Episode 26: I’m Not Going to Shut the Doors

Guests:

Paul Downs is founder of Paul Downs Cabinetmakers.

Dana White is founder and CEO of Paralee Boyd hair salons.

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Episode Highlights:

Paul Downs: “The number of people who are calling us for new orders has dropped by 75 percent, and so I can see the trouble is going to arrive for me most likely in September.”

Paul Downs: “I’m not going to shut the doors. And two years from now, I may be a smaller company, but I’m going to be around, and then we’re going to ride this back up.”

Paul Downs: “My partner’s theory was that you keep all this information from the employees. Don’t tell. Because he was worried that people would quit and go start looking for another job.”

Full Episode Transcript:

Loren Feldman:
All right, so let’s get started. Welcome back, Dana and Jay and welcome for the first time, Paul Downs. Paul, it’s great to have you here.

Paul Downs:
Nice to see you. Jay and Dana, I’ve been following your journey with great interest. I think that what you’ve done is really admirable, and I’m really pleased to be a part of this group.

Loren Feldman:
We’re pleased to have you. I’d love to start by giving our listeners some background about you, Paul. When I was editing the You’re The Boss blog at the Times, I got an email from you. You told me in that email that you were running a business that was in the process of failing and heading for bankruptcy, and you wanted to know if I was interested in having you write about that process. First of all, why were you failing? What was going on?

Paul Downs:
I wrote you in December of 2009, about a little more than a year after the Great Recession struck, and to set it up, in the fall of 2008, if I had given myself the Jay Goltz five-point business crisis evaluation…

Loren Feldman:
Jay, he has been listening …

Jay Goltz:
Excellent.

Paul Downs:
I’ll go through them: “How were you doing before the crisis? Profitable? Not profitable?” We were losing money, my partner and I, in buckets. So, zero for that. “What legal obligations did I have to others?” I had a partner who had put a lot of money into the business and expected money back, so I score zero for that. “How is my attitude? Ready for a fight or exhausted?” Now, I score well on that, because I had no intention of going out of business. “Did you or will you lose key employees?” Well, I had to lay off half my team and I had 23 employees in September of 2000, and then went down to 13 in October of 2009. By the time I wrote to Loren, I was down to six people. We lost a lot of people. And then, “What financial resources did I have available?” Not much, and I just knew that after 25 years of running my business by myself that I was probably unemployable. I did not want to go out and try to start a new career. That’s where I was.

Loren Feldman:
How’d you turn it around?

Paul Downs:
Well, I didn’t turn it around. The economy turned around. The questions that I would use to supplement Jay’s test would be, one, “What vast forces are working for and against you?” And in that case, the economy had delivered some punches to an already damaged company. But it started to pick back up, and people started to want my product again.

That brings me to the second of my supplemental questions, which is, “What’s happening with your customers?” We were starting to get people who were interested in buying tables again. It was that more than anything else that brought me out from death’s door.

But I will say that when I started writing for The Times, it was the first time I had the chance to really air the things that were the problems I was encountering and get feedback from someone other than my partner. My partner is a lovely person. He’s passed on, unfortunately. When we disagreed about business, he never let it get personal. When he started to lose money, he took his lumps, but I had really relied on him as being the sole source of information about what we should do next. That was an enormous mistake, because he was someone who was 20 years older than me and just had a viewpoint that wasn’t really aligned with what was happening to us.

Writing for The Times I would say was the big turning point in my personal journey, and starting to implement some of the suggestions I received from the readers and being put in touch with people like Jay and then, through them, joining a business group that I’m still a member of and just starting to learn a lot more about how to be a boss and how to run a business than what I’d been able to teach myself.

Jay Goltz:
How long had you been in business at that point?

Paul Downs:
I started the business January 1, 1986, so whatever that would have been—22 years.

Dana White:
How did you have the energy to keep going?

Paul Downs:
The thing about business is you only fail when you shut the doors, and until you actually spend that very last dollar and walk away from the building, you haven’t actually failed yet. In December 2009, I could see it coming. It was literally weeks away. I could model out my cash flow, how much I had on hand and how much I was spending.

