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Reasons Not to Start a Small Business

Our Small Business 101 series is for anyone who owns a small business and for anyone who's thinking about starting a small business. It draws from lessons we've learned while working with thousands of Canadian small business entrepreneurs over the years. It's the class we wish we'd taken before starting Origami. And the night class you should be taking right now.

So you want to start a small business. Great! Actually, wait, not great.

Give us a few minutes. We'll do our best to convince you not to. We're not trying to be funny or cruel. Funny or cruel is how you'll describe life once you've been through the small business wringer. We're not trying to teach any lessons either. Those you'll learn on your own. And only if you choose to do so.

No, we're just here to give you "the facts" or at least the facts as we understand them after nearly two decades working with small businesses. Many successful, some quite successful, and many, many more not as successful as the owners would have liked.

We've had court side seats. We play the great game of business ourselves. And we see you on the sideline, thinking of jumping in, and we have to ask: What are you thinking?! It doesn't matter for us to know the answer, but it does matter for you. It's really, really important for you to know. So we hope this exercise helps you clear up your thoughts.

The facts we're going to relate fall into a few categories. They're about you, your situation, your resources, the market and industry you're considering, and the product or service you're offering.

Nothing we're pointing out is definitive, of course. We're not claiming that if any of these apply, you're bound to fail. It's just that, based on our observations, these facts, where they apply, tend to lower the odds of success. And they make for a bumpier ride. Some of the stuff below matters. Some of it's just gallows humor. You decide.

If you're still around by the end, if you still want to be here, great, let's get to work. We hope you read the rest of the Small Business 101 series. The point we're making in this first post is basic: small business isn't an easy game, easy to play or easy to win. We want you to know what you're getting yourself into. But once you're in it, we're rooting for you, and we'll do what we can to help. We want you to win. And you have to play to win.

You're not good with money. You get hit with late fees. You carry a balance on your credit cards. You don't have savings. You don't have assets. A budget? Investing for retirement? What are those? Don't add to your money problems by carrying these bad habits into a business.

You don't have any money. Starting a business with little or no capital is like wearing a shirt that's a size too small. It's uncomfortable, and you can't breathe. It takes a while for a new business to get on its feet, start generating reasonable revenue, and break even. Capital buys time. It lets you recover from the inevitable setbacks. The closer you start to zero, the easier it is to get there.

You're going to borrow money. The primary function of lending in the economy is to fund new business starts and it is incredibly unrealistic for a non tech startup to not be primarily financed by debt. The money has to come from somewhere. And you're probably going to borrow it from people you know. The road you're going down isn't smooth. Your friends and family are in for a bumpy ride. They won't like it. You won't like it. If you borrow from the bank, you'll be borrowing against your house. If that's not enough to make you say "Ah, hell no!", then you'd better be close to certain that you're borrowing $200K to make $2M... not $210K.

You need a lot of money to cover your personal expenses. If frugal isn't in your dictionary or you have a lot of obligations you can't easily shed, you should know that money will be slow at the start, the start may last a while, and you're going to be the last one to get paid once the money shows up. If it shows up at all: your business may never get past the start.

You're going to burn through money quickly. If your idea needs lots of money to start and lots of money to run, then you're either someone who has these resources, someone who's done this before, or someone qualified and connected enough to get backing. If you're none of these people, don't pursue an idea that forces you to contemplate burn and money in the same sentence.

You want to get rich quickly. If you work for someone else, move up the career ladder, live within your means, and invest, you have a good chance of getting rich slowly. Some small business owners become wealthy. Very, very few get there quickly. Most never do.

Small business is full of risks. A risk is a threat to your company's finances and survival. Some risks you'll be aware of and be able to manage if they actually happen. Then there'll be pandemics, fires, floods, government actions, changes in technology or customer preferences: risks that are harder to predict and much harder to recover from.

You lose heart, interest, composure easily. Small business success is a long game. It constantly tests and filters out people that don't have the personal qualities needed to play.

You can't improvise. You'll be able to control a few things in your business. The rest will just come up. Pieces won't fit. Things will break. You'll have to be flexible and resourceful to deal with it.

You lack discipline. Two ways this rears its head: you put things off and you can't focus. Someone once said discipline equals freedom. Take one guess what lack of discipline equals.

You're not good with people. You're going to hate being a small business owner! This is something you you need to recognize and work on. While his degrees from the University of Nebraska and Columbia collect dust in a drawer somewhere, Warren Buffett proudly displays his Dale Carnegie public speaking course's certificate of completion on his wall.

You like spending time with friends and family. There's going to be much less of that. One of the most important resources you'll need to pour into your business is time.

Your employees are not you. You're in your own head. They're out there, living their own lives. You have to trust them and, yet, you can't trust them. They'll never be exactly what you want them to be. They'll never be you. It'll be frustrating, and you'll have to find ways to make it less frustrating. For you and for them.

Recruiting, training, and retaining employees. Human Relations is tough. It's hard to find good employees. Wait till you use job boards from the other side. And just when you've invested enough time and effort to get a new employee confident and productive, they'll leave. Plus, when trusted employees go through issues in their personal life, you'll go through those issues too. So you have your issues, and you'll have theirs.

Very few A performers. You're an employer. You're competing with all other employers for the right to lock in the services of capable employees. Guess who has more to offer capable employees? Guess who capable employees prefer to work for? The answer is not you.

You don't know what you're doing. We assume you're thinking of starting a business doing something you know something about. You're maybe an expert. If not, if you don't know what you're doing when it comes to the very basics of your business, reconsider.

