This chapter dived into the topic of a business filing for chapter 11 bankruptcy. It’s titled “When Filing For Bankruptcy Is Your Best Option, Do It Early!” Cloutier talked about how while many people have a very negative social view of bankruptcy, sometimes it just makes perfect sense and that the law of bankruptcy was invented for a reason.

He used examples such as how certain people would refuse to file for a chapter 11 bankruptcy and instead go through extreme lengths to stay afloat such as mortgaging their homes. In the end they had nothing left. Compare that to people that go ahead with it and it gave them a tremendous amount of time to get things back into shape as well as reducing their debt.

The drawbacks were mentioned though where if you do file for chapter 11 that the judge will get to control a lot of your actions during your restructure. He made an interesting remark about lawyers though implying that a lot of them try and make bankruptcy sound like such a hard thing when it is fairly straight forward. It seemed like he was implying that they just want to make more money off of you this way.

In a nutshell, you should basically do this if the numbers make sense and not by your emotions. Makes sense overall I’d say and nothing was really controversial about this chapter. That’s usually why people try to separate their personal income and assets from a business too where if something goes bad with the business you can still be protected personally.

What an interesting coincidence too where chapter 11 was about chapter 11 bankruptcy.

What kind of chapter was this? My goodness. It’s definitely not any kind of advice I have ever heard of before. The chapter title is “You are not in the business to pay your vendors.” It revolved around trying to keep your cash as long as you can and in this case that means paying your bills and vendors late whenever possible using stall tactics.

Basically, Cloutier is saying that you should forget about things like your credit rating and whether or not your vendor likes you. Paying your bills late is like an interest free financing with way he puts it. Of course, there are various examples he uses of applying this business tactic that has worked wonders for him and many others.

As well, he clarifies too that this doesn’t mean you should be intentionally trying to avoid vendors and your landlord, but what you are doing are giving excuses like how you need a few more days to get the money in order to pay the bills. You should also make a list of vendors based on rankings such as ones that really wouldn’t want to get rid of you and therefore you can stall longer.

As much as I hate this advice, I have no doubt it probably works a lot of times too. Now you know why as a provider you should have a clause where if people don’t pay up they will be subject to an interest fee penalty. I don’t see why you would want to wreck your reputation though and depending on which industry you work in it is just so much easier nowadays to cut something off that a business desperately needs if they don’t pay the bill. Example, if it’s an online business I doubt the web host will let you run for long without paying. What a crazy chapter.

“I Am Your Work God!” was the colorful title for this section of the book. It was pretty familiar advice I thought in terms of taking the more no nonsense and non emotional approach to running a business. It revolved around handling employees and that you need to make sure that everyone follows orders. It’s that mentality too where people don’t have to like you but they should respect you.

The way Cloutier gives this advice though is a little surprising. Example, he says things like turnover is usually good as you can in a sense constantly get more motivated workers that way. As well, it seems like he thinks the whole notion of a friendly and nurturing environment is garbage as fear is the best motivator. He doesn’t like it when workers think, such as having different ideas on how to do things, as he just wants them to obey.

Another way he puts it is that he feels a business is not a democracy as you should be the end all decision maker. If you are too light then people will make all the excuses in the world costing you time and money where you need to get rid of them. I suppose you can say it’s more of an army commander type of mentality he encourages.

Okay, I think you need like a human resource consultant or lawyer before implementing any of the tips in this chapter. It is titled “Pay For Performance” and it revolved around how you should set everyone in the business with a compensation structure where their paycheck can increase or decrease based on performance. Very much like a commissioned sales person. If you must pay someone a base as a result of stipulations such as people being in a Union then you should pay them the lowest base salary and make them earn the rest through a bonus structure.

As well, Cloutier was expressing how it’s not good enough if your pay for performance structure is a one lump some setup such as how companies have a year end Christmas bonus if the company does well. Basically, with this no one has the urgency in between to do well.

He used examples too of companies that he convinced to implement this type of compensation structure. Not surprisingly, the majority of the employees disliked this and quit. Just as fast as they quit he mentioned that they were able to find new replacements. The profits and productivity have soared since then.

Now here was the biggest shocker. He mentioned that even for his own company when someone does something bad he would deduct their pay. Example, he said that he began to deduct $50 when people failed to return calls within thirty minutes. Not surprisingly, people smartened up afterwards.

I have no idea how you can do that with an employee. Example, to my knowledge you can’t just deduct an employee’s wage if they did something bad. If these were like contractors or business partners then that would be completely different. So that’s why I say that you should really research this and the laws in your area.

There was also an interesting point on how employees like the job security though and so this type of plan wouldn’t fly in most cases. Cloutier then tries to counter that view by saying there is no such thing as job security and that it is actually more secure this way since people are in control of their pay in many ways and can make more.

Overall, I personally agree with the underlying message here where it makes most sense to have a structure where people are rewarded and compensated from producing results. In many ways I think many people have too much of an entitlement mentality when it comes to earning money.

In some ways you can say that it is just better to be an entrepreneur if you have to work under this type of pressure. Another way I see it is that you basically are an entrepreneur except you don’t have to pay for all the expenses in running a business.

There was a lot technical material in this chapter I think. It was called “Live And Die By The Plan.” The main formula that Cloutier was emphasizing was how you should always have a “profits first” plan. I’ll try to briefly explain it. From what I gather, he emphasizes how when it comes to planning and budgeting most people revolve this around items such as anticipated sales and the cost of obtaining items.

An example would be you want to open up a store and so you look at the cost of the building. Then, you look at the products you are selling to see how much you need to sell to make that monthly rent as well as making an income for yourself. Basically, your plan is not revolved around your profits but rather things like potential sales.

Therefore, the better way to do it is to base it on your profits. An example was that for every dollar that you sell 15 cents goes to you and 85 cents goes to the business. So with that you are basing your expenses on your pool of profits and not in anticipation of future sales. If you can’t afford something yet then you don’t get it as you need to cut back.

There was a good analogy for this such as a family trying to save money. Basically, if you tell yourself that you have to save say $1000 every month you would automatically take that out of your monthly income funds first. Then, you have to base your budget around what’s left. Normally the bad way to save would be to spend first and then save how much you have left. It makes sense in many ways as revolving around a plan with this method forces you to be really on top of your financial situation.

The other part of the advice when it comes to making a plan was ways to hold employees accountable. He suggested things such as financial incentives for people that do well such as meeting a sales quota. Other than that, lot’s of story examples based on his past experiences in working with business owners.

What this chapter kind of shows too is that being financially successful in your personal life and in a business takes almost the same type of strategy and direction. Similarly, the same type of bad habits tend to produce the same type of bad results.