Right now there are 2 types of business owners facing the festive season. There are those who look on it with anticipation because the next few weeks are the most active and most profitable of the year. Many will have struggled to survive this long, and are hoping a good season will bail them out of the boat-full of debts they have incurred trying to get this far. But for them [and I hope you're in this group] there is light at the end of the millennium tunnel.
Then there are the rest of us. We've struggled through a tough, tough year. We've only just managed to crawl this far, and then only by the skin of our teeth. And now we're faced with 3 weeks of almost zero sales - because we're in the business of selling to businesses. To compound the challenge, we're faced with much heavier than usual monthly expenditures - staff bonuses, Christmas gifts, Christmas parties, and the like. And for us, this time is anything but festive. Which is the reason for this short article.

I have but a single piece of advice to offer at this time of pending creditors and looming disaster. It is this - SIGN NOTHING! I am going to elaborate in a few moments - but let's repeat that together right now shall we? SIGN NOTHING. OK, I'm glad we got that out of our collective SME system, because I'd like to explain it now.

The reason I manage to do so much consulting with folk going out of business is simple - they've signed stuff they shouldn't have. Of course, they all have lots of good reasons for signing these documents otherwise they wouldn't have signed, would they? And would you like to know when they signed most of the worst stuff? They signed the really BAD stuff within 6 months of closing shop!

So, getting back to basics - I don't care how bad the pressure is [and it will be bad]; I don't care how solid the reason [and there will be many good ones]; I don't care how far up the creek you are [and I have been further than you]; and I don't care how hungry you are. Sign nothing! What will happen if you don't sign the document you're being asked to sign - ostensibly so that your creditor will hold off for another few months? Honestly, what's the worst thing that can happen at this point? Can your creditor shoot you? Can he put you in jail? Can he put your family in jail? Absolutely not! Can he sue you?

Of course he can - but he can do that without the piece of paper you're being asked to sign anyway. In fact, the document you're about to sign will simply strengthen his case [which is why he's asking for it] and will make it easier for him to sue you sooner. In a worst case scenario - if your debts really are overdue [by more than 60 days] - then it's still going to take a creditor until at least January to summons you and get you close to a courtroom. Hopefully you will be back in action by then and will be bringing everything up to date again. In the meantime, anything you sign is going to become a whip to beat yourself with!

By now you're questioning my sanity. After all, what person of integrity advises people to not pay their debts? Let's be clear on what I am advising. I am telling you to pay your debts - IF YOU CAN. But if you cannot pay your debts - SIGN NOTHING. The document you're going to be asked to sign has no integrity.

Let me give a simple example. If your business owes me money, and isn't paying its bill, there isn't a great deal I can do about it. Certainly I can sue the firm - but that's not much use if the firm simply doesn't have the cash to pay, is it? I cannot sue you personally because the debt is in the name of the firm. If I have a surety from you, than I can try using that to take action against you - but that will take some time to implement.

So what I am going to do is call you up and tell you that I will hold off any action - as long as you acknowledge the debt. To any reasonable person this seems pretty fair - in fact downright generous. So I fax the AoD [Acknowledgement of Debt] to you and you sign it. Why is that a BAD thing?

Firstly, I now have a piece of paper that I can get IMMEDIATE judgement on - instead of the iffy, slow claim I had before. Secondly, whereas the FIRM incurred the debt -I now have a piece of paper that makes YOU responsible for that debt. I have strengthened my case immeasurably because I can immediately take action against your home and possessions - something I couldn't do before! Lastly, I have a document that you have no defence against - whereas before I had a really poor claim - if any? And lastly, you felt so guilty about the whole thing that you probably forgot to check the figures - which means I have a valid claim against you personally for what I think is the correct amount - not what the correct amount really is. And if I am not sure I can get the money out of you - I can sell that AoD to someone who is much better at getting money out people.

My question to you is - who lacks integrity here? You - who is trying to hold everything together and be fair to everyone, or your creditor who is trying to get a stranglehold on you at all costs - and sod you, your business and the rest of the creditors? I think the answer is obvious. What do you think?

I now have a simple rule in my life. I don't sign anything [except a cheque] unless my attorney reads it first. Over the past 4 years, this simple rule has saved me more than R100,000. Since his advice cost me less than R2000 over the same period - it seems like a good investment. I used to think that because I could read [and I read more than 1000 pages/week] I could understand legal stuff. But I don't. Legal stuff doesn't make sense, and it isn't fair.

If you sign something and you don't understand EXACTLY what it means - you're walking into a minefield without shoes. SIGN NOTHING. For the sake of your family, please. SIGN NOTHING

© Peter Carruthers, www.petesweekly.co.za

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