Before he passed away, my Dad and I were talking about the challenges of owning a small business. He started his business not long after I turned 16, so I worked for him sweeping the floors, putting orders in boxes, and eventually started making deliveries working through High School. I know he had a life before he started his business, but I really can’t remember much about it.
As the business grew, my Mom started doing the books and helping run the office so my Dad could focus on what he considered the real work of the business. I know he hoped I would one day take over for him, but for a number of reasons it just didn’t work out that way. It was definitely an education and even inspired me to, as Michael Gerber describes, an entrepreneurial seizure or two myself. It’s been almost 40 years since I started sweeping the warehouse floor and over 30 years since I started my career. Although a lot has changed, much has stayed the same. And some of the lessons I learned working for my Dad have stayed with me.
- Anything worth doing, is worth doing well: I learned this lesson sweeping the floor in the warehouse. My Dad taught me the right way to do it and that it mattered. He also taught me that how the warehouse looked and my appearance mattered. “For most of our customers, you are the only person they will see on a regular basis,” he would say. That meant I needed to be clean, I needed to keep the delivery truck clean and in good repair, and the warehouse needed to always be neat and tidy. I’m glad I was able to learn this at such a young age. Although it makes doing the job a little tougher, it does mean that customers, colleagues, and everyone else that interacts with what I’m doing has a good experience.
- There’s a reason someone has to be the boss: I read all the time about flat organizational structures and how organizations without a management hierarchy succeed. My Dad always felt like someone needed to guide the ship (he was an old Navy man) and he was that person. I’ve worked in small business my entire career, including time spent working for myself. Unfortunately, I can only think of three or four real leaders I’ve had the good fortune to work with. Plenty of managers. Plenty of people very willing to tell my colleagues and I what we should do, but very few leaders. My father and his generation directed the affairs of their organizations they way they were taught by the paradigm of the time. Because so many of them had served time in the military, that’s the approach they took. A few of them became inspiring leaders of men (and women). Most successful organization have leaders who inspire the workforce with a reason to come into work every day and give their all. That is something managers can’t do. My friend and nine time turnaround CEO Dick Cross, likes to say, “The job at the top is important and needs to be done right or the business will flounder.” I agree.
- Capital is the lifeblood of any business: I have a CPA friend who likes to say, “Cash flow is king.” And he’s right. I just don’t think it tells the whole story. One of the biggest challenges every small business owner faces is accessing the capital he or she needs to keep his or her business afloat. If you’re in a super sexy high-tech business, you might be able to attract an equity investor of one type or another to give you capital in exchange for a piece of the pie, but those businesses are few and far between. In reality, some statistics show that only about two percent of small businesses have anything scalable enough for an investor to get involved. Most small businesses have to rely on personal resources, borrowed capital, or bootstrapping to stay afloat. I watched my Dad borrow money, dip into personal savings, or go without over the years. There’s nothing easy about financing a small business.
- Small business owners need to develop their financial IQ: Speaking to business owners all across the country I’ve discovered that many of them are like the younger version of myself. They don’t have a good enough understanding of the financial machinations going on within their business. They look at profit and loss simply as reconciling how much came in this month and how much went out. If there’s money left over, it’s all good. Unfortunately, it’s not quite that simple. I learned that the hard way once or twice and wish I had known then what I know now. Increasing your financial IQ is also important when you’re sitting across the desk from your banker or another lender. One lender once told me, “If I know more about their business by looking at the numbers than they do, I’m not likely to give them a loan.” There are a number of ways to learn more about the financial ins-and-outs of running a business. It might be as simple as making sure you’re bookkeeper or CPA takes the time to explain your quarterly reports to you. Most of them would welcome the opportunity to help you understand what’s going on. It will take time, like anything else, to learn how to read and understand a financial report, but it’s not rocket science and every business owner should know how to do it.
There’s a lot a small business owner needs to know to run a successful business. It’s definitely not for the faint hearted. Nevertheless, most of the intrepid souls who take the challenge wouldn’t have it any other way.