It wasn't all that long ago that the retreading industry had a back-alley image—a succession of one-man bands operating in small, run-down shops and eking out a living at the tag-end of the transportation industry. Fortunately, such operations have been disappearing and the industry has a totally different image today. It has come of age. Retreaders still may be tough, hard-nosed businessmen, but any similarity with the old way of doing things ends there.
Today's successful retreader will usually be found in modern, well-lit, specially designed premises housing the latest technology.
Because of this, accountants and other financial advisers outside the trade are looking at retreading, not only as a means of saving money on tire costs, but as a business proposition for investors.
However, anyone contemplating getting into retreading ought to be a first-class professional—and the number of those is limited.
According to the International Tire and Rubber Association, 1,376 retread plants are now operating in the U.S.—down from 1,800 just 15 years ago. Only two new plants have opened so far this year and meanwhile two others have ceased operations. But it looks like shrinkage in the number of retread plants is slowing.
Nevertheless, it is naive to assume that launching a successful new retreading operation can be done solely on the strength of common sense and the advice of a good accountant. There's more to it than that. An existing knowledge of the retreading business is necessary to succeed today.
Today's retreading entrepreneur needs to be ``street-wise,'' familiar with new technology, able to produce a sound business plan and willing to work with accounting and marketing people. He or she also must be energetic, ambitious and determined to be successful in a challenging industry.
The name of the game is profit. A successful retreader is a profitable retreader. Like it or not, our effectiveness as business people can only be gauged by the profitability of the companies we operate. And it's not easy to make a profit in today's business climate.
I'm sure no one gets into retreading without expecting to be profitable. Yet some retread operations are extremely profitable, while others are not.
As management, you're responsible for the company's performance. You're the one who, in good times or bad, will be judged by the harshest taskmaster of all—the bottom line.
Yet even with the best of planning and management, it's still possible for a company to go through economic downturns—or even fail. The steady decline in the number of retread plants over the years testifies to this fact.
If your business should encounter rough financial seas, certain steps should be taken to limit your losses and get the operation back on solid ground. If business troubles are faced promptly, they don't have to be long-term disasters.
Most important of all, pay all taxes withheld from employees' paychecks on time. If you don't, the Internal Revenue Service and state tax authorities could hold you personally liable for them—plus penalties—even though your business is a corporation or limited liability company.
Stave off other creditors as best you can and use available cash to take care of employment taxes. Do this as soon as you know how much you owe, so the money will be out of your bank account and beyond reach of other creditors.
Should you be tempted to borrow more money, think carefully whether that really will help your business do better or merely compound its debt problem.
Be forthright when applying for a new loan or consolidating old debt. If you misrepresent your debt in order to get a loan, you'll be committing fraud—which means that even if you end up going through bankruptcy, you're still liable for the debt.
It's sometimes wise to keep checking and other accounts somewhere other than the bank from which you've borrowed. Loan agreements can allow the bank to take funds without notifying you, if it thinks you're in financial trouble.
When business is going badly, it's hard to remember that lots of people are pulling for you to succeed—your creditors, suppliers, employees, customers and even neighboring business owners. It's not unusual for some of them to lend a helping hand.
Suppliers may realize they need your business as much as you need them. If you can convince them your business is viable in the long run, they may extend the time for paying past debts. Most, however, will expect you to pay in advance or COD for any new goods. To avoid that, you'll need to convince them that current operations are in the black and that you are paying all new bills promptly.
We sometimes lose sight of the bigger picture in the pressure of daily activities. We get so bogged down in the problems of the moment we fail to see or make the most of our opportunities.
Too often, we hear someone whose business is not going well say ``business is bad,'' as if nothing could be done about it.
Too many retreaders allow business conditions to control their future, rather than putting themselves in control of their success.