I started looking online for information about what happens when a Main Street business fails, and I found literally nothing. That is why I reached out to Loren. But why did I keep going through that? Because I come to get up in the morning and do the same thing I’ve been doing for 22 years. Now, until I actually failed, I haven’t failed. I could be failing. You could be failing for a long time. I was failing for I would say 24 of the 22 years. It took me a few years to really dig out of it, but I wasn’t failing quite as fast as I was succeeding in some other ways. I was in this terrible situation, but I’ve been in bad situations for years and years and years, and I just really hadn’t hadn’t given up yet. That’s the answer. I just haven’t given up yet.

Dana White:
Yeah, you haven’t failed until you’ve failed. So if you’re down to your last dollar, and you’re getting ready to turn in the keys of your business, do you turn in the keys and put the dollar in your pocket? Or do you hang on to the keys for as long as you can and take that dollar and do something with it that would, in turn, allow your business to turn around? I think that’s what I’m hearing you say.

Paul Downs:
Yeah, I would say that aside from playing offense, which is what you may use that dollar on, there is one critical thing, which is just to keep the lights on. Because you don’t know what’s about to happen. What happened to me on the last day of 2009 is a client placed a nice order. That got me another five weeks, and then in that five weeks, somebody else placed an order. If I’d walked out, then I wouldn’t have gotten that phone call and then it would be over. But if you can just hang on, maybe the vast forces that are always at work on everybody may start to go in your favor, as opposed to against you.

Dana White:
Did you do everything that you were supposed to do? Did you do all the marketing? Is that what led to the failing? Or were there some things that you hadn’t done that, with the new orders coming in, gave you an opportunity to grow and save the business?

Paul Downs:
I’ll tell you, there are always things that I haven’t done. I’m just gonna plant this flag right now in the first 10 minutes of being on this podcast, which is, I am the worst business person on this podcast. I am not as concerned with sacrificing every ounce of my energy and resources to make the business succeed as some others are. It’s just not who I am.

Part of the reason for that is that I have a family, and particularly at that time, I had kids in the house. One of my kids has special needs. He’s severely autistic. Whatever I put into the business, I still have to reserve something to go home and deal with that.

Then the other thing is, in the course of having an autistic child for the last—he’s 26 now—you always run across something that you as the parent are encouraged to try. It’s this miracle cure. It’s that miracle cure. You get to the point fairly quickly when you realize you just can’t do everything. You can’t do it all. Some of it is pure quackery. Some of it may not be, but you just can’t do it all.

I found that I had to make a choice about how we would treat that situation and how much energy we would put into it and how much my wife and I would try to reserve for my other children, and how much I would personally try to reserve for my business and try to keep it all in balance. I’m never going to say there’s not something that someone could suggest to me, like, “Oh, you should try this.” And they’re probably right, and it may even work. But if I’m not capable of fitting it into my overall life, I tend to not do it. That I’m sure means that the business is not as successful as it could have been. On the other hand, I’m now in year 35, and it could be a lot worse. I’ve seen a lot worse.

Loren Feldman:
Paul, I don’t want you to sell yourself short. All the things you said I’m aware of, and I know about the importance of your family to you. That’s all certainly true. But I also know, having edited your blog posts at The New York Times, that you threw yourself into understanding the dynamics of your business in a way I’ve seen few people do, whether it was understanding the mechanics of Google Pay Per Click or understanding Obamacare when it got released. You would devote countless hours to trying to understand these things and figure out how to make them work for your business. I think it’s important to acknowledge that.

Paul Downs:
Can I comment on that? First of all, I am very interested in understanding the underlying things that happen in my business, and I love setting up spreadsheets and following data series. Those things make me feel busy and make me feel smart but don’t necessarily make the business any better, so it’s a form of self indulgence at times. Because there are definitely things that I could be doing, always, that would make the business better.

