This NEVER Happens

I think Leo, our President, has been walking little old ladies across the street or something because today when we went to the post office to pick up a piece of REGISTERED MAIL (which for us usually means big past due bills or lawsuits), for ONCE IN THE HISTORY OF HISTORY, it was... get ready for this...

A CHECK. And it was for the ASSICIATION. It was from the electric company for 400 euros!!

Is this karma? Let's hope so.

How we wiped out 75 percent of a 30 year debt in one year

The other 25 percent will be paid (if things keep going the way they have been. Touch wood) by December of this year.

When Leo and I took over the Association last year (he is president, I am director), we found a mega debt that apparently went back as far as 30 years (the creditors changed, but the debt, not so much) that was accompanied by some bad habits, like always paying the rent late, updating accounting every 3 months or so, spending more than was coming in, etc. Considering that the Association takes in about 80,000 euros per year, a hole of 40,000 was pretty daunting. After we had about 3 heart attacks each, we decided to take action. We needed to be absolutely drastic in  order to stay alive. Here is what we did.

First step: TAKE RESPONSIBILITY. We committed ourselves to doing what was possible not only to save the Association but to give it a future. Well, not really, we just went into panic mode and put out fires with our legal friend, Federica, for the first three months. Then we asked our friend, Davide, to help with the accounting. From there we could finally concentrate on filling up classes and planning fundraisers with our colleague, Denise. Here's what else we did to save money and boost revenue. We plan on being completely debt free by the end of the year and as of yesterday it actually looks more possible than ever, thanks to a lot of team work and honesty.

1. Started treating the business accounts like a personal bank account. Started tracking EVERY penny that came in and went out.
2. Changed phone plan, down-graded ADSL, got a company cell phone for cell calls (which cost a lot from a land line). Saved over 100 euros per month.
3. Stopped updating website (600 euros per year) and started a blog (free)
4. Made the director (me) a volunteer (300/month)
5. Asked Davide to do the day to day accounting and make payment plans (Key decision).
6. Went to all creditors, asked forgiveness and made payment plans, stuck to them.
7. Gave our teachers a raise (best decision we made. Good teachers are like good hairdressers. They have a following). Made sure all teachers are paid the same (we only want the best, btw, so this is not a problem)
8. Bought office supplies on-line.
9. Stopped paying for expensive dinners for VIPs, having coffees out
10. Asked illycaffè to donate a coffee maker, they did. Now we have VIPs for coffee.
11. Changed our payment terms for classes (pay before, not after)
12. Asked big companies for help (some did!)
13. Held fund-raisers (Thanksgiving, 4th of July)
14. Received a grant from US Gov for materials, opened a children's library which revitalized our image.
15. Asked US Gov to donate our magazine subscriptions (500 euros/year)
16. Created a team of volunteers: Accounting, Legal, Fundraising, Graphics and marketing, Library, Public School Liasion, Programs and Events, IT. (savings LOTS).
17. Created a positive, family-oriented, volunteer-friendly community
18. Teachers donated teaching hours (no one forced them. It was voluntary and says something about the awesome atmosphere I work in).
19. Found an accountant who would provide tax help for free (Hopefully we will be able to pay him one day) saving us 2000 euros/year
20. Split the cleaning lady bill with our sub-renters.
21. Paid serious attention to energy consumption.

Is the Sinking Ship Coming up for Air??

On Friday I have a very important appointment to see about getting some funding for the Association. This same foundation gave us a grant last year that saved us from having to close with a lot of debt that we found out our new President would be personally responsible for (Thinking about opening a non-profit in Italy? Make sure its status is RICONOSCIUTA and not NON-RICONOSCIUTA to avoid this problem). This helped explain a few things like 1. Why the old president was in such a hurry to get out and 2. Why past presidents kept smiling, pretending nothing was wrong and passing the debt on to the next president. Like I've said in earlier posts, they say our debt goes back about 30 years with creditors changing and getting paid depending on how loud they complained. Payment priority went to the creditor who sent the lawsuit threat letters. What changed the situation was the piece of advice our old accountant gave our last president about the rental situation which had been paid after it was due instead of before it was due since the Association moved to this building. The rent was always very past due. Finally, when the landlord threatened to sue and then did, no action was taken. The old accountant's words, I believe, were "We're in Italy, they can't throw you out!"*

Um. Yes, they can. But we solved that problem.

