July 28, 2013

Dan Demeritt: Most-Googled Demeritt humbled, emboldened by notoriety

The author shares the details of a financial nightmare while holdng on to the Amercan dream.

There are several Dan Demeritts across the country. Thanks to a few tumultuous months with Gov. LePage and this column, I account for about 90 percent of the Google search results of our shared name.

It has, however, been a bumpy road to prominence, and I owe my namesakes an apology for messing up their online identities.

In the spring of 2011 the financial challenges facing my small and relatively obscure businesses were front-page news in Maine. While I am kidding about the apology, I have always wanted to share more about these challenges and what my experience taught me about doing business in Maine.

What I learned is that we have plenty of businesses in Maine. The problem from an economic standpoint is that too many of these firms are microbusinesses operating without employees. Entrepreneurs with skills, products or ideas would rather work alone than risk insolvency by adding scale and overhead to their operation.

Economic growth and jobs are created when tiny businesses make investments and make their operations bigger. But that comes with a lot of costs, burdens and, as I found out, risks.

Late in 2003 I acquired a failing pizzeria in Augusta and closed on four small apartment buildings in less than 30 days. It was a bold stroke. Almost overnight I was half-a-million dollars in debt, working harder than ever before, and extremely optimistic about the future.

Despite the highly competitive nature of the restaurant business and a lack of discernible product differentiation, I built a delivery business at my pizzeria that was strong enough to sustain my operation and power two expansions.

I enjoyed initial success in real estate management as well. My rental business grew to the point where I owned several small, modest buildings and managed 23 rental units. Given the size of my buildings, these 23 units had to shoulder the costs of roofs, boilers and maintenance across seven buildings. There was little room for error or vacancy, but it worked.

In 2008 I started to see the light at the end of the start-up tunnel. Money from my customers and tenants amortized thousands of dollars per month in debt on hard and appreciating assets, my free cash flow was improving, and I had a great manager who helped keep the trains running.

Then everything changed with the economic collapse. The phone stopped ringing at my restaurants, energy prices skyrocketed, and I went from having one or two manageable vacancies at a time to carrying four or more empty units most of the time.

The math no longer worked, and the value of my investment properties disappeared overnight.

In late September of 2010 I came to the tough realization that I needed work outside of my business to support my family. I consolidated my two remaining pizzerias into one location, left a manager in charge, and joined the LePage campaign.

Some observed that directing communications for the free-spoken LePage was one of the toughest assignments in Maine politics. For me working for LePage was always an oasis, providing a fleeting escape from my entrepreneurial meltdown and a steady paycheck that on many occasions helped cover a payroll or fill an oil tank at an apartment building.

But a brutal reckoning was coming.

The prominence I achieved working for LePage eventually put my financial challenges on the front pages of Maine newspapers. I resigned out of a shared recognition that I could not simultaneously serve the governor and shutter my businesses. I wrote the statement from the governor's office announcing my resignation and left the building.

Over the next few months I sold my remaining pizzeria for a fraction of what I spent to get into business eight years earlier. I worked with my banks to sell or cooperatively foreclose on my apartment buildings. Then, after months of trying to avoid it, I was forced to file a bankruptcy to clear my outstanding business debts and preserve my ability to provide for my kids.

While most of my debts were owed to large financial institutions, I will always regret and remain truly sorry for having to use the legal process to discharge debts owed to a couple of other small, Maine-based businesses.

As for the lessons, there are many. On the personal front I have learned it is only money, failure is an option, memories fade, and the faster you fall the quicker you can bounce back up.

Given the chance again, I would also give more consideration to an obscure post away from the glare of the governor's office. But I would still turn it down.

Despite the gloom, doom and obstacles, I remain optimistic about Maine's future. And my own.

Dan Demeritt is a Republican political consultant and public relations specialist. He is a former campaign aide and communications director for Gov. Paul LePage. He can be contacted at:

dan@win207.com

Twitter: @demerittdan

 

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