Writing about debt properly for the first time
I have written about money on the periphery several times before. But today is the first time I am facing debt itself head-on and writing about it.
Honestly, this is the installment I am most afraid to write.
I feel that once I put it into words, the reality becomes fixed. That is why I have stopped short of it until now. But since this issue is ultimately at the root of my sharing, I cannot start without addressing it. I am writing this with resolve.
The majority of the company's borrowing is COVID-19 loans
I touched on this a little before, but I will write it properly once more.
The majority of the company's current borrowing was taken out during the COVID-19 pandemic. It is not just one loan. I borrowed multiple times.
At that time, there was absolutely no outlook for sales. With no one knowing what would happen in the future, I borrowed what I could to protect the company and its employees. I do not think that decision itself was wrong at the time. If I hadn't borrowed, things might have fallen apart even sooner.
However, the debt I took on to keep the company alive has continued to put pressure on it long after the pandemic ended. I am being strangled by what I borrowed to protect. I think any business owner who did the same thing during that period probably understands this feeling.
And the debt extends to me personally
I have to write this too, or it would be incomplete.
When you run a small company, the boundary between the company's wallet and your personal one becomes more ambiguous than you might think. To keep the company running and to support my life, I ended up borrowing as an individual as well.
Therefore, you cannot understand the true weight of it just by looking at the company's debt figures. Apart from the company's repayments, there are also monthly repayments on the personal side. A business owner's debt is often discussed as "company numbers," but in reality, it is eating into my own life.
There are various reasons for how I ended up carrying this much personally. However, that is outside the scope of today's topic, and it is not just my own story, so I will save it for another occasion if I write about it at all.
Repayment quietly erodes daily life
If I had to say what is the hardest part about debt, I think it is not the amount itself, but the fact that a fixed date arrives without fail every month.
Revenue fluctuates significantly from month to month. It is unpredictable. Yet, the repayment amount and the date remain unchanged no matter what happens. A single delay in payment can collapse the entire plan for that month. Because of this, a part of my mind is always conscious of the payment calendar.
Sometimes I wake up in the middle of the night and start calculating next month's figures. Even though calculating doesn't solve anything, I knead the same numbers over and over in my head. When morning comes, I start the day again with a face that suggests nothing is wrong.
And I cannot tell anyone the true total amount. I haven't told my employees or even those close to me the exact figures. I don't want to worry them, and I also have my pride. A business owner's debt is a lonely thing.
Until very recently, I wasn't looking at the big picture
I am writing a pathetic story.
Until very recently, I hadn't even compiled the full picture of my debt into a single document.
How many corporate loans I have, how many personal loans, what the balance is for each, what the interest rates are, how much I am repaying each month, and when it will end at this pace—I had never properly listed these out. I just had a vague idea in my head and understood them all separately.
That is why the anxiety was always enormous. Because I didn't know what was the most critical issue, I was vaguely afraid of everything. I felt that if I looked at it, the reality would be set in stone, so I avoided facing it head-on for a long time. I was not looking at the very thing I needed to look at most.
Moreover, AI, which should be a tailwind, is becoming a headwind
Recently, another problem has been added to this.
The world is in an AI boom. I, too, am trying to rebuild my company using AI. So, originally, this should have been a tailwind.
However, what is happening on the ground is the opposite.
On the client side, they are also able to do more with AI. They are starting to be able to handle some of the work they previously relied on us for by themselves. It is a natural progression, and it is not something that can be stopped.
What happens as a result? Requests for discounts increase. If they say, 'We can do this to some extent ourselves now,' I cannot push back strongly. And so, the business relationships that have continued until now are gradually drifting away. Customer attrition is slowly beginning.
It is an ironic story. I am trying to survive with AI, but that same AI is eroding my foundation first. I want to buy time to rebuild, but the revenue I need to earn is thinning out because of AI.
However, this reality did not make me change my policy; rather, it made me more convinced. Will I be passively consumed by AI, or will I turn into someone who uses it? There is no middle ground. If that's the case, I have no choice but to be the one who uses it to the fullest. There is no more time to be laid back.
Even so, I decided to pay it back.
To be honest, there are days when I wish I could just feel relieved for a moment. There are moments when the thought of dropping all this weight crosses my mind.
I have heard that there are ways in this world to just default and wait for the statute of limitations to expire. I don't know the details, and I have no intention of looking into them. That is because I have decided not to do that.
What I borrowed, I will return. It might sound like a platitude, but for me, it is the simplest and most unwavering axis I have. Rather than spending energy on schemes to escape, I want to channel all that energy into building the strength to pay it back.
There are several reasons for this. I have employees, I have a family, and I have built something over the last dozen years or so. Besides, even if I did run away, I would probably be the one who could never forgive myself. That is why I decided to pay it back. Rather than a noble resolution, it has become something that is just a matter of course for me.
Having decided that, there are things I have started to do.
First, I laid out the big picture, which I had been trying not to look at, on a single sheet. The balances of all loans, both corporate and personal, interest rates, monthly repayments, and payoff dates. When I did this, for the first time, it became clear which ones were the most problematic. Vague anxiety turned into items that needed to be addressed.
By laying them out, I also realized one thing. Even while repeatedly rescheduling, I have managed to reduce the debt, which had exceeded 100 million yen at its peak, down to the tens of millions. In my own way, I have paid back this much. Honestly, this fact has supported me a little.
However, I also realized at the same time that I must not be complacent here.
Being in the middle of a rescheduling means that the burden of repayment is being temporarily suppressed. Because of that, the reduction of the principal slows down. In other words, even if it looks like it has decreased this much, it will not decrease at the same pace from now on. If anything, the real battle starts here. There is a limit to how much can be reduced while under a grace period. Unless I find a way to properly pay back the principal at some point, I will just be going around in circles forever.
That is why what I am thinking about now is, 'How can I build the strength to pay back the principal in earnest?' Increasing the profit margin of contract work. Putting an end to loss-making businesses. Generating continuous revenue outside of contract work. All of these ultimately lead to this one point.
Next, regarding the repayment terms themselves. To tell the truth, I have already worked on this many times. So far, I have done rescheduling—a review of repayment terms—three times.
The first time, the second time, and the third time was just recently.
When you say 'rescheduling,' it might sound like 'they made the repayment easier,' but the reality is not that simple. This third time, the conditions are to pay back more than they were the second time. In other words, even while receiving a grace period, the burden of repayment itself has actually become heavier. I have bowed my head many times, and on top of that, I have made a heavier promise than before, and that is how I am barely keeping things together. This is the reality.
I am also exploring in parallel, while consulting with my tax accountant, whether I can consolidate or restructure the loans instead of leaving them under the original conditions when I borrowed them. I am doing this carefully, without rushing.
By the way, this task of 'putting the big picture on one sheet' is quite troublesome if I do it by hand every time. So, lately, I have been experimenting at night to see if I can turn this into a system and view it automatically. I will write about that in detail in another article.
My debt hasn't decreased by even a single yen yet. Managing funds for next month is still a tightrope walk, as always. Writing this article won't change reality at all.
The only thing that has changed is that what was once a vague, massive sense of anxiety has now become specific items and numbers. I can see the outline of the enemy. Just that alone allows me to stand my ground without running away.
If you are also carrying a balance you don't want to look at,
I want you to try laying it all out on one sheet first. It's a scary task. I couldn't move for a while after I finished laying mine out, too.
But it was still much better than fighting an anxiety whose outline I couldn't see.