Starting right

Image courtesy of FreeDigitalPhotos.net

A couple of weeks ago I mentioned that I had received my auctioneer's license and was preparing to start an auction business.  Today I met with my attorney to discuss how I should structure the business.  He advised me to create a Limited Liability Company (LLC) that would help protect our personal assets in case there were problems in the future.  It costs very little to set up an LLC and it provides a lot of protection.  He suggested that if I wanted to save money I could do it myself online as it wasn't that difficult, but when I asked what he would charge me to do it I found out it wasn't much more.  I asked him to do it.

I'm all about saving money, and like most small business start-ups I don't have a lot of money to put into this endeavor.  However, I think there is value in knowing that the foundation for the company is being laid correctly.  I could save money by doing my own dentistry too, but I doubt it would be worth it.  I want this company to be set up correctly so why not pay someone who has been trained for this kind of work to do it, especially when it is such a minimal amount?

One of the mistakes I made in my previous company was that I tried to save money in places I shouldn't.  Penny wise and pound foolish I believe the old proverb calls it.  I want this new business to be started right so I've asked my attorney to do the paperwork for the LLC to ensure it is done correctly.  I began today pricing liability insurance.  When the state approves the LLC I will set up two bank accounts for the business: one for business operations and the other for an escrow account as required by state law.  I have started printing business cards and brochures and began handing them out to close friends.  Later this week I will order contract forms and other paperwork needed in the auction business so when I am ready to launch the business I will have everything ready to start. 

And it will be right from the start.  I will not make the mistake again of trying to cut corners that should not be cut in an effort to save a few dollars.  I learned that lesson from my first business.  If you want to know what other lessons I learned from losing that business be sure to read my e-book Mistakes: Avoiding the Wrong Decisions that Will Close Your Small Business. 

Reading and success

Image courtesy of FreeDigitalPhotos.net

 

 

In his book No Time for Tact: 365 Days of the Wit, Words, and Wisdom of Larry Winget, Winget writes

On average, people spend twenty hours per week watching television and less than two hours per week reading.  Fifty-eight percent of Americans won't read a nonfiction book after high school.  Forty-two percent of university graduates never read another book after college.  Only 20 percent will buy or read a book this year.  Seventy percent have not been in a library or bookstore in the past five years.  I guess these folks think they have all the information necessary to be successful, prosperous, happy, and healthy.

One of my fondest memories of my childhood was joining the reading club at our library each summer.  Our family did not have the money to buy a lot of books, but my mother took me to the library nearly every Saturday we came into town.  During the school year the library sent a mobile library to the county schools, and I would always check out a book or two to read before it returned the next time.  I loved reading and still do today and cannot understand people who don't read.

We live in a time of rapid change.  New things are being discovered every day.  It is impossible to keep up with all the new knowledge that impacts nearly every field of endeavor, but if one doesn't read he or she will find they are quickly being left behind.  Anyone in leadership in any capacity will soon be passed by if he or she isn't involved in trying to stay current with recent discoveries in the field in which he or she operates.  I began my ministry in 1981, and I can assure you that ministry has changed greatly in the 3+ decades since.  We assumed ownership of a small business in 1994, and we saw major changes in the field in which we were doing business from that time until I sold it a few years ago.  My ministry remains productive and effective today while our business suffered in its final years.  What made the difference?  I read ministry related materials much more than I read business resources.  I continued to grow in my ministry responsibilities while I allowed our business to continue to operate much as it had since the original owner started it in the 1960s.  No one will ever convince me there is not a direct correlation between reading and success.

Of course, it matters what you read.  If one reads a steady diet of romance novels it is unlikely to have much impact on one's success in business or life.  My recommendation is that you read books by highly respected authors in your particular field.  Read blogs and journal articles that address the challenges you face and the areas in which you need the most growth.  Read material outside your particular field to stay abreast of what's happening in the world around you.  Read biographies of successful people who overcame incredible odds to achieve their success (which will include most successful people.)  Read material to help you understand the culture in which you live.  It's OK to read fiction books occasionally.  I have to admit that I do not read many fiction books, maybe 2-3 out of the approximately 50 books I read each year.

Some people find it hard to believe I read as many books as I do, but I have friends who read many more books than I do.  Especially if you are not currently an avid reader I recommend you begin with a commitment to read one book a month.  If your budget is limited go to the library to get your books and read the journal articles that you need to read.  If you will read even this minimal amount in 2013 I believe you will find at the end of the year that you were much more productive and profitable due to the increased knowledge you gained from your reading.

I'm launching a new business

This week I am starting a new business.  Late last year I began attending auctioneer school, and last week I passed our state exam and earned my license.  This week I will begin the process of starting an auction business.  This will be a very part-time career as I continue to serve in my calling as a minister, but I am excited about it just the same.  Although there are many licensed auctioneers in the state, many of them are not very active.  It seems that only a handful in most of the counties near me handle most of the auction business, and some of them are ready to retire and have already started cutting back on their work-load.  I believe this is a good time for a new auctioneer to enter the profession even if it will just be part time.

Auctions have long fascinated me.  As a young boy I was taken to a farm auction by my father who asked me to buy a corn planter he wanted.  He also worked off the farm and could not attend the auction, but he wanted to buy that planter.  He explained the strategy I should use in bidding and gave me a maximum amount to bid.  I ended up buying the planter for less money than he was willing to pay and found the process enjoyable.  In recent years I've been attending a number of auctions which led me to pursue my own auctioneer license.