Anyway, today it turns out that I can finally report some GOOD NEWS. According to my friend Davide, who took over the day to day accounting at the Association last August (Rule number one, ask for help!), we should be debt free by December. Can you BELIEVE THAT? After 30 years of ignoring the debt, our team will have ELIMINATED IT IN A YEAR AND A HALF. Incredible. So that's it. We just have to live until December. Zero will never feel so good!

At least there is an end in sight. In later posts, I will tell you how we are achieving this amazing feat. But for now I am on cloud nine and I must feel the thrill for a moment.


*He is no longer our accountant by the way, he was one of the Baddies we eliminated, actually he eliminated himself-- THANK GOD. He was just recently in the paper for giving more stellar advice to another company in Trieste. I believe the words were "Sure, go buy that expensive machinery! OF COURSE the Region will pay for it!!" so they did, and then the Region told them "Hey, we can't pay for machinery that you already have!" Boom. Bankruptcy!).

I'm not the Only One

Since I started trying to turn my sinking ship into lemonade, or, when I took over a non-profit that was 40,000 euros in the hole last year, I have been putting out fires (first of which was an eviction notice. With help from some very nice people, we got that taken care of by doing a lot of begging, establishing a payment plan, and taking responsibility. We were able to get a new contract for 6 years to come up with another plan and I am happy to say that if we live until December, our Association will be officially out of debt for the first time in 30 years). Other fires included lawsuit threats, a couple of stalkers, you know, the usual. If you can imagine it, I have probably dealt with it over the last year.

I have also been reading about management, personal finance, being successful, anything to get some ideas on how to save our library/cultural Association/language school. A lot of the books are older, since they're library books that have entered our library any time over the last 50 years.

Here's what I'm reading today:
Beware the Naked Man Who Offers You His Shirt by Harvey Mackay

The title of chapter 4: "YOU'RE A LOT BETTER OFF BEING SCARED THAN BEING BORED"

Isn't that chancey?

If you want to feel a little better about your business

Try some marketing reasearch. When I told my student volunteer the other day that I wanted her to do a little marketing research for me, she went silent. I asked her "Do you know what that means?" Her answer: Calling people? No no, I said, it means finding out who your competitors are, seeing what they do, where you are positioned in your market, you know, that kind of thing. Relief. So I put her on the task of finding us on the web (we're pretty much not there in the traditional sense), then getting the info on the others.

To my surprise:

1. There were lots of LIST sites where people can get info on where to do things like take English classes, etc. We are not there (do people use them?).

2. We had more competitors than I thought. But on closer look I realized that some people were LISTED as doing what we do, but really do other things and wanted more visibility.

3. Many language schools offer a gazillion things (every language possible, computer classes, etc) so that they can try to appeal to everyone.

4. Many of these schools are franchises/chains. Like McDonalds for learning languages.

5. Offering tests and certifications are supposed to show that you are serious.

6. Everybody and their mother is a "CULTURAL ASSOCIATION" even when they are clearly a for profit business.

I have to admit this first part of the project got me a little down. After all, how are the little guys like us supposed to compete with multi-nationals, and the sheer number of competitors (I personally can think of only one that feels like an actual competitor) was a little depressing. So I decided to take action and have my volunteer call these other schools (after I told her she wouldn't have to do any calling. I had to explain that this was different. No selling involved-- let them sell to you!)

I wanted a simple piece of information: How much does a private lesson in English cost? To be sure, this was a difficult job for my volunteer, who felt like she was lying to the schools by asking for this information, she was sure they knew she was an imposter, etc. To which I said, you're a student, you're getting information. Basta.

