Beau Lane | Crain's Phoenix

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Beau Lane

Background:  

LaneTerralever is a Phoenix-based marketing agency that has been in operation for more than 50 years.

The Mistake:

We were stuck with the unpaid media bills from publications like the New York Times and USA Today – big, national newspapers, magazines and media. 

About 10 years ago, we had a client in the airline industry. It was our largest client at the time and it went bankrupt. Right before their bankruptcy, they had spent a large amount of money on media to try and save the company. We had a policy that called for them to make payment quickly, but it happened so fast that we’d spent the money before we received payment.

At the end of the month, the campaign was not enough to save the company. The CEO called me and said not to worry; they’d make good on everything. Famous last words. It was to the tune of about $1.5 million for one month’s worth of media expenditures, which was a lot to us. We were stuck with the unpaid media bills from publications like New York Times and USA Today – big, national newspapers, magazines and media. 

They weren’t too lenient and looked to us for payment, even though we had never received reimbursement from the client. It was enough money to really damage our company and maybe put us out of business. 

So, we negotiated in good faith with all these different media outlets and ended up being able to pay it off over five years. It affected our profitability for a number of years, but we survived. I negotiated some of it down, but we ended paying at least half of it. We couldn’t let it affect our other clients and the media weren’t accepting advertising for any of them. We were forced to figure it out.

You have to make sure that you’re staying on top of your financial relationship with a client.

The Lesson:

We got smarter about handling such cases, going forward. We’re now much more fiscally responsible with large media expenditures on the behalf of clients. We probably should have known better; it was a tough period of time for the airlines. It just made us much more stringent in the way that we handle our financial dealings.

You have to stay close to it and use your financial instincts. You have to make sure that you’re staying on top of your financial relationship with a client and not extending terms to someone that doesn’t have a proven track record.  

Follow LaneTerralever on Twitter at @LaneTerralever.

Photo courtesy of Beau Lane

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