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In May my partner got married, and by November she and her family had moved to North Carolina. I took on a little bit more financial burden than I had anticipated. I paid her a partial lump sum, then I was going to make payments once the business started making money. We thought we should have no problem.
By the fall of 2002 I was driving every day to the store. It was a lot of time and gas and wear and tear on my vehicle. Then, in October, we had the sniper shootings; business was terrible. Northern Virginia was just deadlocked. Nobody went out. We had several snowstorms, a lot of school closings, a lot of ice. There were problems with just getting the store open.
We also had expenses that we hadn't anticipated — a water heater leak, a leak in a toilet that we didn't notice until we got the water bill. We were very cautious about spending, but when you don't have a reserve to fall back on, it makes it very difficult.
We tried to establish a line of credit with our bank, but everybody wanted a personal guarantee. We purposely incorporated so that our personal assets wouldn't be involved if anything happened. We got to the point where the store was breaking even other than my salary, but I needed an income. After discussions with my husband and a lot of heartbreak, I decided to close.
I had a lot of stuff left over that didn't sell. I ended up taking space at an antique mall in Hagerstown, Md., closer to where I live. I work full time at a bank because I need an income, and I'm keeping my fingers in the antiques because I love it. My goal is to pay off the debt and maybe someday if the economy gets better to open a shop again.
Lucinda Duncalfe Holt
BUSINESS Destiny Web Solutions, which provided software and services to financial institutions.
LOCATION Conshohocken, Pa.
Lucinda Duncalfe Holt is the former chief executive of Destiny Web Solutions. The dot-com implosion, the economic slowdown and changes in the competitive landscape contributed to the company's demise, and it was liquidated near the end of 2002. In January of this year, Ms. Holt started a company that offers antispam technology.
Destiny Web Solutions was originally called Destiny Software. It was founded in 1994. By the end of 1998, we were decently well-positioned, but in that last quarter the behemoths all entered our market — Microsoft, I.B.M., BEA Systems. It was unbelievable. We looked down the barrel of all those guns and said, "O.K., it's time to find something different to do."
We decided to switch courses and become a consulting company. The company grew from about 30 employees to over 100 in a six-month period. In the second quarter of 2000, we were showing terrific profitability. We had big customers — Citigroup, Mellon, Bank of America, Bank of New York. The dot-com bubble burst and we saw no immediate impact, but we weren't getting new clients. We finally saw the downturn in the second quarter of 2001. Customers started cutting back. Citigroup, which was about 70 percent of our business, outsourced all the stuff we were doing to India. We couldn't get our feet underneath us. I likened it to being on a muddy slope. At the end of 2001, we liquidated and returned the capital to our investors. It took a year to complete.
While looking for new opportunities, I founded a company with someone I knew before I joined Destiny. It's called TurnTide and it offers an antispam router. We founded the company on Jan. 7, we're up to 12 employees, and it's off to the races again.
BUSINESS Bookpeople, a wholesale bookseller and distributor.
LOCATION Oakland, Calif.
Michelle Dow, 58, is chairwoman and publications editor of Bookpeople, an employee-owned company, which filed for bankruptcy in August and is in the process of liquidating its assets.
Bookpeople was founded in 1971 when employees of a book distribution business pooled their resources and bought out the owner. The interest initially was to support independent publishing and bookstores. The titles that really put us on the map were the "Whole Earth Catalog" and "How to Keep Your Volkswagen Alive." We had exclusive distribution and everybody in the world wanted them. By 1974, we had 30 employees, stocked 7,000 titles and grossed $3 million.
The company was incorporated under a formula where each employee could purchase equal shares of stock, but had to sell it back at no appreciation in value if they left the company. I think that attracted people who were self-motivated and interested in working in alternative business situations. The work here isn't glamorous. You're taking orders, you're filling orders, but if you love books then you're seeing things all day long that are of interest to you.
We had ups and downs but weathered them all. We always sort of felt that books were recession-proof. This time, it turned out not to be the case. The marketplace changed rapidly. The superstores were moving in and the independents would just disappear. Bookstores went bankrupt on us.
We were already struggling, then 9/11 happened and there was a shutdown of consumer participation. The whole next spring people just weren't spending money.
I think Bookpeople's unconventional structure may have hurt us. We never had our eyes focused much on the profit motive. We had a more altruistic outlook. Now I realize we should have been plowing every cent back into retained earnings.
At the end of August 2003, we declared bankruptcy because we had a lot of debt. December came, the high-water mark of the wholesaling year. We did respectably, but we didn't have a great month.
In January, it became evident that we should close. We were getting some pressure from the creditors committee in our bankruptcy case. We also had to prepay for all our orders and we could only afford to stock what we guessed would sell. That's an untenable way to continue business. What we're trying to accomplish now is a very managed liquidation of the assets.