After moving to ‘the Island’, a place I won’t make too obvious here to protect the innocent and the guilty alike we settled down and built a house. We got to know a lot of people and were quite happy to employ a few of the people there to help run our various businesses.
We had money in the bank and a very positive outlook on life, the breathtaking nature and some hard earned time-off had renewed the store of energy that I had come to rely on over the years. A couple of the local people that we got to know expressed their desire to run a company of their own, and it didn’t take long before an opportunity presented itself.
The Island had two stores, one a general store where you could buy just about everything but it was on the far side of the island. The other a gas station, right next to the only access point to the island by car (technically it wasn’t an island any more since the bridge had been put in but it definitely still felt like one). The owners of the gas station were getting quite advanced in age and working a company like that in Canada, especially during the harsh winters is pretty heavy. Operating a gas station is a funny business, you make almost nothing on the gas (1 to 2 cents per liter, and of that you have to operate and service the pumps, pay for inspections, deal with occasional theft and so on), but you make it all back in the store. If you run such a station wisely it can hold its own, stay afloat and provide employment for a fairly large number of people (2 people, 2 shifts, 7 days per week) and turn a profit. So with the old owners willing to sell (they’d tried selling it before but that had not gone through for some reason) and new people willing to step up there was a possible deal to be made.
We put together a package, bankrolled by us which would result in one family having a house, one new company subletting the large garage space next to the gas station and a group of individuals that would be employed and would be co-shareholders in the gas station. It looked like a pretty good plan on paper and with the blessing of the bookkeeper and the various authorities it was put in motion.
The first year things looked to be going quite well. The man that had stepped forward to manage the whole thing had many years of experience in retail and he did a good job of making the transition from the old owners to the new one. We kept the name and we re-established ourselves as a constant factor in the lives of the local population. The gas station was quite important to the locals, it had been around longer than many of the people and there was a large element of loyalty involved. Be nice, serve up a good product, improve the store bit by bit, what could possibly go wrong?
In the winter of that first year I got the first sign of trouble. We’d done pretty good over the summer but somehow there wasn’t enough money in the bank to cover the tax bill. I really didn’t understand what was happening, all the books seemed to be in order and yet, even after the best quarter we were down enough that extra money was required to plug the hole. After discussing the situation we borrowed the missing amount. The store manager back-pedalled on his original commitment, and wanted to be relieved. This was a major problem. Even before the whole thing had started I had made it more than clear that we were willing to bankroll the operation but that we did not have the time or the knowledge required to run a retail operation ourselves and that we were relying on everybody to do their part.
A solution was found, one of the other partners in the venture stepped forward and made a good case why she should be allowed to take the position. She had been one of the hardest workers over the summer and seemed absolutely reliable. So the management change was made and things were back on track.
For about another year things seemed to be going well. We survived the winter (which had always been touch and go, the energy bills were huge), spring arrived and we were set for a fantastic summer. That year things derailed spectacularly. At some point the fuel supplier called me on my personal number inquiring when the next payment would come in. Fuel is sold in ‘drops’, a typical drop is one truckload of a mix of diesel and regular, sometimes premium (if that’s still sold, we still had one pump serving premium). The original arrangment was that I had asked specifically not to be given a line of credit. In spite of that agreement the fuel supplier had delivered three drops without payment, about $150,000 worth of fuel! Their reasoning was that since we had such a good reputation that the money would be coming any moment, and in fact they were assured to that effect by the people running the station. The call came as a complete surprise to me, I didn’t have clue that we were in arrears on anything, let alone in excess of a hundred grand.
The decision to shut down the station and liquidate the assets was a tough one. But it had to be done, there was no way we were going to survive a hole this size. But that still left the question of how we had gotten into this situation in the first place. Little by little the truth dribbled out, I’ll likely never know all the details but it seemed that some people figured that since the cash isn’t counted on a daily basis, why not take that cash and visit the casino. Surely if you gamble a bit then you can make some money, pay back the difference and nobody will be the wiser. And then, if it doesn’t work the next time you go gambling, you just take a bit more. And so on. In a span of 3 months a business that was the 3rd largest employer on the island was destroyed by those that were supposed to be minding it.
I blame myself. Trust but verify should have been my motto, trust alone simply doesn’t cut it. I should have kept a much closer eye on things. Coming from a software background I had 0 insight in the retail business, the one thing that I thought would offset this was the fact that we had a retail expert on board and that the people we were dealing with were effectively destroying their own livelihood if they would do anything against the interest of the group. But apparently not everybody is smart enough to see even that far ahead. What a pity!
So, a lot of people lost their jobs, some their house and reputations. We lost a bunch of money, the station got sold and the amount it fetched was high enough to cover all the debts (it turned out that there were many more bills that had not been paid) with a little bit of money left over.
And a very expensive lesson was learned: If you invest, do it in a business that you understand, and keep a close eye on your investment otherwise you risk getting burned.