The second thing is, before I wrote for the Times, I never wrote for anybody. Nobody knew who I was. Nobody cared at all about what I had to say about anything. If you hire someone like me to write in The New York Times, and suddenly you’ve got an audience of hundreds of thousands of people, and you can, by looking into things which are ordinarily hidden, bring that in a succinct way to thousands and thousands of business owners who could use that information, that’s a big incentive to do that extra digging, to do that extra work. A lot of what you saw out of me, Loren, was in response to the realization that I had the ability to shine a light on things that large institutions keep hidden from most of us because it’s to their benefit. I really enjoyed that role of being the everyman’s champion, and that drove a lot of what I did when I was writing.

Loren Feldman:
Well, there’s another aspect of it. You referred to your partner. It was a difficult relationship, and you went from having an older person who you trusted to guide most of the business decisions while you were making beautiful tables to taking full responsibility for the business. I’m curious, looking back now, how you think that affected the turnaround of your business.

Paul Downs:
It had a big effect on it, because I took responsibility for decisions mostly that I had been assuming were not my… it was my skin in the game, but I just didn’t know enough to feel like I owned a decision. But then once my partner and I came to the point where we couldn’t agree on how to operate the company—this was in late 2008—I was like, “Well, okay, I’m just going to do what I need to do.” Knowing that I wasn’t tied down by our agreement to agree on what we were doing anymore, that put me in a different position.

I had been in that position prior to getting a partner in 2002, but the world of—and Jay you lived through this. You start a business at age—I was age 22, it was 1986—there’s no internet, there’s nothing. You know nothing. I had never worked for anybody. I run on self confidence basically, but tied to extreme ignorance.

For most of my time prior to having a partner, I had no idea what I was doing and no way to find out. It was a completely different world. All of that experience didn’t really help in the newer world, and it was starting to write for The Times and realize, “Wait, now we can make connections.” Now you can reach out to people for free instantly, or you can hear the benefit of their thoughts. Or you can meet people and share information and share experiences. It’s just a way different world now, and so that had a big affect on my willingness to assume responsibility.

Jay Goltz:
We both started at 22, and the difference is you are extremely self-aware, you’ve always been extremely self-aware. That’s why I love you. You really think about things. You process things. So the question is, who was in a worse spot: me, who never had any partner, but I had to figure it out. You had a partner who, because he was 20 years older than you, you assumed he knew how to run a business, and you followed that. I didn’t have that. That’s an interesting parallel, because we both have the same thing in common. I started at 22, you started at 22, and we were thrown into this business world that is far more complicated than it appears.

Paul Downs:
I don’t know, but maybe you had other connections into your community that were helpful to you.

Jay Goltz:
No, I didn’t. I really didn’t.

Paul Downs:
Synagogue? Nothing?

Jay Goltz:
No, absolutely not.

Paul Downs:
Okay.

Dana White:
No, no. Jay, you did. You had an uncle who had a dime store.

Jay Goltz:
No, that’s my father and my uncle. They had one employee, and I learned how to give customer service. I learned that it’s all about the customer. But beyond that, I could literally tell you the day my father called me. I was growing really fast. Keep in mind, my father’s store was my aunt, my uncle, my mother, my father, my grandparents, and Edna, one employee, for my whole life, until my grandparents passed on. That was my whole exposure to business. I don’t even know what the business did. It probably did all of $150,000 a year. That was my perspective: take care of customers. I didn’t know any different.

My father called me, I was probably 32 to 34, “Hey, how’s it going there?” And I said to him, “I just had to fire my—” Loren knows this. I went through 10 production managers over a period of three years. So I had just fired one more production manager, except this time, he had a wife and kid, and he was younger, and I was really kind of torn up on it. I knew he had to go but…

So my father calls me, and I said, ”I had to fire the production manager. I kind of feel bad.” And my father gave me one of his lines. He was like a jukebox. You hit the button, and one of his lines [comes out]. He said, “You know what the problem today is? People want a job, but they don’t want to work.” I said, “Yeah, Dad. That’s it.”

