Brian and Emily not felt secure because they had an overdraft facility with their bank and family to rely on. Instead of taking a clear look at their financial situation, they chose to ignore it and pretend that everything was going to be fine. A completely normal human reaction to stress I might add. A friend referred them to me, but they insisted that they didn’t need help with a strategy – they simply needed more time and things would be fine.

Things were not going to be fine. Each month the overdraft increased and the milk cheques continued to deplete as more cows became unwell and died.

After six months Brian and Emily were faced with mounting farm debts that they were unable to pay. They were living month to month, shuffling credit cards and hoping things would somehow get better. The good months that usually came would surely arrive – soon.

Brian and Emily sought help from Emily’s parents who gifted them a significant sum of cash. They also refinanced their livestock and asked Brian and Emily’s parents to go guarantor for them. That’s all they needed they told themselves – until things got better. 

Unfortunately things didn’t get better. How could they? There was no plan in place outlining the course of action to ensure things could get better. This wasn’t their fault. The blame lay with the supplier of the new stock feed. By placing the blame on someone else Brian and Emily reconciled to themselves that this wasn’t their fault therefore ignoring the issue should make it go away. They were wrong. They had been borrowing money using their own personal assets to pay the company bills fixing the immediate problem without fixing the problem of why they were in so much debt. 

Brian and Emily both chose to enter bankruptcy. A good decision on their part ultimately, but about six months too late.

The Consequences of The Ostrich Problem

1. You’ll become scared to leave your comfort zone. Those who most need track their progress are the least likely to do so. If you’re comfortable with your current modus operandi, it can be very tempting to delude yourself that there’s no need to change, and avoiding progress monitoring is one way to do that.

2. You won’t be able to evaluate your methods. The only way to improve at any process,-whether it’s losing weight or cutting costs,-is to hone your techniques through trial-and-error methods over time. Measurement is the only way to compare the results of one method to those of another.

Overcoming The Ostrich Phenomenon

What’s the best way to stay diligent about measuring and tracking? Here are some tips:

• Set deadlines. In the absence of deadlines, we procrastinate. In the presence of looming deadlines, we catch fire and work harder with more focus. Psychologists call this largely unconscious mechanism the “goal looms larger effect”. The nearer you are to the finish line, the larger the goal looms in your mind; the more it dominates your thinking and benefits from your attention.

• Automate the measurement process. If you ask colleagues to check progress on your behalf, you’ll no longer need the willpower to check things on your own. Someone else will have to do the work of checking and breaking the news to you. Bookkeepers can do weekly reports so that you know how much money your making (this is the biggest reason for you to use a bookkeeper so that it’s not you at night or your partner because you end up only doing the essentials e.g. invoices and GST, rather than the more powerful management reports that the accounting software packages provide.

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