Facing adversity is a common, and often necessary, challenge on the road to business success. How you handle a single crisis could mean the difference in your company’s survival.
Warrington alumni meet those challenges head on, and emerge as wiser, stronger, and more determined leaders. Share in three of our alumni’s worst days, and learn how they survived.
Marty Schaffel (BA ’74, BSBA ’76) thought he was having a heart attack at 28 years old—at least that’s what it felt like when he thought his business was doomed.
To expand his audio visual company (now AVI-SPL), Schaffel found a supplier that allowed him to purchase $100,000 of merchandise, and gave him 100 days to refund the costs. That was a sweet deal considering Schaffel had only $2,000 to his name when he started the company in 1979, and banks were reluctant to offer a loan.
But when the supplier’s new CEO put an abrupt stop to the arrangement, Schaffel had 48 hours to return the $100K or he would not be allowed to purchase any more merchandise —which would be the death knell to his business.
“That was my one and only anxiety attack,” Schaffel said. “I thought it was all over. Remember, it’s 1981. $100,000 is a lot of money.”
So Schaffel did in two days what most Kickstarter campaigns couldn’t do in two months—raise $100,000. He borrowed from every family member, friend, and business contact willing to help him out. He pleaded for a loan, and a bank finally relented. He paid back the supplier, maintained his business, and kept all 15 of his workers employed—and he learned a valuable lesson.
“You can’t have a business dominated by one single customer or supplier,” Schaffel said. “You don’t have a way to regroup if they do something adversarial.”
By the way, Schaffel paid back in full everyone whom he borrowed from.
(Keep reading to learn another valuable lesson from Marty)
Scott Sims (BSBA ’97) doesn’t lament his professional disappointments; he doesn’t have time to.
So when his successful eBay-selling business folded in 2007, he simply moved on.
“I never looked at it like that [my worst day],” Sims said. “I never let it get me down. It was just another bump in the road. Besides, I didn’t have much of a choice.”
Sims has rebounded beautifully with Victory Tailgate, a direct-to-consumer, on-demand manufacturer of licensed goods and apparel. The company landed at No. 18 on the 2016 Gator 100 with an impressive 73.45% compound annual growth rate over the past three years.
At one time, Sims said his business was the largest volume seller on eBay, but his success led to his downfall. Online platforms were created to maximize mass volume selling, and competitors copied Sims’ strategy.
“All these platforms made it easy to do what we did,” Sims said. “Our margins shrunk, and the model no longer worked.”
Sims learned from that experience, which is why establishing more rigorous barriers to entry was a priority with Victory Tailgate. Sims, Victory Tailgate’s Founder and Chief Executive Officer, has acquired licenses from the top U.S. sports leagues and collegiate athletic programs to restrict competitors from copying its outdoor tailgate games. That protection, plus Sims’ emphasis on innovation, has the company poised for further growth.
“You have to learn from your mistakes, but, more importantly, have faith in yourself,” Sims said.
There’s no debating Kristen Hadeed’s (BSBA ’10) worst day as the Founder and Chief Executive Officer of Student Maid.
Having 75 percent of your workforce quit on the same day is something you don’t forget.
Hadeed hired 60 student workers after securing her first major contract for Student Maid, a company where college students perform housecleaning services in Gainesville. But when it was time to get to work, 45 of those students quit.
“I believe every failure is an opportunity,” Hadeed said. “Looking back, I didn’t know how to be a leader.”
Hadeed’s crisis made her reexamine her leadership style. Hadeed, who managed to get all 45 workers to return, spent less time at the office and more time on site with her workers. She also worked on developing a positive culture so students would remain with the company longer.
The results have been extraordinary. Student Maid continues to thrive, and Kristen is writing a book that will launch in the fall about leadership and culture. She frequently travels to organizations around the country to help them create workplace cultures that bring out the best in people.
Schaffel’s second moment of crisis came on Oct. 19, 1987, otherwise known as “Black Monday.” The Dow Jones Industrial Average fell 508 points, which remains the largest one-day stock market decline in history.
“All business seemed to stop in place,” Schaffel said. “Money that I was owed wasn’t being sent. They were all hoarding their cash.
“I kept paying my bills and my employees. The next thing I knew, I was out of cash.”
Like he did six years earlier, Schaffel scrambled for borrowed cash to keep the business afloat. After a few weeks, the stock market settled and Schaffel’s business associates resumed their payments.
That experience prepared Schaffel in the aftermath of the terrorist attacks on Sept. 11, 2001—and the potential economic downfall the tragedy could trigger. While paychecks to his employees continued, Schaffel halted other payments and conserved capital for three weeks before resuming his usual payment schedule.
“The stress and anxiety that comes with helpless feelings at those times, I can remember them as clearly as yesterday,” Schaffel said. “You learn from adversity, and those kind of situations cause me to learn and be more successful.”