Rudi had the energy and build of a scrum-half. He bounced into my office and thrust his hand out to shake mine. He had teeth and over the ear hair that advertisers dream of. But he wasn’t smiling that day. He was a customer and he wasn’t happy. By a strange quirk of fate, I had ended up running a group of companies in Germany. One of them made wooden windows and doors. Rudi and his small team of 5 were resellers – they sold windows and doors in a 150-mile radius, bought them from our company and fitted them for a day rate and a small premium. The problem was – the margins were so small that you if you had to go back to fix something you would make a loss. If you had to go back twice it soon became expensive. And he was having massive problems with our products that were costing him money.
Our team was not producing quality consistently and I spent a lot of time with Rudi in his shiny new red Mazda visiting building site after building site and mollifying angry German house builders and building contractors. I slowly got our team to produce quality consistently and we were soon following my mantra of making sure our resellers only visited a building site once – to install our windows and doors.
In the time we spent together I got to know Rudi well and liked him a lot. I spent time with him and his lovely wife and son over weekends and I was delighted for him when he excitedly told me that he had won a new ongoing contract to supply windows and doors to an ambitious and fast growing building contractor run by a guy I will call Tino.
Tino was short, skinny, dark haired, snappily dressed and charismatic. He was making a lot of money building apartment blocks after the reunification and wasn’t shy of showing it. He had a large and flashy office, business premises and house all on the same site that he had built himself and drove a huge black Mercedes. He even had a couple of security guys hanging around. Rudi had to hire more people. Soon he had over 15 people working for him and was an increasingly important customer. My time building bridges with Rudi and fixing our reputation and his had paid off.
Rudi and I gradually spent less and time with each other because he was now working for Tino all the time and had given up almost all his other smaller clients. He had also started socialising every weekend with his new best buddy. I was ok with that – we still spoke on the phone frequently and the orders and the money kept coming. Everyone was happy.
Then Rudi came and asked me for better payment terms. He seemed a little tense beneath the toothpaste smile but I ignored it. Tino had pushed his payment terms from 30 to 60 days and Rudi was having cash flow issues. These were getting bigger as his turnover increased – but the contracts and our orders were getting bigger and bigger and I liked Rudi so I made an exception.
Months passed and he started paying me a few days over the 60 days. He also didn’t return my calls. I drove unannounced the 40 km to his house and knocked on his door.
He opened the door. He smelt of schnapps and his eyes were red and bleary. His head was down. He was quite different. We went into his home bar and we started to drink. We smoked and drank and talked about nothing for an hour or so. Apart from us the house was silent – his wife and son weren’t there and the place looked unusually scruffy.
Then it all came tumbling out. Tino had started delaying payment of existing contracts until new ones were signed. Rudi was a sole trader and hadn’t ever thought of the need to use a limited company for his business. So he personally kept getting deeper and deeper into Tino. He often had 3 or 4 outstanding contracts signed with Tino with 2 or 3 that were overdue for payment.
In tears and in anger and desperation Rudi told me that Tino had also decided that he wanted Rudi’s wife. Whether she had initially been a willing mistress or not – the fact was that she and their son had moved in with Tino. Rudi had lost his wife, his son, his independence and he was close to bankruptcy and losing his house. The bank was phoning him every day. Tino would take him to the last day and then part pay just enough to keep him solvent – often on condition that he literally begged on his knees for the money or that he signed a new contract. Or both. On one occasion he was made to beg for money on his knees in front of his young son with his wife watching draped around Tino’s shoulder.
Tino had a large team of builders. But he also had a team of very sinister suited and armed minders and his compound had become increasingly well guarded with a guard pointing his nose in the car window when I visited.
In a Hollywood film this story would have had a classic and satisfying denouement. Rudi would have shot Tino or Tino would have been arrested for carrying unlicensed firearms.
It was less satisfying. Tino’s business did go bust and so did Rudi. We don’t really know what happened to Tino. Rudi lost his car and his team lost their jobs. But he was able to rent his house from the bank and his wife and son came back. But it wasn’t the same. The weekend parties in his home bar were over. His smile was rare and restrained.
He started buying windows on credit from me again and stuck to small modest jobs that he could do himself or with a friend – a few windows here, a door there.
No heroes in this story of business and people. Business stories are almost always more about the people than the business.