Mike & Joe met a prospect at a tradeshow. He was in some serious international construction development.
He had the pedigree. He had the connections. They did their due diligence and things looked good. This was going to take Mike & Joe’s company to a whole new level.
An RFQ came in. The kind that you dream about – volume and margin. The initial engineering issues were resolved to meet the specs and the project was a go. The first payment was received in time to make for a nice holiday bonus for everyone.
Halfway through the order, more good news. A container ship was headed out loaded with materials for the development. If Mike & Joe could piggy-back on this, he would split the shipping savings. Which would be substantial.
Things couldn’t get any better…
They authorized overtime to meet this shipping deadline since the shipping savings would more than offset the cost. The company hummed. Everyone was onboard to make “the Project” as successful as possible. Then the last weld was made. The last create was packed. The last semi rolled. The entire company cheered from the loading dock as it pulled away.
The final BOM and invoice were prepared and sent. Mike & Joe got him on the phone for a final conference call. Not only would he check in after the product was received at the site, but he intimated that there could be more work on the horizon.
The call came in, everything had arrived in good condition and he said the developer would authorize payment to him and he’sd send a check to Mike & Joe.
Then…nothing. No check. No return calls. A call to the developer confirmed that the product was received and paid for. Mike and Joe began the collections process which evolved into a lawsuit.
What happened next surprised everyone. He went bankrupt! It was $1MM to Mike and Joe (a pretty big deal on $4MM annual revenue, but they couldn’t figure out why he bailed. Then the other shoe dropped. It wasn’t’ just them, Mike and Joe were part of a $500MM loss by players big and small. The kicker? He had diplomatic immunity so there was no where to go and nothing to do but eat it.
He was just…gone.
The loss to Mike and Joe proved to be lethal. Not immediately. But company-wide excitement became dismay. They had debt from the materials and labor. They had little or no pipeline since the last 6-8 months had been almost solely dedicated to “the Project”.
They began a self-fullfilling downward spiral that took nine months.
Then Packard saved the day. But that, as they say, is another story.