Ever since that day, I never asked him anything anymore, because I realized he was way out of his depth. I couldn’t talk to him about finances. I couldn’t talk to him about marketing. I couldn’t talk to him about management. He gave me a couple of tips along the way, like, “The officers don’t eat with the enlisted men.” He was in World War Two. There were a few little quips, I would say, but beyond that, I really didn’t have anybody to talk to.

Loren Feldman:
In the time we have left, let’s jump ahead. It’s been more than 10 years since you dealt with that crisis, Paul. We are now in the middle of another one, as you well know. Tell us, how is your business coping with the pandemic and the economic crisis?

Paul Downs:
Getting back to the five point test, I’d score a five on February 29th of 2020. We were coming into it profitable, and I no longer had a partner, and good attitude, because we’ve had good years. I feel like I’m much better at running the business than I was and I have a great set of employees. We have work on hand, and we have money, and I have money in the bank at home, the mortgage paid off and all that. So, in good shape going into it.

We have weathered it up until today quite well. We had to shut down in March because the state ordered us to shut down, and we stayed shut until the end of April. I reopened on the day I got my PPP money and we resumed work on a 10-week backlog of orders we had. We lost a lot of money in March and April, but we made it all back in May and June. And the company’s profitable.

Loren Feldman:
Who’s buying conference tables right now, Paul? Who are you selling to?

Paul Downs:
That’s the problem is that the number of people who are calling us for new orders has dropped by 75 percent. And so I can see the trouble is going to arrive for me most likely in September and through the rest of the year. I would be fairly surprised if we’re able to match our current sales or production pace next year.

I don’t know how far it’ll fall, because if you think about it, a giant conference table isn’t necessarily the most COVID-friendly product you ever could imagine. But there are a lot of empty buildings going up, and people tend to finish projects that have been financed. We saw that same dynamic in 2009, that the beginning of the year wasn’t nearly as bad as it could have been. It was a year after the crisis that it really hit us. That’s where we are. I’m great right now, and I can see storm clouds on the horizon, and so I’m a little worried about that.

Jay Goltz:
How about your competition? Are less people doing what you do now?

Paul Downs:
There will be, and that’s my game plan honestly. We’ve explored the idea of pivoting into other products, and for many years before I got into conference tables, I actually did high-end residential work. I kind of have a horror of going back to that.

Loren Feldman:
High-end residential work meaning building furniture for residences?

Paul Downs:
Yes, for individual people. God bless them, my clients for the most part were all lovely, but it’s a business that has really changed since the late 80’s and 90’s because of cheap imports and people’s attitudes towards owning, say, a dining set, are just different. The sales process involves a lot of nights and weekends, and I just don’t have the stomach for it. Whereas the corporate and government clients are just way easier to deal with. They spend a lot more money because it’s not their own personal money, and we’ve been able to build a much more successful business doing that.

My game plan is to stick it out. I’m not going to shut the doors, and we’re gonna hope this kills the competition. And two years from now, I may be a smaller company, but I’m going to be around, and then we’re going to ride this back up.

Jay Goltz:
I have to tell you, I looked at your website. Good for you, your website’s beautiful. You see meaningful stuff on there. I love, on the contact page, you say, “If it’s during business hours, we’ll get back to you within minutes.” All your copy, everything you wrote on there is all meaningful and poignant and authentic. I am confident you will be one of the survivors at the end of this because you’re doing a good job, period. Your competition is going to run out of steam at some point, some of them.

Paul Downs:
Well, thanks, Jay. I would hope the writing’s good. I did all of it myself.

Loren Feldman:
There are also a lot of pretty pictures of beautiful tables.

Paul Downs:
Yeah, there are. We’ve been very fortunate in the range of people who have approached us and the quality of clients who we’ve been able to work with. It’s easy to do great work for good clients.

Jay Goltz:
I would challenge your word “fortunate.” You weren’t fortunate. You make great products, you care, you’ve got a great-looking website, and you earn those customers. So you didn’t just get lucky, you earned every one of those customers.

