Within a few months, the four of us had completed two more profitable projects and were talking of starting the company back up. Our hopes were soon dashed, however, when the CEO and CTO committed to a new project, but for a lower fee and on a shorter time line. This absolutely guaranteed the project would cost us more than we would earn. It appeared that the higher-ups had learned nothing from the earlier failure.
In addition, my invoices were very late in being paid -- way past the 15-day terms I'd been promised. I also knew that the sum of outstanding invoices was approaching $175,000, including my colleagues' exposure. At our current pay rate, it would be a long time before we'd see full reimbursement for our work.
Additionally, I found out the company was factoring its invoices -- getting money from the bank before the invoice had actually been paid, and it had been the case for months. In spite of the successfully executed projects, the company was unable to produce a positive cash flow --a very bad sign.
To get to the bottom of the situation, I sat down with the CEO to share my concerns about our finances, and he revealed that the company was walking away from over a quarter of a million dollars in invoices from vendors, previous landlords, phone companies, office suppliers, service providers, and so on. The bosses were planning to turn their back on a huge pile of newly acquired debt as well. The idea was to default, close the firm, start a new one, and transfer the invoices and payments to the new enterprise, all of which sounded like fraud to me.
This was the final straw. I had been devoted to my job and to the people who worked beside me. I had no problem logging long days and nights. I was often described as a good company guy, one who tends to say yes to new duties and requests.
But I had been burned by the layoff at that first company, and now I was exposed more than I could afford. On top of that, I had just learned that the CEO was likely committing fraud and screwing his vendors. It also seemed very likely that my colleagues and I would be pushed aside if it became too troublesome to pay us.
So I did something I had never done before: I told the CEO I was going to move on and needed to devote my time fully to finding my next position. We balanced my remaining invoice against my COBRA payments and the company laptop in my possession, and we called the split even. I believe I came out a good deal ahead of the other guys (poor bastards).
Choosing to leave that job and my colleagues gave me the opportunity to start a firm myself. Additionally, leaving the job on my own terms provided the benefit of maintaining good relationships with everyone from the original company. I wouldn't necessarily wish my experience on anyone else, but at least I learned my habit of watching the numbers, balancing budgets, and focusing on the big picture paid off in the end.