Life lessons in business: The two traps

A few weeks ago, I discussed my children’s business in the basement and I was surprised at how many of you responded positively, asking for more business posts. Others asked for advice on different business matters. So, I think I will do a series on business over the coming months (along with my series on texture).

Truthfully, I could talk about this topic for a long, long time. I am as passionate about business as I am about music and like music, the bulk of what I know about business has been learned in the past 15 years in the trenches. I want you to understand that if I come across as confident or a know-it-all, it is not because I am some kind of financial Yoda that everyone should listen to. I am merely passing on things I have usually learned in the school of hard knocks. Sometimes, those knocks have been very, very hard knocks. The only difference between many of you and me is not some great intellect or skill; it is just that I have been through things that you have probably escaped.

Let me give you a quick background on me. I got a degree in college in computer science and managed to hold down jobs as a software programmer for about seven years. Five of those years, I lived in Rhode Island working for a company called EDS (founded by Ross Perot). EDS was about as close to the military as you could get in the private sector. It was very rigid and the work was tough. However, it was also an invaluable way for me to get experience managing big projects and that set me up for entrepreneurship.

In 1999, I started a website selling health supplements and that site is one of the ones that my kids manage today, still chugging along. In 2001, I left my software career to work in that business full time even though I was making very little money in it. A few months later, 9/11 hit but we survived and started to flourish. I built more websites, started Vitabase in 2003 or so and sold it three years ago. Since then, I have focused on music but one thing I am thankful for every day is that my business experience complements my music career.

One thing I know very, very well now is that business is what I am supposed to do. It fits my personality and strengths. The move to quit my job in 2001 is one of the key decisions in my life. I am glad to say that while there have been highs and lows, the highs have been higher than the lows and I have seen success. I am telling you that only because if I had not seen success, I would not want you to listen to me. The world does not need another guy spouting business advice that has never been successful in business himself. There are more than enough of them already.

Now that you have my quick bio, let’s get to what I want to talk about. Over time, I have learned that there are two big, big traps that business owners tend to fall into. They are mammoth traps because they affect the quality of your life. They are so big that I really can’t start talking about all the details of business without talking about these two things first.

The financial trap
Many people want to start their own business and walk away from their jobs. However, they really don’t know what they are asking for. I can count on just one hand the number of people that I know who have run a successful business apparently unscathed, without hard times and extraordinary financial pressure. On the other hand, from now until Friday, I could name small business owners I know who struggle week after week with cash flow, debt, declining sales and other financial issues. I have seen them deal with incredible pressure, never feeling secure about the future, no hope of retirement, and making less money than they would make if they just gave up and got a job again.

The truth is that being a small business owner CAN be a great lifestyle. I feel that it is for me. I don’t feel that financial pressure now and haven’t for a long time. However, that has not always been the case. I went through a multi-year period when building Vitabase that was extremely rough. Now, looking back, I can see all the wrong moves I made and what I was learning the hard way.

The biggest lesson I learned was very simple. It reminds me of a maxim I heard once where a young college student asked a wealthy man if he could buy him lunch. At the lunch, he asked the wealthy man what one thing he should know in order to get rich quick. The man looked him in the eye and said this: “The best way to get rich quick is to get rich slow.”

What he was saying was this: back off on the risk and take your time. You don’t need to take on lots of debt to try to grow faster. That works sometimes but even if debt does not destroy your business, it will quite possibly destroy your quality of life.

Growing a business without debt is counter cultural. For example, Donald Trump has referred to himself as the king of debt (and by the way has bilked taxpayers out of billions by declaring bankruptcy to avoid paying it back). However, regardless of what Trump does, it is generally a bad idea and I would not take some the debt risks I took in the past if I were starting over.

What you want to rather than debt is bootstrap. Bootstrapping is simply operating in a more lean way where your profits fuel your growth. It is a slower way to grow but a much safer way.

The time trap
When you look at many small business owners and the businesses they run, it is often hard to identify who owns whom. Many never get a break from their business, working long hours every week with no opportunities for vacation. Honestly, a 9-5 job with 3 weeks of vacation a year can start to sound like heaven.

Again, I have had mixed success avoiding this trap over the years. I have never been a 100 hour/week workaholic but I do go through periods where I work a lot. I enjoy the work; in fact it does not even feel like work but even so, it is easy to become unbalanced.

That being said, in general, I can walk away from my business for extended periods of time without affecting it very much and I attribute that to a book I read way back in 1999 called The E-myth Revisited. The overreaching idea of that book is to design processes that get your business to the point where it can run itself. I have used those principles over and over through the years and for the most part have successfully managed to keep my businesses independent of me.

I would not want a business that handcuffed me like I see happen to many business owners. I cannot tell you strongly enough that you need to be wary of that trap too.

I was going through some stuff recently and came across my copy of The E-myth Revisited and want to pass it along to one of you future or current business owners. If you are interested in getting it, post a comment below. I will pick one at random and send my copy with a note written in the front to you.

If you start out with a plan to avoid the financial trap and the time trap, your life will be a lot better. In the end of the day, quality of life is far more important than money or business success. Now that I have laid that foundation, I will start talking about more specific business advice in the next post in this series.