The failure rate for small businesses is quite high. Many of these failures could be avoided because many of them are due to making some very small mistakes that, when added together, become quite costly. Several years ago we owned a small business that had been in existence for several years prior to our owning it. Unfortunately, that business failed. While the financial crisis of 2008 played a part in that failure, that wasn’t the entire reason the business had to close. Most of the reason was due to mistakes I made. I address them in an e-book I wrote called Mistakes: Avoiding the Wrong Decisions That Will Close Your Small Business.
These are mistakes I am avoiding in my auction business. For example, I refuse to borrow money. As the Bible says, the borrower is slave to the lender, and I refuse to be a slave to the banks. I may not drive the nicest vehicle, but I also don’t have to pay $500.00 every month to try to impress people I’ll never meet. It would be easier to own my own building for auctions, but I’m not going into debt to purchase a building. I’ll continue to rent on an as-needed basis until the business is built up enough, and enough money is saved, to justify buying property. Dave Ramsey says the turtle always wins. Grow your business slowly without debt, and you’ll come out ahead in the end.
Another mistake covered in the book is being cash poor. Cash is king in a small business. It really does not matter how much money you’ve earned, if it is all on accounts receivable you’re in trouble. If you run out of cash you’re done. When the economy took a downturn we did not have the cash on hand to ride out that storm.
This is just a brief look into what is discussed in the book. I wrote it to help people avoid the pain I felt as I struggled to keep that business operating. One of the worst times in my life is when I realized the people working there would lose their jobs. I don’t ever want to experience anything like what I experienced during that time, and I don’t want anyone else to go through that either.
I’m sure I’m prejudiced, but I think every small business owner should read this book, especially if you’re just starting out. For $4.95 it’s a small price to pay to avoid some mistakes that could cost you your small business.