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Closing a Business Gracefully

Geplaatst op jun 3, 2014 in News

Our family company, founded by my grandfather in 1880, was an importer and distributor of preserved food products in the Greek market. We had dry goods like sugar, coffee, beans, lentils, peas, and chickpeas. We also stocked preserved fish that we supplied to the mountain villages, many of which which had no electricity: Dutch smoked herrings, salted sardines from Portugal, and salted codfish from Norway, Iceland and Canada, all packed in 50 kilo wooden boxes or jute bags.

When I was a boy, none of our goods were branded; they were all sold in bulk and delivered to grocery stores; competition was all about price. It was not until the mid fifties, when I joined the company after completing my MBA in the US, that all this changed. We started packing products in branded half-kilo and one-kilo plastic bags. We also introduced non-food products to grocery stores, securing the distribution rights for American Home Products and Johnson and Johnson.

Our sales of packaged and branded products rose quickly and we prospered for a while as the first mover. But our industry model was changing as supermarkets started to displace the traditional grocery stores and began sourcing supplies directly. In this new environment there was no longer a viable place in the value chain for the wholesaler, and in order to survive we would have to become commission agents for our suppliers, taking orders from the supermarkets.

In our case, our early move into branded goods had bought us time to adjust, and we could embark on the process of closing down our wholesale business deliberately. But there was a real risk that we would lose a hefty sum in receivables from our eleven thousand grocery clients all over Greece, many of whom, not expecting more business with us, would sit on their debt to us forever. To reduce the chances of this happening, I made it a point to visit as many of the larger customers as I could to communicate in person that we would no longer be supplying them.

It wasn’t just about my meeting the customers, of course. There were too many of them for that. I also had to ensure that our sales force would co-operate. Since many of them would be losing their jobs as a result of our change in strategy, their co-operation could not be taken for granted. To secure it I engaged an employment finding agency to help them find new jobs, and paid them their salaries until they did. I also provided them all with warm personal letters of recommendation.

It wasn’t cheap, but the investment paid off, as we were able to recover the vast majority of our receivables. Better yet, the fact that we had made such a graceful departure positioned us well as a commission agent, a role for which it is important that you have a reputation for fair dealing. Trust, not price, is the differentiating factor.

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