Like many business people today, I also believe this is a good time to start a new business.  There are tax advantages to owning a business which could be helpful depending on how the tax laws change over the next year or two.  This is also a good time not to depend on just one source of income.  There remains much uncertainity in the financial and economic worlds due to the leadership failure that exists in Washington.  While some politicians try to convince the American public that our economy is coming back, most of us in the real world do not see much evidence of that.  Multiple streams of income provide the average American a safety cushion that is more preferable than hoping our government leaders will find a solution to the economic problems our nation has.

My previous experience at owning a business came from obtaining ownership of an existing business.  This one I will be starting from scratch, and already I feel an excitement as I begin that process.  I learned so much from our previous business that I will apply to this start-up which should help me avoid many of the mistakes I made the last time.  I'll keep you posted at how this business progresses.

If you would also like to learn from my previous mistakes you can find those discussed in my book Mistakes: Avoiding the Wrong Decisions that Will Close Your Small Business.

Going smaller with your business

Since this blog is primarily for small business owners the idea of going smaller may be the furthest thing from your mind.  Chances are you are trying to find ways to grow your business, and there is nothing wrong with that if big is how you define success.  However, there is much to be said for small as well.

What would happen if you fired half of your customers?  You know, the ones who always pay late, complain about your prices and/or service, never give you a positive recommendation, and take up large chunks of your time over the most miniscule of issues.  Right now I'm thinking of a woman who complained to me about the cost of a service call our company did for a rental house she owned.  She didn't feel she should have to pay as much for that call as someone in a community less than ten miles away because she lived in a poorer area.  I reminded her that our supplier charged us the same for the part we used regardless of where we used it.  Our serviceman had to drive that extra ten miles to do the service call, and she was the one who chose to buy rental property in that poorer community.  She was adament that I reduce the bill which I did.  Life is too short to quibble over ten or twenty dollars.  We also never accepted another service call from her.

What would happen if you fired half of your employees?  Barbara Corcoran of Shark Tank fired the bottom 20 percent of her sales staff each year. Don't just dump them out on the street.  Help them find other jobs before letting them go, but keep only your top talent and give them substantial raises.  You would lose the employees who come in late, are less productive, and often infect other employees with their bad attitudes.  Your overhead would go down, you would be working with your top talent, the atmosphere in your workplace would be less toxic, and the ones you keep would be more productive because they are no longer carrying dead weight.

Doing these two things would change the way you could do business.  You could begin to pick the projects you actually enjoy doing rather than the ones you have to do to make payroll.  Your stress levels would go way down because now you are working with your very best clients and team members.  You would probably be more profitable at the end of the year.  Think about that: less work, less headaches, more on the bottom line.

Again, making this type of change first requires a change in how we define success.  If you want to grow your small business into the next empire, fine.  Just know that your dream could turn into a nightmare before it's over.  If you want to enjoy the things in life that really matter: your family, your friends, your faith, your life, and enjoy a good living then you may want to consider going smaller with your business.

For other tips on small business success be sure to read my e-book Mistakes: Avoiding the Wrong Decisions that Will Close Your Small Business.

Who is really to blame when a business goes under?

Image courtesy of  FreeDigitalPhotos.net

We owned and operated a small family business for fifteen years until we were forced to close it.  The last few years the company was not profitable, and it was a struggle to keep it open.  We continued to think things would turn around as they had during previous downturns, but that time we just could not turn the corner.  After an auction we had enough money to pay our creditors.  We were lucky.  Many who lose their companies are forced into bankruptcy, lose their homes, have their credit destroyed, and/or deplete their life savings.

The news continues to be full of stories of small businesses failing, and the owners point their fingers at a lot of causes.  The economy is bad, taxes are too high, there is too much governmental red tape, Obamacare, inability to compete with foreign-made goods, fiscal cliff uncertainty, too much competition especially with the big box stores, dishonest employees,, and a rapidly changing environment.  Of course, this is not an exhaustive list of reasons why businesses fail.

Each of these are a severe hindrance on small businesses, but are they really the reasons why a business fails?  The fact is that businesses fail in a good economy, and many small businesses continue to do well in our present economic downturn.  I agree that taxes are too high, but they are basically the same for every business, and some seem to prosper despite high taxes.  Every one of these reasons are a challenge, but some small businesses are able to meet those challenges and do well while others end up closing their doors.  The real reason a small business fails isn't due to outside challenges; the real reason is internal.  The owners failed to make the decisions that were needed for the company to prosper despite the challenges it faced.  In a good economy our mistakes don't hurt us too badly, but in a poor economy our mistakes cause us major problems.

When our business was struggling I blamed a number of issues that were all true, but each of them were outside my control.  It wasn't until later I realized that the real reason our company closed was because I failed as a leader to make sound business decisions and operate the company in a way that would ensure its profitability.  I could write a book about all the mistakes I made as the president of our business.  In fact, I did.  It's called Mistakes: Avoiding the Wrong Decisions That Will Close Your Small Business.  For thirteen chapters I describe in detail the mistakes I made that led to the closing of our business.  In each of those chapters I also describe the lessons I learned that, if they had been applied at the time, would have led to better decisions on my part.

Success and failure are both inside jobs.  You can't depend on Washington to bail out your small business.  That is not going to happen.  You can't even depend on them to not do something stupid that will add even more risk to your business.  The big box stores are not going away.  Taxes are not going to go down; in fact, it is likely they will continue to go up because Washington is convinced we are not yet paying enough to fund their programs.  If you want to ensure your company's success you have to work smarter, and one way to do that is to learn from the mistakes of others. 

That's why I wrote this book.  I want to help others avoid the mistakes I made so their businesses don't fail.  If you started your company it was because of a dream you had.  Perhaps you are now the head of a business that has been passed down from other generations, and you want to keep their dreams alive.  I believe this book will help that happen.  It is currently only available on NOOK devices and can be ordered here.