It seems to me that we've lost our way somewhere.
We little guys start out running our own show with an impressive gung ho style. Failure is not an option, and for God's sake don't confuse us with the facts. Michael Gerber's research shows that just four out of every one hundred start-ups survives that first decade? Ha! I'll just have to work 25 hours each day instead of the mere 24 that I had planned!
Besides, I have faith. I have prayed about this and God (in whichever manifestation or gender I choose to believe) has told me to persevere. After all, it's all about perseverance, isn't it? Winners don't give up at the first hurdle, or the tenth. Look at Edison. He didn't give up on the light bulb before he'd tried 10,000 different bloody ways to get it to work. I'm only on my 2154th attempt to make this beast move. (Like most small business myths, this is not quite the full story.)
And my bank believes in me, otherwise they wouldn't have lent that money based on my superb business plan. Anyway, Fred Smith got Fedex working even after his MBA Professor gave him a C for his plan for a hub and spoke freight system so don't you be trashing my model. (Fred's story is also usually enhanced for dramatic effect.)
And so it goes. We each have a unique line of crap we believe in to make it through every business day. After 25 years of being my own boss I have my own mantras. But this is a series of ideas about what happens to most entrepreneurs.
Firstly, Failure is an option! In fact, if Michael Gerber has his maths right, failure is not only AN option, it is almost the ONLY option. So lets deal with it.
Why are there so few books on how to successfully close a business and walk away without losing the family home? Why do so many thousands of business owners, would be entrepreneurs, have to go through these experiences as if they are the first on earth to 'fail'? Why do we have to be so much more moral than our (dare I say) entrepreneurial peers in the banking industry?
I ask these questions because I have recently surveyed 600 of my readers, all people on the downhill slide to 65 and (at least in theory) retirement. 597 of them have nothing to retire on. The financial press is the first to tell them what the problem is. When they were retrenched at 40, say the experts, they should not have used their pension funds to set up a business.
Far better to have held the funds in some kind of tax sheltered preservation fund, they say, and starve to death early. (That's my interpretation of their comments. In fact, the experts wonder why it is that so many folk withdraw those savings. I think it is often to start businesses because they cannot find any other gainful employment.)
And then they lose it all. That's not quite true. They lose a lot more than their pension savings. They lose everything, including the house. Because they have this 'Failure is not an option' mindset.
They confuse business failure with entrepreneurial failure. They forget that the business is just their first step on the entrepreneurial ladder, and they're expected to fail on it. Which is why it is such a really bad idea to throw every resource they have at it.
Most of the businesses I consult with started failing from the moment they opened. They started losing money from day one. But the bank kept lending them money, and their accountant suggested that a growing business needs a growing overdraft, and their mate suggested that you can't make money without spending money. And my heroes knew everything there is to know about plumbing, or programming, or proctology, so they assumed they knew enough about the business of plumbing, programming, and proctology.
They didn't. And by the time they found this out it was too late to rescue that first business.
After my first entrepreneurial conniption in 1992 I was so persona non grata that I had to start the next business from scratch with no capital. It's the best way to go because it inspires a bunch of disciplines that you don't have when you think you know what you're doing. And it forces you to do some really creative thinking about what you're going to sell, and how you're going to get paid. (And you rapidly lose the fallacy that image really matters.)
Tuesday, 21 April 2009
Sunday, 19 April 2009
How I got here
I have been self-employed since 1984. Not really by choice. Let me explain.
In 1971 I was diagnosed as insulin-dependent diabetic. I was 13 years old. The disease has made many of my choices for me. While still completing high school I read an interesting novel about an old infirm man married to a delightful young wife. The novel was set on the coast of Florida. What inspired me the most was how this old gent managed his "empire" from his sick bed using computers. (I read the book in 1973. The first personal computer - Apple - appeared in 1977.)
I had overheard a doctor telling my mother that my body was like an apple -- shiny on the outside, but with a worm inside. My adolescent brain interpreted this to mean that I probably wouldn't have a long, healthy life.
Anyway, in the book the old gent eventually dies when a hurricane sweeps away the sand underneath the apartment block, and the architect saves the old man's wife.
I took away one core thought that has guided almost everything I have done since: No matter how ill I am I can work through computers. And then the Internet arrived!
I knew that I would probably end up working for myself when I couldn't get a job. It's not that I was stupid. I qualified medical School, completed the first year, and dropped out during the second year after a motor car accident. But at the time, 1977, most large companies in South Africa refused to take diabetics onto their books because they felt we were medically expensive -- bad for their medical funds. I eventually found a job at the bank.
By 1982 I realised that my ambitions to head the bank were somewhat more ambitious than theirs for me, and I joined a mining company. They had an IBM S/34 Minicomputer lurking in a dark room on the 11th floor and I fell in love with it the first time I saw it.
By 1984, after a few years programming, I realised that the only way I was going to be happy was if I was working for myself. It wasn't so much that I had this great yearning to be free, but rather that nobody in his right mind would pay me the kind of money I wanted to earn.