This part made me feel better and here is what I learned.

1. There are schools that charge more than us, but not much more (my fear was being on the low end, which is not a good place).

2. The same schools that offer a gazillion things also charge less and (incidentally, from personal past experience with at least one of them) pay their teachers about half what we do (always pay your teachers as much as you can).

3. One school was going out of business next week (one of those franchises).

4. About half of the schools would not give this sensitive information on the phone. They were also snitty and made my volunteer feel bad. So let's talk about this for a moment.

Bad marketing strategy-- the old "get them into the office so they can't say no" routine. I wouldn't touch one of those places with a 10 meter stick. The idea makes me feel itchy, like they're going to convert me to something strange when I get there. No thank you.

5. Our hours, which are 4-8pm Monday through Friday (well, in summer we close on Fridays) are actually AWESOME. A lot of these places had no one answering the phone after 6, when many people finish work.

So I'm feeling a little better. Yes, there is more work to do (lots), but I know more about who we are and where we are (more importantly) and I am more convinced than ever that transparency is the way to go. People ask you a question about your business, answer them truthfully. You can still respond to your clients' needs, but having different pricing options for different folks just smells funny from the outside.

Thanks, Jasmina, for stepping out of your comfort zone for us yesterday. BTW, I try not make my volunteers do tooooo much, but in this case, I couldn't have done the calling myself. My American accent would have given me away and then my research results would have been botched.

You are not a complete idiot

With financial matters, it often seems like some people just know how money works, and others are not meant to know. I always felt I belonged to that second group. I still feel that way sometimes, but learned that the secret to not feeling like an idiot is to just get as much info as possible. I started reading books on personal finance, reading blogs, and reading financial pages (still don't understand much, but hope it's like foreign language, and I have some experience with those, that one day it will all click).


I also realized at some point that the people in my life who are supposed to be the experts (in an amateur sense), don't really have all that much experience investing, running businesses, etc.

I am feeling much more confident than I used to. With the Association, my approach to accounting is to treat it as little like a business as possible when it comes to spending. If I wouldn't do it with my own money, I won't do it with the Association's money. That works for me. Again, it's all about being honest.

That, and I have two very kick-ass volunteers who keep track of the day-to-day numbers stuff. Phyoo.

A little something about the Association

The Italian American Association in Trieste, Italy is an amazing place. When you walk in you feel the calm and comfort of a place filled with books. It has always been my refuge here, ever since I arrived 8 years ago. I knew I could come in and read and give my feet a rest between appointments downtown. All those books and magazines in English make me feel like I never left America sometimes.

The Association itself was started 50 years ago this year. We hope it will continue well into the future. Last year, around April, we were in danger of losing the apartment which houses the office and the library. In fact, the week I started as director, I received an eviction notice giving us 8 days to vacate the premises.

That week sucked.

As I write this, my 8-month old daughter is teaching herself how to crawl on the floor next to me. She is grunting a little, crying, turning herself over, getting herself up on one knee. Not so different from how Leo, the Association's new president, and I had to do last spring and summer.

Tough times. And so many uncomfortable moments. Like when I had to go to our sub-renters (who in theory were helping us pay the rent, but in practice the rent had not been paid in 6 months, and it was our fault. How could I not have been told that?) and say "I know you paid the rent, but you still may have to leave in 8 days..."

I wince when I think of it now.

Step One: get rid of the baddies

One of the reasons I became the director of my non-profit is my ignorance. I didn't know how to read a balance sheet and so I did not fully realize how much trouble the company (it's a non-profit, but that's a company too) was really in. I knew I could use my classroom management skills to manage a team, but when it came to the numbers, I was completely useless. The other reason I becamse director was because I genuinely believed in the Association and wanted it to do well. I also couldn't think of anyone at the time who believed in it as much as I did.

