Let’s see how Steve Cole scores!
1. The biggest killer of a small business is debt. Making debt payments can be a huge hurdle for monthly revenue to overcome. Many people who start a business just assume that they have to borrow a few hundred thousand dollars to do so, and that’s not only not true, it’s very risky to do.
FALSE. The biggest killer of small business in the U.S. is not debt service, it is undercapitalization: too little operating money to keep going until you make a profit. #2 is too little or too much gross revenue. Yes, too much revenue will kill you just as surely as too little. Growth is difficult. Cost control is #3.
2. Something over 2/3 of new small businesses are started with less than $5000 and no borrowed money. To be sure, these are not the kind of business that is going to employ a dozen people on the first day, but if you plan well and pay attention you can make a living for yourself and grow a small business steadily.
MISLEADING. I loath these sorts of attempts at inspiration. Five grand won’t give you anything but an etsy shop and maybe, just maybe, a three-person business in five years that will barely make your expenses. You’re much more likely to go broke from lack of capital. You will notice he doesn’t mention how many of these business fail.
3. It may be annoying to pay $450 every time you need to rent a backhoe for one day, but that’s better than making debt payments on a $50,000 backhoe, pulled on a $10,000 trailer by a $30,000 truck and covered by an insurance policy. Borrowed money increases risk and magnifies mistakes.
FALSE. Equipment rental isn’t “annoying,” it’s “cost of doing business.” Borrowing money to expand your business isn’t just a good idea, it should be necessary at some point, otherwise you are utterly hamstringing your growth. Hrm. I wonder why ADB can’t grow…
4. The definition of entrepreneur is risk-taker, but that must be tempered by research and knowledge. Taking stupid risks or doing anything that bets the whole business on one deal is a bad plan.
HALF-TRUTH. Being an entrepreneuer means betting your business. That’s the definition of a start-up. He’s right that research is important, but at some point, you have to decide whether the risk is worth it.
5. None of your employees are going to be motivated to work as hard as you work if you don’t do anything to motivate them. To them, it’s just a job. You have to make them feel like a family and reward them with performance bonuses.
FALSE. No one should be working as hard as you are. It’s your ass on the line, in some sense, and if you feel like making people family will make them feel better, do it. A lot of great businesses run that way.
6. If you have idiot employees, it’s your own fault. You hired them without enough of an interview process, and you did not fire them when you figured out they were idiots.
FALSE. In a perfect world, we’d have infinite time, money, and applications to find the perfect fit for each job. In the real world, you hire people you think will work well, and when they don’t, you might have to keep them around until you can find someone better or afford to lose them. It’s a lot cheaper to train and coach them, though!
7. A dream is just a wish. If you can define it, it’s a vision. If you have a plan to accomplish it, it’s a goal.
8. If you don’t balance your business and family time and take care of your health and social life and spirit, you’ll fail.
FALSE. Eventually, yes, you’re going to want to balance your life with your work. For the first year or three, though, this is going to be your life. I’ve watched a lot of good businesses fail because the owners thought they could check out after the first three months.
9. Delegate things that are urgent but not important and ignore things that are neither urgent nor important.
FALSE. This is literally the worst advice. If something needs to get done, it should be on your time budget. More importantly, if you can’t delegate important things, you are hiring the wrong people. This is the way to finding things on the action list from ten years ago.
10. You need to have your accounting up to date. You need to know things like how much business you do a month, what the average turnover in your inventory is, what profit you are or are not making on any given job or product.
TRUE! Good job! See above! Try it sometime!
That’s…1.5 out of 10, or a 15%. F-