I started a consulting/programming venture, working for a clutch of IBM S/34 (and the new S/36) users. My first client wanted to link some PCs on the Orange River to their office in Cape Town. Nobody knew quite how to do this, so I called a firm in Seattle, WA, USA (Emerald Technologies) and they freighted out a piece of kit that solved the problem. Before I knew it , we were the experts in this field.
In 1992 the firm closed, with me hanging on kicking and screaming. I needed a new income stream fast. After messing around trying to get back into the same field I gave up and started to sell life assurance to small business owners.
(I was still diabetic, and no life assurance firm wanted to touch me because I would mess up their medical aids, so I acted as an independent. In hindsight, this allowed me space and options most agents could only dream of.)
I began to ask every single small business owner I could find what they were doing that was so right, and what it was that I had done that was so bad that I had gone out of business. Turns out nobody was doing anything different than I had. But all that I spoke to assured me that failure (in the sense of losing ones home, furniture, and dignity as I had) was just not an option.
Around this time I read Michael Gerber's The E-Myth Revisited. His statistics of small business failures were pretty sobering. Only 20% survive the first 5 years, and a mere 4% survive the first decade!
It didn't come as much of a surprise when the folk I had been selling assurance to started to close their businesses. Since I was the only person they knew stupid enough to talk about business failure at every turn, I soon became the Western Cape's leading consultant on the subject.
It was dreadful business model though. We small business owners live in utter denial until the blade falls. Most of the folk had no money left to pay for help. I spent more time counselling than consultant. (A consultant is a paid counsellor.)
It's Sunday evening, most recent Carruthers family member is shrieking because of the indignity of cleaning her aftermath, and Dad needs to intervene. I will continue the saga later. (Not too much more to go.)
In 1971 I was diagnosed as insulin-dependent diabetic. I was 13 years old. The disease has made many of my choices for me. While still completing high school I read an interesting novel about an old infirm man married to a delightful young wife. The novel was set on the coast of Florida. What inspired me the most was how this old gent managed his "empire" from his sick bed using computers. (I read the book in 1973. The first personal computer - Apple - appeared in 1977.)
I had overheard a doctor telling my mother that my body was like an apple -- shiny on the outside, but with a worm inside. My adolescent brain interpreted this to mean that I probably wouldn't have a long, healthy life.
Anyway, in the book the old gent eventually dies when a hurricane sweeps away the sand underneath the apartment block, and the architect saves the old man's wife.
I took away one core thought that has guided almost everything I have done since: No matter how ill I am I can work through computers. And then the Internet arrived!
I knew that I would probably end up working for myself when I couldn't get a job. It's not that I was stupid. I qualified medical School, completed the first year, and dropped out during the second year after a motor car accident. But at the time, 1977, most large companies in South Africa refused to take diabetics onto their books because they felt we were medically expensive -- bad for their medical funds. I eventually found a job at the bank.
By 1982 I realised that my ambitions to head the bank were somewhat more ambitious than theirs for me, and I joined a mining company. They had an IBM S/34 Minicomputer lurking in a dark room on the 11th floor and I fell in love with it the first time I saw it.
By 1984, after a few years programming, I realised that the only way I was going to be happy was if I was working for myself. It wasn't so much that I had this great yearning to be free, but rather that nobody in his right mind would pay me the kind of money I wanted to earn.
I started a consulting/programming venture, working for a clutch of IBM S/34 (and the new S/36) users. My first client wanted to link some PCs on the Orange River to their office in Cape Town. Nobody knew quite how to do this, so I called a firm in Seattle, WA, USA (Emerald Technologies) and they freighted out a piece of kit that solved the problem. Before I knew it , we were the experts in this field.
In 1992 the firm closed, with me hanging on kicking and screaming. I needed a new income stream fast. After messing around trying to get back into the same field I gave up and started to sell life assurance to small business owners.
(I was still diabetic, and no life assurance firm wanted to touch me because I would mess up their medical aids, so I acted as an independent. In hindsight, this allowed me space and options most agents could only dream of.)
I began to ask every single small business owner I could find what they were doing that was so right, and what it was that I had done that was so bad that I had gone out of business. Turns out nobody was doing anything different than I had. But all that I spoke to assured me that failure (in the sense of losing ones home, furniture, and dignity as I had) was just not an option.
Around this time I read Michael Gerber's The E-Myth Revisited. His statistics of small business failures were pretty sobering. Only 20% survive the first 5 years, and a mere 4% survive the first decade!
It didn't come as much of a surprise when the folk I had been selling assurance to started to close their businesses. Since I was the only person they knew stupid enough to talk about business failure at every turn, I soon became the Western Cape's leading consultant on the subject.
It was dreadful business model though. We small business owners live in utter denial until the blade falls. Most of the folk had no money left to pay for help. I spent more time counselling than consultant. (A consultant is a paid counsellor.)
It's Sunday evening, most recent Carruthers family member is shrieking because of the indignity of cleaning her aftermath, and Dad needs to intervene. I will continue the saga later. (Not too much more to go.)
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