My strength, though, was that my experience as a classroom teacher in the States and in Italy taught me that status and responsibility aren't always related. The fact that I wasn't concerned with it (if you're a teacher, you're not expecting much in terms of prestige or pay, let's face it) but WAS concerned with performance, probably made me a good choice for not making the same mistakes my predecessors had done. In Italy, titles are important. The moment you become a MANAGER, or a DIRECTOR or a PRESIDENT, you change status and people want to know you.

But... to be important in Italy you have to communicate complete COMPETENCE. That's why my Association, over 30 years, went deeper and deeper into debt and no one seemed to know a thing about it (except the people who were constantly waiting for payment, of course). The people in charge never let anyone know that they were in trouble. Asking for help, or showing any kind of transparency, for that matter, communicates WEAKNESS. And that is a no-no.

Then I came along and everything changed.

For starters, I asked for help and told people about the real situation, foolishly thinking that this would ignite some kind of collective effort to save the Association. I learned a lot from doing this. For one thing, the exact OPPOSITE happened. People who were in a position to help us DISAPPEARED. At first I didn't understand this, but later I realized that these people were the problem (a disgruntled board member AND, not surprisingly, the accountant, also a board member, and whose lousy advice exacerbated the problem. When things got really bad, he actually threatened to SUE US!!) and they did not want their names to be connected to these kinds of problems. Good riddance.

This is an important part of the initial Clean up. Getting rid of the BADDIES.

This was step one to purification.

Step two was choosing a team to share the burden.

At least my non prof is a library!

I remember reading once that the easiest people to place in jobs were Psychology and French majors. I figured this was because psych majors knew something about people, and French majors were language people, intellectually curious, and perpetual students.

At least that is the case for me. Luckily, the non profit that I am currently trying to dig out of a big, dark, and deep hole is also the home to a 50-year-old library that is constantly being updated through donations from ex-pats and, lately, a nice grant from the US Gov.

Now that I have been at the helm for about a year and I am out of the worst part of the crisis, I decided it was time to start thinking long-range planning. I also decided it was time to learn about management-- figure out what the experts say.

So I picked up this book: THE ESSENTIAL DRUCKER which is 60 years of Peter Drucker's writing on Management. And you know what? It's pretty good reading. Not at all what I would have thought about business writing, especially when I was a young French major. Well written, good stuff.

Here's what I'm working on today. People. How to pick them, etc. And the wisdom comes down to this.

1. If I put someone in a position and they suck. It's my fault.
2. It is my job to make sure that person performs.
3. People decisions are important because they determine the capacity of the organization.
4. Don't give new people major assignments.

The two rules that I realized I have been weak on are number 2 and number 4. I need to make sure that people know their job (I must communicate it to them) and I shouldn't expect new people to do anything other than what I can communicate well and offer help doing.

My experience with number two has to do with Accounting. More about that in a minute.

Learning to lead, make money and be good

The first thing you should know about me is that I am a sucker. That is to say I am gullible, I trust nearly everyone, I am impulsive, a risk-taker, optimistic to a fault, and I do not read the fine print. That is what I was going to call this blog-- read the fine print, people. Do as I say, not as I do. But that was taken. 

Having said that, now look at the title of this entry. These are the things I have been thinking about lately. Can you do all three? Can you do the first two without being a jerk? Can you do all three at the same time? I am learning to lead, make money, and be good. The third item seems to be coming along okay-- I have had good models  in my life and happen to dislike bad people. Now I would like to reconcile my desire to be good with the freedom and autonomy that comes with creating wealth. 

On the money front I have to think in terms of the non-profit I run, which is an economic disaster-- hence the title. I took it over without truly understanding how bad the situation was, more on that later. Which is another reason I am a sucker, but I choose to see it this way: one person's sinking ship is another's opportunity. I jumped on that sinking ship and I am committed to turning it into lemonade. 

On the other hand, I also need to eat, I never want to be an employee again, and I never ever want to worry about money. 

So here is a beginner's guide to learning a few things about saving a company, being a good leader, a decent person and knowing a little something about money.