A Small Business Manifesto Part 1

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.)