Chapter 3 - ERIC’S “PROFITABLE” BUSINESS
Eric owned Mercer Homeworks, a small residential contracting business.
Kitchens.
Bathrooms.
Basements.
Decks.
Occasional additions.
He started it four years before we married.
When I met him, the company had six employees and a good local reputation.
By our third anniversary, it had eleven workers.
Eric loved saying:
“We’re growing.”
But growth and profit are not synonyms.
I knew that professionally.
At home, somehow, I stopped applying the lesson.
Eric showed me revenue.
Never margins.
One year:
$1.8 million.
Next:
$2.2 million.
Then:
$2.6 million.
He called every increase success.
But the company always seemed short of cash.
Materials.
Payroll.
Insurance.
Truck repairs.
Customer delays.
“Temporary.”
Everything was temporary.
Until I examined tax returns.
Bank statements.
Loan records.
And the promissory notes I had forgotten because I trusted my husband.
Mercer Homeworks had not produced meaningful profit in almost three years.
After owner draws, debt service, vehicle payments, payroll, and job overruns, it was barely breaking even.
One year it had lost approximately $84,000.
Another about $41,000.
Eric covered gaps in three ways.
Business credit.
Delayed vendor payments.
Me.
My $42,000 “temporary loan” had never been repaid.
Neither had the additional $31,000.
Then I found something else.
A $150,000 business line of credit.
Personally guaranteed by:
Eric Mercer
and
Claire Hart-Mercer.
I remembered signing.
Unlike some fantasy version, my signature was not forged.
Eric had brought the renewal documents home eighteen months earlier.
He said:
“The bank needs spouse support because of the house.”
I skimmed.
Signed.
My mistake.
Rachel read the agreement.
“You are liable according to its terms unless the lender releases you or the debt is repaid.”
“I know.”
“We cannot simply cancel your guarantee tomorrow.”
“I know.”
“But you can decline future renewals or increases, depending on the agreement.”
“Good.”
We notified the bank through counsel that I would not consent to any increase or new guarantee and wanted all notices copied directly to me.
That did not shut down the business.
It did something more dangerous to Eric.
It ended his ability to assume I would sign the next document.
Then came the automatic transfers.
Every month, my $11,000 household transfer landed in joint checking.
From there, Eric had been moving portions into the business.
Not always huge amounts.
$2,000.
$3,500.
$1,800.
Sometimes returned.
Sometimes not.
Total over eighteen months:
$46,700.
I stared at the spreadsheet.
“He was using household money to cover business cash flow.”
Rachel nodded.
“Potentially. We need explanations.”
“I asked him why the mortgage was late twice.”
“What did he say?”
“That his customer paid him late.”
Rachel paused.
“Why would a customer delay affect your household mortgage if your salary funded household expenses?”
There it was.
The question I should have asked.
Because Eric had blended everything.
Business.
Household.
Family.
My income.
His cash flow.
If one bucket ran low, he poured from another.
And because I kept replenishing the largest bucket, nothing collapsed visibly.
May you like
Until I left.
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