Paul Downs:
I’m going to tell you this story, and I’m going to tell it as fast as I can, which is how we got into the conference table business. This happened in 2003. I made my first conference table, just one, in 1999 for a local client. We put a picture of it up on my very first website in the same year. This is a website that was all about high-end residential furniture: dining tables, chairs, the things we specialized in. Then there was a section on the site of some other stuff we’ve done, like some church furniture and this and that. Here’s this boardroom table. In 2003, Google chose that picture, out of everything that was on the internet, to be the top search result for “boardroom table.”

Dana White:
Oh, wow.

Paul Downs:
They just did it one day. I remember clearly getting a call from a guy in South Dakota, who said, “Hey, I see your boardroom table. Can you make me one of these?” I’m in my office. I’m like, “Who in the world are you? And how? Why? Why would you even call me? How did you find me? I never even heard of Google.”

Three days later, I’m on the phone with someone in Kyrgyzstan, who’s putting up an oil company headquarters. The following week, we got sent a set of plans for a Saudi Arabian prince, his weekend home in Jeddah. He needed four tables for each of his wives. That’s luck. That’s luck.

Jay Goltz:
No, no, you’re wrong. It’s not luck. You had the best-looking table, and Google chose it.

Paul Downs:
After that was a lot of hard work and thinking about what was going on and figuring out how to do the business, but you can’t say that that was anything other than lucky, because it was.

Jay Goltz:
I’m not saying there wasn’t some luck, but you made the best-looking table, and you earned it.

Dana White:
Timing was important too.

Paul Downs:
That was there. But there’s a motto inlaid on my desk, which I live by: “Fortune favors a prepared mind.” This is from Madame Curie, and “fortune,” the first word, you’ve got to acknowledge it exists. There’s luck. There’s luck in this world. There’s luck when the sperm meets the egg.

Loren Feldman:
Paul, those initial clients you got after the photos sound like pretty ideal clients, but I’m guessing that’s not your typical customer. Who is your typical customer these days?

Paul Downs:
I should point out that we didn’t actually make a sale to any of those people, because I didn’t really know how to respond. But the interesting thing was that the calls kept coming. We generally get, at least before March, we would get anywhere from three to a dozen every day. This is for the last, whatever it is, 17 years now.

Our typical client right now is someone who needs a table, and it could literally be anybody. We do business with people you’ve heard of, giant organizations and billionaires, and we do business with little tiny companies of people you would never think need to go custom. But our thing is, they all call us, so let’s figure out how to do business with all of them. So we’ve figured out how to have a conversation with anybody and to identify a budget and to try to come up with a solution. We don’t really have a typical client other than there’s someone who’s not finding what they look for in a catalog.

Loren Feldman:
How has your approach to pricing changed through the years, Paul?

Paul Downs:
That was actually a very difficult thing to come up with, because there’s not much information available on the pricing of these items. You couldn’t find it anywhere on the internet then, and it’s very difficult now. We just came up with some wild guesses for the first 10 years, and then eventually, I sat down and wrote a very complicated spreadsheet that would allow my sales guys to at least come up with numbers in some systematic way. We have since discovered over time that our prices are basically market acceptable because people bought stuff from us.

But it’s difficult. It would be like trying to find pricing of—I can’t even think what—like a submarine. If you needed to go buy a submarine, what does it cost? I don’t know, it depends on the submarine, right? And then, who’s selling it? Well, they don’t sell them at the corner store, so you’re gonna have to do some digging. Our method is to try to short circuit people’s investigation process by helping them as soon as we can. That’s why we call people back within a minute, because we don’t want them to go anywhere else. We just want them to feel like they’re getting the information and then that they will stop shopping from other people.

Loren Feldman:
Why is it like pricing a submarine? I understand your tables are custom, but isn’t the price determined largely by the size of the table?

Paul Downs:
Yes and no. Size, materials, complexity. That’s the basics. But within those three parameters, a table of a given size could cost X or cost 100X.

Loren Feldman:
When did you start thinking about, in doing your pricing, whether you were charging enough to make a profit?

