Rich Johnson knew he had to get together and fight when the bank called in ViaQuest’s line of credit Featured

4:00pm EDT July 31, 2013
Rich Johnson, president and CEO, ViaQuest Inc. Rich Johnson, president and CEO, ViaQuest Inc.

Rich Johnson was preparing to wrap things up for the week at his company, ViaQuest Inc., at about 4 p.m. on a Friday. It was 2008, and while he knew the credit crunch was starting to affect the economy, the last thing he expected was to have bank representatives walk into his office and inform him they were not going to renew ViaQuest’s line of credit.

“That basically sucked the cash out of our account, and I needed to come up with a large sum of money to meet payroll on Monday morning,” says Johnson, president and CEO. 

Johnson was in a state of shock. Lenders were waist-deep in the red ink flood, and many businesses were hurting.

“I was sitting at my desk on a Friday night, trying not to panic,” he says. “My strong faith had a lot to do with helping me not to panic, but the first thing I did was to calm down, and just try to clear my head. I started making phone calls to people who had the same experience; I had never had this experience. I knew that I’m a fighter — and I was preparing myself for a fight.”

While he understood the reasons behind the credit crisis, he was surprised that it knocked on his door.

“We had never missed a covenant payment,” Johnson says. “We weren’t overleveraged. It really had nothing to do with us as a company. It was what was happening with the banking industry. It just took us by surprise.”

ViaQuest at the time was a $15 million company. Its longest standing division serves people with developmental disabilities in the home and community-based settings, and it is one of the largest providers of those services in Ohio.

“We had 1,100 employees who were dependent on us, and we needed to act quickly,” Johnson says. “We are passionate about serving a very special population of people with disabilities, older adults. Our staff is the most remarkable employee base that you can imagine. The first reaction was not, ‘How is this going to affect me?’ It was, ‘How is it going to affect the people that we serve? Let’s fight to make this work.’”

As you can imagine, ViaQuest had a difficult time for the next 12 to 18 months. 

“We were late paying vendors. We were late making a lot of payments,” he says. “We had to decide what we could pay and what we couldn’t pay. It was just a very dark time in our history and we came very, very close to not surviving.”

But not only did ViaQuest survive, the company grew. It now has 1,400 employees and is on track for revenues of $60 million this year.

Here is how Johnson put together multiple approaches to keep ViaQuest’s head above water — including an astonishing bailout for the immediate problem at hand.

 

Leave no stone unturned

Many business leaders may admit that one of the biggest fears is having your lender pull the rug out from under you. What Johnson found to help his situation, however, was akin to an angel investor stepping up to the plate and hitting a home run.

“When the bank came in and shut down my line of credit, they said they would not extend any credit to me without collateral to back that credit,” he says. “They already had my house that I lived in as collateral, and all my assets were in the company. I had to act quickly.”

The first person he called for help was his ex-wife, Jill, with whom he was still good friends. 

“This was Saturday and I asked her if she would be willing to put up the house [she had received it as part of the divorce settlement] as collateral to fund my next payroll. She started crying and said, ‘You know, this is the house that our kids live in, and I know that you would never let anything happen to me or the kids. You have always taken care of us, and I know how passionate you are, and I know that this, too, will pass.’

“That’s how we survived,” Johnson says. “She put up her house as collateral; it got us to the next payroll.”

While such a bailout may often provide a little breathing space, it also is a cry for a major review of company operations.

Once Johnson started to review his options, he and his team worked on collections and vendors.

“Some vendors didn’t get paid for months, but they didn’t stop service,” Johnson says. “They hung with us. We are just very fortunate that we had a long history with them.

“It is at times like that when you find out what relationships are all about.”

 

Involve the rank and file

Before you spend all your time with financial matters, you need to let your people know during a crisis what is going on.

“Over the weekend I drafted a correspondence to all our employees and told them exactly what was happening,” Johnson says. “We are a very transparent organization. I am the sole owner. And good, bad or ugly, I always let people know where we are at all times with everything — I let them know what was happening.”

Johnson told his employees that they were fighting for the future and asked them to stand with him. 

“I said I understood if they wouldn’t, or if they felt that their family was in jeopardy and they needed to take care of their family. I understood that, but I asked them to bond together and fight with me. And every person did.”

One of the greatest things you can learn during a time of crisis is about the perseverance of the company and its culture. 

“A lot of people were very afraid, but we did not lose any employees during that time,” Johnson says. “Most employees elsewhere would have been running for the door. I’m fortunate to have the greatest employees in the world who said we are going to stand and fight with you, and we are going to see this through.