You don't know how to run a business. There's a lot to know: marketing, sales, accounting, finance, management, HR, IT, product, operations, strategy, supply chains, customer service... No one's an expert at everything. But you have to have some strengths.

You're not much into planning. They say you don't plan to fail, you fail to plan. The thing is they're right. Planning results in directed movement, not planning results in random movement. Where does random movement get you?

You don't set goals. If you don't set goals, what are you working to achieve? But it's more than that. Goal setting is taking a look at the situation today, comparing it to a better situation tomorrow, and then working to get there, intentionally, step by step.

You don't track your performance. Monthly financial statements can tell you how you're doing. Or you can put your head in the sand, because you're busy, yada, yada, yada. Having cash in the bank to make payroll and thinking you're doing OK isn't going to be good enough. Reviewing the financials keeps you accountable to yourself and your partners if you have them.

You're going to marry your business partner(s). You're going to need each other. You're going to count on each other. You need the marriage to work. Both of you have to pull their weight. Divorce, as always, is painful. So be sure you want to get married. And you want to get married to this person.

You like the idea of being at the top of a small hierarchy of people. Power tripping. We've seen this plenty of times. It ends badly. People who do this usually end up spending all their time burning through employees that don't meet their crazy expectations. You can't expect anyone to do what you aren't willing to do or haven't already done yourself. You have to walk the talk.

You have a short fuse. No one likes to deal with your anger issues. If you have a habit of making people deal with your anger issues, then, aaargh — you see, you're getting us worked up.

You don't like marketing, advertising, promoting, or selling. Then you don't like revenue. Hard to grow a business without revenue.

You'll almost certainly be much wealthier if you make the same consumption sacrifices while building your career and investing. There's this wonderful thing called compound interest. The money you save and invest makes money. And that money makes money. Start early, stay consistent, and you'll be rich. With a small business, it's hard to start early or stay consistent. And you're unlikely to be rich. How much is loving what you do worth? Loving what you do better be worth a lot.

You like a steady pay check. You're going to go through a stretch, perhaps a long stretch, where you'll be happy with any pay check. You're not going to like that.

You might get sick. This is the spectre that haunts every small business owner. For most, everything rides on their shoulders. They stop supplying the energy, the machine stops moving. But the bills and financial commitments don't go away. It's just the revenue that goes away. It can happen to anyone, at any time. Of course, if you're not in the best health to begin with, don't do it, don't start a business.

Your spouse will hate you. Some small business owners talk cheerfully about how much their spouse supports them and how they wouldn't be able to do it without that support. They put their "passion" into their struggling, no-money-making business and put their spouse on slow boil. Don't kid yourself. Your spouse hates what you're doing. Eventually, as you fail to see it, that transforms into your spouse hates you.

It just goes on! No holidays? Check. No time with friends and family? Check? No hobbies? Check? Doing everything yourself? Check. Customer issues? Check. Employee issues? Check. Check didn't arrive today? Check.

You will need to fire someone solely because you MUST never lose money. You're probably going to like your employees. You'll make personal sacrifices to make sure they're taken care of as best you can. That'll get you in trouble when the business shrinks and you need to take action and reduce costs. The employee you have to let go will have done nothing wrong either.

You hate waking up terrified of losing everything in the middle of the night. This happens. If you get yourself in a bad spot, it'll happen a lot. And even when you come through it and everything looks good, you'll weirdly still wake up in a sweat.

You have tons of competition. If it's easy for someone else to set up and compete with you, then expect a lot of people to do just that. Standing out when there's tons of competition is difficult. Most novice players will compete with the one thing they have to offer: low price. That'll force you to keep prices lower than you'd like. You'll struggle to turn a profit.

Your competitors are pretty good. If your goal in starting your business was to compete with idiots and you see a competitor outperforming you, then consider that maybe competing with idiots was also that competitor's goal. Whether you enjoy competition or not, you're really not going to enjoy competing with someone you can't beat.

You won't be able to find enough customers. Maybe it's because of the competition. Maybe it's because you can't get the word out. Maybe no one will want what you're selling.

Your customers have no money. Serving an extremely price sensitive market sucks. Trying to sell to customers who can't pay what you need to turn a decent profit sucks.

You don't have anything different. You're business number 10 of 14 doing the exact same thing. This could maybe work if the market needs 17 such businesses to match the demand. But, then again, at least one your 13 competitors is probably going to be good enough at business to hoover up that extra demand.

You have something different. Now you have to educate your customers on what you have to offer. That takes a lot of patience and resources. Customers have to care. You have to be solving a real and pressing problem for them. Most days you'll go home empty handed.

You can't decide. That's not good. You'll have to make all of the decisions or at least the most important ones. If that's not your thing, those decisions will somehow be made for you: by circumstances, customers, employees, suppliers, luck. And you may ask yourself: How did I get here?

In his first meeting with his new team, Deion Sanders was asked by one of the players who was part of the 1-11 Colorado Football Team last season what the offseason is going to look like. Coach Prime's response paraphrased: "How should I say it? We're going to try to make you quit. Those of you we don't run off, we're going to try to make you quit." Then he added: "I want the ones that don't want to quit. I want the ones who want to be here. They want to work. They want to win."

Well, we tried to make you quit.

Still here?

OK. In the rest of the Small Business 101 series, we'll work on skills and knowledge you need to win.

Thanks for reading! If you're ready to start building a better business, give us a call at 1-888-745-1315 or get in touch with us by filling out our Get Started form. We're always happy to hear from you and learn about your business. We'd love to see your small business succeed, and we'd be proud to be a part of your success.