Paul Downs:
I always think about that. The difficulty with not having widely understood prices for things is that you don’t really know how your client is going to react to whatever you present to them. I have to constantly battle this fear that my salespeople have that what they’re showing is just too expensive and they want to try to cut deals somehow. One of the reasons I wrote the pricing spreadsheet was to stop that, or at least put a floor on what we would sell things for. Then the pricing spreadsheet not only kicks out a number, it kicks out a prediction of how long things would take to build on the shop floor. Then we have some standards to tell the people on the shop floor, and then we collect data about how long it actually takes them to do stuff.

What I found over the course of the years is that you can set up a rational system for coming up with a number predicting time, and then when you start tracking what actually happens out in the shop, the closer you look, the more everything just falls apart, and the only way to really consider it is in aggregate, because we have such an inconsistent product. It could be this one day and that the other day, and they can be very, very different. You never repeat yourself.

What I started looking at was, instead of trying to master every little bit of the equation, it would be: how do you simplify this? What do we need to know, at the end of the day? I’ve broken it down to, at the end of the day, we need to have revenues. We need to ship $360,000 worth of tables every month, in order to break even. And if we can go higher, we make money. If we go lower, we lose money. That’s something that I can very easily explain to my team, and we can keep track of. We have a lot of data that looks closer than that. But that’s a simplification. Having grown my business from zero up to $4.7 million a year now, I have a pretty good idea of what the ratios would look like at any given revenue target.

I’m expecting the business to contract by maybe 40 percent next year. I have a very good idea of what the Paul Downs Cabinetmakers that will produce $2.4 million in revenues in 2021 will look like. If we get back to $5 million in revenues, I know what that’ll look like. That’s the profitability calculation for me at this point, and there’s a lot more to it, but it probably isn’t really suitable for explanation on a podcast, unless we’re targeting the need to go to sleep.

Loren Feldman:
How much of your experience surviving the last crisis is informing what you’re doing now? Did you learn things there that you think are helping you prepare to survive this one?

Paul Downs:
Yeah, the most important lesson was, as we were going into the fall of 2008, my partner and I were disagreeing about how we would run the business. We were already losing money. We knew there was trouble. Without even the whole economy collapsing, we knew we were in trouble. My partner’s theory was that you keep all this information from the employees. Don’t tell them. Because he was worried that people would quit, and go start looking for another job. Keep in mind that the summer 2008 is very similar to, say, the summer of 2019, where unemployment was pretty low. If you have good people, you want to keep them.

He said, “You cannot talk about our problems with the employees.” I disagree with that, because that’s just not who I am. But you know, we’re partners, so I didn’t. Then the day came when I had to lay everybody off, and it turned out they already knew something was wrong, but they didn’t know what it was.

After that layoff, I decided that I would not play that game anymore. I told all the people who were left that, “One way or another, I will tell you the truth. I will answer your questions and I will try to keep you abreast of my thinking on our situation, so that you’re never surprised.” That approach has stood me in good stead ever since then.

I ran into some rough years in times when the economy wasn’t doing so badly, particularly in 2016, 2017 and 2018. My autistic son started living at home with us after being away at school for 10 years. That really had an extreme impact on my ability to work. The company started to fail again, and I had to get to a point, actually, where I had to cut everybody’s wages. I told them it was happening as it was happening. “Here’s the problem: we’re running out of cash. Sales are not as good as they could be. I don’t want to shut the doors, and this is what we’re going to do. You’re all taking a 15 percent wage cut.” And I was able to say, “And here’s what I’m doing. I’m taking a 100 percent wage cut.” Show them the numbers and show them a P&L. Then when things get better, bring them back on, show them what happened.

Loren Feldman:
You said you were distracted during that period for obvious and understandable reasons. What was the direct impact of that distraction? What wasn’t happening? Why did the company flounder while your mind was elsewhere?

