I can't put my finger on it exactly but there's something about this story that isn't making sense.
I'd guess that the reason they don't name names is that most of their ire is directed at this facilitator, their attorney has advised that naming them could end them up in a nasty libel suit, and the last thing they want is any more "excitement". I'd also guess that the title/narrative puts the focus on the big company for better virality.
I understand that that is the story they want to tell us. But that story doesn’t add up.
If you are selling anything you need to know at the point of signing the contract how many you need to deliver, for how much each, and what is the total.
Even if the person negotiating completely drops the ball at worst you will realise something is very bad when you look at these three numbers. Either the price you receive will be 6 times as much as you expect, or the count won’t match your expectations, or the total won’t match.
As practical advice to avoid getting burnt, yes what you say is true.
But as condemnation from an Internet Investigator who's going to get to the bottom of this company's possibly flimsy story to save us from some possible omitted details? meh. I can totally see how the attorney reviews the contract, the consultant explains the terms, and the business owner is mistaken about what they're signing up for. They did think they knew, that was the entire problem.
> Mid July, after 6 weeks of roasting 21 hours a day on the roaster in 3 shifts, working 12-16 hour days, regularly working until 11 pm to finish bagging and boxing, bringing in every friend, young and old, to help get this order done, we sent off the last pallet. In the end we produced 34,000 bags of coffee, an insurmountable feat. We were exhausted, mentally, physically, and emotionally, but we did it. We figured it would take a couple of weeks to move to the retailer’s warehouses and then the payments should be released. To make this order happen, we had to take $45,000 in personal loans from friends and family, $65,000 in business credit card debt, $35,000 from a business loan, $60,000 in personal credit card debt, $20,000 in outstanding invoice debt, and $11,000 in loans from us personally to the business, for a total of $216,000 in debt. We maxed out every credit card and depleted our personal and business savings. We had no other choice but we reassured ourselves that the $250,000 that this opening order would pay us and continued future orders from this retailer would be worth it in the end.
The natural conclusion in that situation is "we must do anything and everything to get across the finish line so all of our effort is not for nothing" and if the contract is due to pay out $250k in a few weeks, then taking on $200k of debt is plausible. Sure, an expert in the field wouldn't make these mistakes and wouldn't take on the risk however these aren't experts and so they did not understand the risk, they thought the $250k was guaranteed if they could just get to the finish line.
The debt did not exist prior to execution of the contract, the debt and contract are linked. Your comment supposes that they started out by borrowing $216k.
Like you said, they must have agreed a per unit price. The mistake had to have been purely in volume.
When they recognised the mixup with cases / bags, they wouldn't have pushed to deliver the actual expected volume had the unit pricing been a problem.
As someone that has gone through the process of trying go to build a business that sells to distributors, I cannot understand how you’d miss a 6x discrepancy in your price model. Your margins are slim, a 6x markup means you’re seeing more than 500% profit margin. (Probably by not having a price model, if I had to guess…)
The problem with this interpretation is that it would mean that the entire second half of the story would realistically have to be a lie. Once they realized that they were getting 1/6th of what they thought, they would have to find a way to get out of the contract or go bust, which is the opposite of what they say happened. As such, it's too much of an accusation to make with essentially no evidence.
There's definitely something odd about the unit pricing and unit ordering though.
> The food broker laughed and said “I wondered why you’ve been so upset and concerned. When they said ‘units’, that was cases. They’re right on target so far.” You can imagine how we felt in that moment, realizing that the person we hired to make this a smooth transition and to guide us and to tell us the things we don’t know failed to ever ask us if we were ready for a 36,000 bag order.
I.e. they thought they were getting a 6000 bag order, not a 6000 case order.
The error on pricing can only go one way; they can't have signed a deal where they charged <fair-per-bag-price> per unit and therefore don't break even at 1/6 the per-bag-price, since they would just walk away at that point instead of borrowing money to throw into a deal that they don't break even on.
So they must still break even at 1/6 the price, which means the distributor priced it somewhat-fairly (at least not below-cost) per-bag, and they originally thought they were getting an insanely good per-bag-price that was 6x what they should have been getting per bag. Again, not questioning your working when you think the distributor is paying 6x what they should is a big red flag for me. You should notice a 2x discrepancy as margins are really thin in this kind of business, and your business plan needs to have a pretty good idea of the margins in order to determine if you can even break even.
Edit to add: I suppose it's possible that they agreed a per-bag price, with "bag" and "unit" used in different places in the contract. On reflection I should reduce my certainty on the above.
In college, I worked in a lab that used disposable pipette tips to measure/move samples around, which come in small "racks" like these https://www.coleparmer.ca/i/thermo-fisher-molecular-bioprodu...
We normally got a copy-paper box or two of these at a time, which lasted for a few months. However, one day one of my colleagues, who did not grow up speaking English, placed the order and asked for a huge number of cases, thinking "case" was a synonym for the individual plastic boxes that they came in.
It...was not, as we found out when a delivery man appeared up with a motorized pallet jack. He's a bit miffed too: "Is there an easier way to bring up the rest?" The order ended up filling an entire closet and then some. They were still working through them when I left a year later.
In retrospect, the price was obviously too high, but it was a small part of a big equipment order--and science stuff is often eye-wateringly expensive anyway.