The Day My Business Almost Went Up in Flames

Today’s post is by Mike Kappel, President of Patriot Software.

When you start a new business, you’re occupied by thoughts of your next sale, equipment investment, or whether you’ll have time to break for dinner. You’re generally not thinking about being sued, cited by OSHA, or arrested.

But in business, your fortunes can turn on a dime. Here’s what happened to me and my business.

My partner and I had started our network of executive recruiters four years earlier, and it looked like the business might finally take off. Still, we were essentially broke, with less that $250 in our account, on the day that our pressman, George, decided to go to the local laundromat to wash the rags that we used to clean our printing presses. (This was not our standard procedure; we advised George to manually clean and line-dry the rags. Instead, George decided to take a shortcut and go to the laundromat instead.)

And then George put the chemical-soaked rags in a gas dryer.

The pilot light from the gas dryer ignited the rags, throwing George over a row of washers and slamming him into the wall. The laundromat caught on fire.

After I got the call from George and arrived on the scene, I saw fire trucks blocking the streets, firefighters spraying down the building with a huge plume of water, police diverting traffic, lights, sirens, and barricades everywhere. Basically, a business owner’s nightmare.

How had this happened? I mean, I didn’t even know that George had left the building. I thought he was still 20 feet away from me, running the printing press.

George was lucky he didn’t die. Although he was stiff after being thrown during the accident (and minus his eyebrows and some of his hair), we were thankful that he wasn’t hurt worse.

But the fire was a real catastrophe for our business. We knew we were in the wrong. We didn’t have a clue what laws or regulations we might have violated. Being arrested, fined, or sued were all very real possibilities.

And our problems were about to get more serious.

It turned out that our insurance company wasn’t interested in covering the $25,000 estimated cost to repair the laundromat.

And then our faithful employee, George, said, “How much are you going to pay me not to sue you?” My partner and I knew that a lawsuit would mean the end to our business. We scrounged up as much money as we could  — $2,500 —  and made George sign a release form to get him and his lawyer off our back.

Once that issue was settled, our fortunes turned once again. About a month after the accident, the insurance company changed their mind: they would cover the $25,000 in repairs to the laundromat! We would owe nothing. Sigh of relief! Things were looking up again.

And then the worker’s compensation statements started coming.

We knew George saw a chiropractor after the accident, but we didn’t know was that he continued to see him, even after his doctor cleared him to return to work. A few workers’ comp statements had arrived and I just shoved them in a file, not thinking. When I finally looked into the charges, I found that the chiropractor had advised George to keep coming several times a week anyways. The chiropractor had charged $10,000 to our workers’ compensation account for these visits, and didn’t stop till I caught on to the scheme.

That was an expensive lesson, one of many lessons I learned:

– Read all your mail, even the mail that looks boring.
– Make sure you have insurance to cover anything and everything that could happen.
– Be careful who you trust, and who you hire.
– Don’t use a gas dryer to dry your cleaning rags.

But here’s the biggest lesson: don’t give up.

When you own a business, you could follow all the rules and do everything perfectly right, and weird, freak things are still guaranteed to happen. You never know. But you can’t quit. I mean, you have so much of yourself invested in your business– years, maybe a lifetime — are you really going to throw it all away on one bad day, one bad quarter, or one bad year?

Yes, this experience was terrible. But it was also valuable. It exposed areas of weakness in our business. I learned that I needed to get to work — reading my mail, brushing up on OSHA regulations, and being more careful about who I hired the next time.

There were other blessings in there — the fact that George nor anyone else was hurt. The insurance company reversing their decision and deciding to cover the whole amount of the damage. The OSHA citations, which while painful, weren’t as bad as they could have been.

When we finally got to the other side of this disaster, we found we had survived. And this business — as well as four others — are still going strong today. Yes, a terrible thing happened. But I refused to give up. I had invested too much heart in this business to let it go down in flames.

– Mike Kappel is the president of Patriot Software, Inc., a developer of online software for U.S. small business owners. He has founded four other successful small businesses in the last 25+ years, and continues to be passionate about helping other entrepreneurs find their own way to success.

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Photo: Its Gettin’ Hot in Here (cc) by Jason Hargrove