The honeymoon ended for Bob Ginsburg the day after he completed his leveraged buyout of four Baltimore area MAP Automotive stores. It ended when he finally got a good look at the company books.
The debt he had assumed in buying out the former MAP owners was "very old debt," Mr. Ginsburg says.
To his dismay, manufacturers of the parts stocked on his shelves had put the stores' credit on hold until some of the past bills -- a whopping $600,000 -- were paid.
"We were down as soon as we started," he says now, two years after the buyout.
But Mr. Ginsburg decided not to liquidate and get out with what he could. Instead, he "cut expenses down to the bone," gritted his teeth and hung on.
"Believe me, we're not out of trouble but I can see the light at the end of the tunnel," he says. "I'll probably die getting there, but I can see the light."
With assistance from Thomas P. McShane, a Reisterstown-based turnaround specialist, Mr. Ginsburg took a hard look at his business, and made some sweeping and dramatic changes.
"We looked at every single item that I was paying for and asked, 'Do I need this or do I need a variation of this that costs less and won't hinder my company?' " he says.
The company was top heavy, he says, so six senior positions were eliminated, ranging from vice president to purchasing agent, and he cut his salary in half.
A warehouse and an unprofitable outlet were closed and sold.
These closings and layoffs reduced MAP's staff by two-thirds, from 54 employees to 19. The company's weekly payroll was slashed from $19,000 to $7,000.
Mr. Ginsburg says he found a new job for every employee he laid off.
"I felt responsible to those people," he explained. "If I'm failing, why should they take the hit?"
Mr. Ginsburg went to the manufacturers who had put a credit hold on him and worked out a deal: He would pay them 10 cents to 40 cents less on each dollar he owed.
In one case, a manufacturer agreed to buy out all the remaining stock on his shelves if he agreed to sell their merchandise in the future.
By giving his creditors and suppliers straight talk about his financial situation, Mr. Ginsburg found that many were agreeable to working out a deal.
"If I went out of business, they knew they'd get nothing so this way they'd get something, at least, and get it off their books," he says. MAP's load of old debts fell to $70,000.
Mr. Ginsburg also sold a delivery vehicle that wasn't needed, eliminating the insurance premiums at the same time.
The company also cut back on computer maintenance costs by replacing old keyboards and downsizing company printers.
MAP store sales have fallen from $3.3 million last year to an estimated $1.5 million for 1990. But, as a result of Mr. Ginsburg's aggressive cost-cutting, the individual stores are profitable.
Still, the company is struggling to free itself of the debts assumed two years ago. Mr. Ginsburg believes that by the first quarter of 1991 MAP should be out of the red, regardless of the current economic slump.
"I'm not quitting," he says. "I've been in this business 17 years and I'm going to be in it until I die. I love it.
"And I'm not going to take anybody down with me, either, because I'm not going down."