Paul Downs:
Because companies need a leader. My team is very capable, but there’s no one who is able to do exactly what I do. I just had the experience of driving across Indiana on the Indiana Turnpike. I don’t know if you’ve ever done that. It’s dead straight for 180 miles. You would be tempted to think you could just take your hand off the steering wheel and start reading the paper, and you’ll be in the ditch almost instantly. Running a business is like that. Even if you’ve got a very well functioning engine and set of tires, and everything’s going swimmingly, and you’re blasting along at 70 miles an hour, if there’s nobody on the steering wheel looking all the way out to the horizon for the accidents up ahead, then you’re in the ditch.

Jay Goltz:
I have a different answer for you. It’s the size of the company you’re running versus my size company. The people you have working there in charge are not capable of steering the ship. That’s true with your size, but when one gets bigger, you’re not as hands-on as you are at that point. My answer to you is you were very hands-on at that point, and you were doing important stuff with the company, and it makes sense that if you weren’t there, it wasn’t getting done. You get bigger, you’ve got more capable people making more money who had been there, and it’s not necessarily the same thing.

Paul Downs:
I would agree with that. I think that my experience just growing from zero employees to 24, which is what we have today, there are huge differences every time you add five employees. I’m right at the point where I’m not big enough to have a real layer of professional managers.

Jay Goltz:
For sure.

Paul Downs:
And if I got to your size, Jay, I would have that because I would want that.

Jay Goltz:
No, I’ve been there. The point is, you’re the quarterback still. You’re not the coach. You’re still the quarterback. That’s the difference.

Loren Feldman:
Dana, we’ve talked a little about what Paul raised, in terms of sharing information with employees. I’m curious if you have any reaction to the way he has shifted his thinking on that.

Dana White:
I agree with him. It sounds to me as if Paul’s team, he could walk in and say, “Hey guys, I’m going to cut your salary by 15 percent. I’m going to take a 100 percent cut.” Or, “Hey guys, we’re in a little bit of a financial strait right now.” I know businesses that you could not do that in and expect to keep your doors open. They would literally jump ship immediately and go find someplace else. It just depends on the culture of the industry that you’re working in.

Paul Downs:
I think that’s absolutely right. Woodworkers are, in general, very low drama, want to know what they’re doing tomorrow, next week, and next month kind of people. It sounds like hairdressers are just cut from different cloths. Also the configuration of the business. If I were running an ice cream shack and all my employees were teenagers, and I was taking a million bucks a year out of it, I wouldn’t have those conversations, because there’s no way to make that situation look like we’re all in this together. In my own situation, I make money, and it’s not an unreasonable amount of money. I pay them as well as they can possibly be paid. Everybody just gets that. It’s part of being there.

Loren Feldman:
Jay—we’ve got to wrap up quickly, I don’t want to start a long discussion about open-book management—I’m curious if you have any reaction to what Paul said about sharing information, especially during difficult times?

Jay Goltz:
Well, I think the naïveté of his partner was, they can obviously see that they’re not making as much furniture. It’s not like they’re not talking about it. There’s somewhere between total open book management and saying nothing. I believe in, tell people how things are going. Say, “Listen, we’re in a cash bind.” It depends on the business, it depends on the sophistication of your employees. I don’t think a blanket thing of total open-book management is the way to go. I think it depends on the business and the circumstances, but certainly communicating with your employees how you’re doing and where you’re at makes sense, because they know about it anyway. Who are you hiding it from? They can see that production’s way off. Thinking if you don’t talk about it, it doesn’t exist is silly. I mean, they know about it, so I do believe you have to communicate with your employees.

Paul Downs:
I would actually add one other point, which is, they know about it, but they don’t know what the actual facts are. What I’ve found is that when you don’t provide real information, people just make stuff up.

Jay Goltz:
Absolutely.

Paul Downs:
They think they know about it. They think they know how much you, the boss, makes. They think they know that. They think if we sold $4 million, that means I made $3.5 million. If you don’t give them the real information and some background on it, then you’re really fighting a losing battle.

Loren Feldman:
I suspect we will have more conversations about this. Paul, thank you so much for joining us. One thing I knew, from my experience working with you previously, is that you would be open and transparent and you have not disappointed, so welcome to the team. As always, thank you, Dana, and thank you, Jay.