“Today we are fortunate enough to have another bank in place,” he says. “We actually are doing very, very well. The experience taught us to manage the business a lot more efficiently, and it really made us tougher.”

 

Find a silver lining

Going through a crisis offers a unique opportunity to focus on the company culture that you have been building.

“The No. 1 lesson that I learned is that we really work on our culture more than any other function in the company. We spend a lot of time building our culture and showing our employees how much we value them.”

Johnson points to quarterly Culture Crusader meetings, where employees talk about living out core values, and annual conferences where managers receive inspirational training.

“It has built a culture that even if we didn’t know if we were going to be around in the future, the culture that we built together really bonded us, and we made it through,” he says.

Making it through a crisis shows how strong your culture has become and offers a particular insight.

“I guess we have matured a little bit,” Johnson says. “I never would have imagined that would have happened because we didn’t do anything (out of order). It is not like we were doing something and the bank gave us a warning that said you had better stop. So now, we make sure that we have the proper systems in place. We make sure that we have the cash and not depend so much on credit.”

In ViaQuest’s case, executive team members realized that they needed a greater focus on the processes of collecting and billing. 

“We were 100 percent government-funded, so if you don’t have your ‘i’s’ dotted and your ‘t’s’ crossed, if you don’t have the systems and processes in place, your collections can get backed up, and you can make any bank nervous,” he says. “So we make sure that we have all of our core processes down to mitigate any billing or collecting issues. Then we develop different relationships and have alternative measures in place if this is ever to happen again so that we would not be taken by surprise.

“I think we have a great, great billing department now,” Johnson says. “Our finance department is outstanding. If there are any accounts that are just a little bit overdue, they start working it.”

It’s also a good idea to consider the role of the line of credit. If you rely on it, it becomes your safety net.

“We do not look at it that way,” Johnson says. “We view us as not having any safety net, and we still operate like we need to meet payroll every month. We still operate today like we did during that six-month period of time when we needed to fund every payroll. It’s kind of like we are Depression-era babies hiding money under the mattress and all those things. 

“We’ve been scarred a little bit so we don’t take that for granted, and it taught us a great lesson. We run better as a company because of it.” 


Takeaways

  • Leave no stone unturned when seeking help.
  • Involve all your employees in the recovery.
  • Find a silver lining.

 

NAME: Rich Johnson

TITLE: president and CEO

COMPANY: ViaQuest Inc.

Education: I was one of those kids that the judge said, ‘It’s either jail or the service.’ I went into the U.S. Air Force right out of high school. It provided me with the G.I. Bill, and I finished at Capital University with a bachelor’s degree in accounting. 

What was your very first job? I was 16 and I worked at a Rax Restaurant. I was the second employee hired by them in Marysville and got my baptism by fire in the restaurant industry. I did everything. They were famous for roast beef sandwiches. 

Who do you admire in business? Herb Kelleher and Southwest Airlines and the way they built culture. I have to admit I am not a huge fan of how you fly with Southwest, but you always know that you can get there on time, and you know it’s going to be a fun trip. I wanted to build a culture like that. I really studied Southwest Airlines. In 2001, we signed up Southwest Airlines to speak at our annual conference. Our conference was two weeks after 9/11. I said, ‘Look, we all know what is going on right now in the world. We respect that, and if you want out of the speaking engagement, I completely understand.’

The speaker said, ‘We made a commitment to you. We understand what is going on in the world but our commitment that we made to you — we are going to honor it.’ And she showed up at our conference, was our keynote speaker and did not accept payment. It was absolutely moving. It was incredible.

What is the best business advice you have ever received? A gentleman gave me the advice, ‘If you don’t have time to do it right the first time, you’re not going to have time to go back and fix it. So take the time to do it right the first time.’ That really stuck with me. But my personal mantra that I started early in business is if you do the right things, the dollars will follow. You always do the right thing first and not let financial pressures get in the way of that. I have stood by that and there are times when we were going through all the ups and downs that we had that it would have been easy to cut corners and do something differently. But I always believed if you do the right things, the dollars will follow and everything will be in place. That’s how we have operated this company. 

What is your definition of business success? Positively impacting as many lives as you can so you can make as many people in your organization successful. It is not monetary. It is changing people’s lives. It is changing the way things are done. It is changing the world. Innovators to me are a business success. When you say you have changed someone’s life or have helped them improve their life, that is business success.

How to reach: ViaQuest, (800) 645-3267 or www.viaquestinc.com