about The B eing an entrepreneur can be scary. From late payments to bank crises, often the future of your business rides on one crucial decision—one you have to make all on your own. But it doesn’t have to be that way. Others have faced the same problems, and for the first time have gathered to share their advice. Through stories and lessons from entrepreneurs who have been there, you’ll discover how to handle such situations as: Ruth King is a seasoned entrepreneur who has owned seven businesses in the past 25 years. She is an owner/partner of ProNetworkTV, which operates the Internet television station BusinessTVChannel.com. King speaks at national and local association meetings and trade shows. You Are Not Alone • We didn’t know if anyone would show up • I lost 25 percent of my business in one day • We trusted the wrong people • I got sick and couldn’t work • My customer wouldn’t pay ISBN 1-4022-0514-7 9 781402 205149 514 95 7 60 789 2 1089 1 Business/ Small Business ISBN-13: 978-1-4022-0514-9 ISBN-10: 1-4022-0514-7 $14.95 U.S. $20.95 CAN UPC EAN Ruth King UGLY TRUTH SMALL BUSINESS The UGLY TRUTH about SMALL BUSINESS • I Bought the Wrong Business • I Was on My Own • A Large Competitor Tried to Eliminate Us • I Got Sick and Couldn’t Work • More Than 400 People Said We Wouldn’t Succeed • We Poured Fuel on the Fire • We Had to Give up Control • I Had No Credit 50 THINGS THAT CAN GO WRONG and What You Can Do About It Never-Saw-It-Coming King UGLY TRUTH SMALL BUSINESS The UGLY TRUTH SMALL BUSINESS about about The • I Bought the Wrong Business • I Was on My Own • A Large Competitor Tried to Eliminate Us • I Got Sick and Couldn’t Work • More Than 400 People Said We Wouldn’t Succeed • We Poured Fuel on the Fire • We Had to Give up Control • I Had No Credit Knowing is half the battle. Be prepared and ready to win. Photo: Craig Bromley 2/21/08 4:57 PM Page 1 Ruth King The UGLY TRUTH about SMALL BUSINESS 50 THINGS THAT CAN GO WRONG and What You Can Do About It Never-Saw-It-Coming 2/21/08 4:54 PM Page i Copyright © 2005 by Ruth King Cover and internal design © 2005 by Sourcebooks, Inc. Sourcebooks and the colophon are registered trademarks of Sourcebooks, Inc. All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means including information storage and retrieval systems—except in the case of brief quotations embodied in critical articles or reviews—without permission in writing from its publisher, Sourcebooks, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other profes- sional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.—From a Declaration of Principles Jointly Adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations All brand names and product names used in this book are trademarks, registered trademarks, or trade names of their respective holders. Sourcebooks, Inc., is not associated with any product or vendor in this book. Published by Sourcebooks, Inc. P.O. Box 4410, Naperville, Illinois 60567–4410 (630) 961-3900 FAX: (630) 961-2168 www.sourcebooks.com ISBN 13: 978-1-4022-1692-3 Library of Congress Cataloging-in-Publication Data King, Ruth. The ugly truth about small business: 50 things that can go wrong and what you can do about it / Ruth King. p. cm. Includes index. 1-4022-0514-7 (alk. paper) 1. Small business—Management—Handbooks, manuals, etc. I. Title. HD62.7.K567 2005 658.02’2—dc22 2005017686 Printed and bound in the United States of America. VP 10 9 8 7 6 5 4 3 2 1 2/21/08 4:54 PM Page ii This book is dedicated to the millions of small business owners who are thinking about starting, have started, or are operating their own small businesses. I hope the stories you read on the following pages give you comfort, hope, ideas, and the knowledge that you are not alone. 2/21/08 4:54 PM Page iii 2/21/08 4:54 PM Page iv Foreword: You Are Not Alone . . . . . . . . . . . . . . . . . .xi Introduction: Learning from Our Mistakes . . . . . . . . .xv Chapter 1: Why We Are Entrepreneurs . . . . . . . . . . . .1 Chapter 2: My Story—Ruth King . . . . . . . . . . . . . . . . .7 Part One: 50 Stories of the Ugly Truth about Small Business 1. I Bought the Wrong Business Bob Breaux . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 2. Battle Scars Tim Hutchinson . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 3. The Grave Dancer Ron Detjen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 4. I Was on My Own Barbara A. Mather . . . . . . . . . . . . . . . . . . . . . . . . . . .28 5. We Were Losing Money Fast Lamar Lawrence . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 6. We Poured Fuel on the Fire Frank Schimicci . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 7. The “Trusted” Bookkeeper Anonymous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 Chapter contents 2/21/08 4:54 PM Page v 8. My Manager Quit and Took the Department Employees with Him Anonymous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46 9. We Were Six Weeks Away from Closing Anonymous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 10. I Was Thrust into Entrepreneurship Doug Kruse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 11. I Only Broke Down Twice Anonymous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 12. We Trusted the Wrong People Anonymous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66 13. I Had No Credit Kitty Ariza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 14. I Hated the Business I Bought Jim Annis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74 15. I Got Fired Sydney LeJeune . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78 16. The Margins Dropped Too Low Eric Hansen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81 17. I Had a Heart Attack Mark McGregor . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 18. A Large Competitor Tried to Eliminate Us Gordon Kinne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88 19. I Got Sick and Couldn’t Work Nita Black . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92 20. I Had No Customers Pauline Cormier . . . . . . . . . . . . . . . . . . . . . . . . . . . .96 2/21/08 4:54 PM Page vi 21. Our Customers Didn’t See Why They Needed Our Product Gary Markle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99 22. The Government Taketh Away Victoria Kamm . . . . . . . . . . . . . . . . . . . . . . . . . . . .104 23. My Partner Lost His Passion Jeff Fisher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .110 24. We Had to Give up Control Jeff Russell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114 25. I Wasn’t Confident in My Abilities Anonymous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120 26. We Didn’t Know If Anyone Would Show Up Rich Schmidt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125 27. My Faith Got Us Through Siney Jordan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129 28. I Shouldn’t Have Turned My Hobby into a Business Beverly Van Horn . . . . . . . . . . . . . . . . . . . . . . . . . .132 29. I Didn’t Have Any Support Christine Kloser . . . . . . . . . . . . . . . . . . . . . . . . . . .136 30. A Competitor Poached My Employees Tom Powell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .142 31. Our Advisors Betrayed Us Julia Barredo Willhite . . . . . . . . . . . . . . . . . . . . . . .147 32. Emotion Got in the Way Donna Fox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152 33. We Opened at the Worst Time Christopher Pollock . . . . . . . . . . . . . . . . . . . . . . . .155 2/21/08 4:54 PM Page vii 34. Due Diligence Wasn’t Enough Larry Duckworth . . . . . . . . . . . . . . . . . . . . . . . . . .158 35. I Let My Greed Override My Common Sense Anonymous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164 36. A Key Employee Left Ryan Allis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .171 37. My Gut Told Me Something Was Wrong Monica Y. Jackson . . . . . . . . . . . . . . . . . . . . . . . . . .175 38. I Did It All Myself Pat Murphy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .180 39. I Lost 25 Percent of My Business in One Day Karen Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185 40. My Industry Was Male Dominated Billie Redmond . . . . . . . . . . . . . . . . . . . . . . . . . . . .188 41. The Bottom Dropped out of the Market Anonymous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .193 42. I Wanted to Be the Hero Anonymous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .198 43. Too Much of a Good Thing Loretta Elbel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .203 44. My Distributor Went Bankrupt Adria Manary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .206 45. Stress from an Unexpected Place Rochele Hirsch . . . . . . . . . . . . . . . . . . . . . . . . . . . .209 46. I Didn’t Watch the Books Maureen Mitchell . . . . . . . . . . . . . . . . . . . . . . . . . .214 47. My Customer Said He Wouldn’t Pay Us Steve Saunders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .218 2/21/08 4:54 PM Page viii 48. Our Cause Can’t Be Cheap Thomas Kemper . . . . . . . . . . . . . . . . . . . . . . . . . . .223 49. I Couldn’t Build a Company for My Idea David Moskowitz, MD, FACP . . . . . . . . . . . . . . . .228 50. Expansion Breeds Issues Lester Scaff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .237 Part Two: What You Can Do about It Chapter 3: 15 Critical Survival Strategies . . . . . . . . .247 1. Pick yourself up, dust yourself off, and keep going . . .248 2. Learn to deal with your emotions . . . . . . . . . . . . . . . .249 3. Find a physical way to deal with the ongoing stress . . .252 4. Believe in what you are doing . . . . . . . . . . . . . . . . . . .253 5. Be flexible. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .255 6. Rely on people you trust outside the business . . . . . . .256 7. Have a team inside the business . . . . . . . . . . . . . . . . .257 8. Make a list . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .259 9. Write in a journal . . . . . . . . . . . . . . . . . . . . . . . . . . . .260 10. Go with your gut . . . . . . . . . . . . . . . . . . . . . . . . . . .260 11. Make the tough decisions . . . . . . . . . . . . . . . . . . . . .261 12. Find a spiritual way to deal with the terror . . . . . . . .262 13. An angel may appear . . . . . . . . . . . . . . . . . . . . . . . .264 14. Surround yourself with positivity . . . . . . . . . . . . . . .265 15. Patience. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .266 Chapter 4: Realities of Partners . . . . . . . . . . . . . . . . 267 2/21/08 4:54 PM Page ix [...]... person wants you to submit the questions in advance) Take notes and learn from that person’s wisdom 2/21/08 4:54 PM Page xvii L e a r n i n g F r o m O u r M i s t a ke s The Ugly Truth about Small Business: 50 Things That Can Go Wrong and What You Can Do about It will give you ideas for getting through the tough nights, the lack of cash flow, and the many other things that are a reality when you run a... largest sale they ever made, over four million dollars She built a division Then, she quit We became entrepreneurs When asked why, she because we have said, “Once you decide a passion for what to let yourself explore we are doing and learn what you really love to do with the people you love to do it with, you can t stop It takes on a vitality of its own You ve made the decision to do it and you don’t want... themselves Of course, they do make some But by learning from the mistakes of others, they save themselves time, headaches, and money The Ugly Truth about Small Business: 50 Things That Can Go Wrong and What You Can Do about It will help you be the third type of businessperson 2/21/08 4:54 PM Page xii T h e U g l y Tr u t h a b o u t S m a l l B u s i n e s s Let’s face it As small business owners... a series of very critical questions before you begin: • What money are you committing to the business? • What happens if the company needs money? • Will you “sign on the dotted line” personally? This will show you the commitment of the partner If the partner won’t commit personal assets and you are committing assets, then you don’t have a partnership You are the boss and your so-called partner is an... million miles and have talked to thousands of people on airplanes You can get the courage to call, write, or email a person who you admire It s in a non-competitive business and that person has achieved success in your eyes Offer to buy that person’s breakfast, lunch, or dinner You ll be amazed at what you can learn for the cost of a meal It works How do you get their attention? The best way that I’ve... one investing dollars in the business He is an employee and will not have the same interests as you do, no matter what he says My father was right You can pick yourself up, dust yourself off, and keep going Sometimes you just need someone who can provide a boost up Find that person Applying the lessons learned to your business: If you are going into business with a partner, make sure that you ask a series... through it Some stayed in their businesses; others closed their businesses and started another one Still others closed their business and found other ways to support themselves and their families Others are living the nightmares right now They don’t know whether the light at the end of the tunnel is a train headlight or real daylight All were generous to share their experiences with those of you who... a place to turn when things aren’t going well After all, we entrepreneurs can be a tight-lipped bunch The Ugly Truth about Small Business: 50 Things That Can Go Wrong and What to Do about It is the place to turn This book includes the stories of fifty entrepreneurs who graciously agreed to share their business stories You ll find sole proprietorships, partnerships, and 2/21/08 4:54 PM Page xiv T h e... my father’s voice: “When bad things happen, you Pick yourself up, pick yourself up, dust dust yourself off, yourself off, and keep going.” This was time and keep going to get on with it But what to do with all of the people, the payroll, and the debt load? Did I have enough guts to make the tough decisions that had to be made? I was sure I did not I couldn’t I was numb Thanksgiving Day 2001 was the. .. tremendous faith in God and are very churchgoing Our faith and our friends just came through for us My wife said that she never wanted to go through this again She didn’t care what kind of money I made She wanted the security I sat her down and told her she was going to have to get over that because I had to do it again Finally, she said okay Maybe deep down it was to prove I could do it or that I . 1 Ruth King The UGLY TRUTH about SMALL BUSINESS 50 THINGS THAT CAN GO WRONG and What You Can Do About It Never-Saw -It- Coming 2/21/08 4:54 PM Page i Copyright © 2005 by Ruth King Cover and internal. 97 8-1 -4 02 2-1 69 2-3 Library of Congress Cataloging-in-Publication Data King, Ruth. The ugly truth about small business: 50 things that can go wrong and what you can do about it / Ruth King. p. cm. Includes. Business: 50 Things That Can Go Wrong and What You Can Do about It will give you ideas for getting through the tough nights, the lack of cash flow, and the many other things that are a reality when you