It was the early months of winter of 2000; Mark and I had just incorporated and we were building out our space. I made an appointment to see a small business advisor at the SBA to see what we could do about borrowing some money to finish construction or have a bit of cash left for cushioning when we finally opened. The advisor guy was nice enough, and heard me out as I explained how we would use twenty five grand. And then he asked a question that was a bit off target...almost a non-sequitur: "Do you plan to deliver coffee to customers"?
I replied in the affirmative. He questioned again: "Do you have a delivery truck"?
I told him that I had a service van, and that my business partner had a car.
"Well the first thing you should buy, young man" he continued "is a delivery truck. Twenty to thirty thousand dollars will get you a good one these days".
And in my mind, the meeting was over. For some unknown reason, I wound up with a small business advisor who wanted me to go out and buy a classic Trash Saddle.
Young business is like young love: it shouldn't be burdened with responsibility. My old POS van worked just fine. For a time (oh...three years...) Mark's car filled in for a delivery vehicle very nicely. The LAST thing my baby business needed was to be saddled with was a $25,000 asset that depreciated by 30% the day it left the lot. Or worse yet, a bum asset like that with a note that had to be paid every month against the full original retail value. Plus interest.
I've heard it said that the most common cause for young business failure is the owner's failure to pay the IRS. This may or may not be true. However, what I CAN say is true is that a substantial percentage of young businesses fail because they are saddled with trash: debt service on buildout expense, monthly payments on spendy vehicles (which also come with spendy insurance tabs), salaries for employees who don't have enough work to do, fees for overblown lawyers, or rent on a flashy space. There is a time for businesses to buy toys, to give out raises and add benefits to compensation packages, and to upgrade facilities. But if spending is done in advance of earnings, in advance of cash flow, it is alarmingly easy to spend oneself into a hole from which there is truly no escape.
Note: this isn't advice to be a cheapskate. If you're selling Kaladi Coffee, buy great coffee equipment and pay to train yourself and your people. Pay for a space that has some sort of long-term promise. As advised in The Untouchables, "don't bring a knife to a gun fight". But really. You don't need $35,000 of tables and chairs to open a new cafe. You don't need twelve $300 light fixtures. Back to Baby: spend on neonatal care and your kid's 529...not $45 a gallon on designer paint for the ceiling of your baby's nursery.
So here it is: keep your young business' burdens light. Don't incur monthly payments that can't be made comfortably. Hope for growth, but don't expect it. And for God's sake, don't let yourself come to NEED growth; don't bet that your new business will make $1435 of net profit per month, wordlessly earmarked for a mortgage payment on the house where your husband and kids live. If you ever engineer yourself into a corner where it's your family against your business...well...don't even bother throwing a punch. Because at that point, you've already lost the fight.
A related but subtly different trash-saddle is that of expectations. Beyond expectations that are strictly financial in nature, we all have "plans" (more like fantasies) of how we'd like our businesses to develop and grow. Maybe we aren't betting on having a Google-like complex within five years, but still...we look to our businesses for validation of who we are and why we work. And what's funny is that a business can wind up being a freakishly accurate mirror of ownership...but it takes a while. No rush. So don't push.
Like parenting, growing a business requires strength, but is in truth a gentle art. It is one thing to find and remove obstacles to your business' growth. It is another thing altogether to try to push it along. Push hard enough and you're cruising for the small business equivalent of American Pastoral. Or, as Mark puts it, "don't push...'cause the Universe will push back, and the Universe is bigger".
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