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    On the Line: Positioning Your Small Business to Survive Ordinary and Extraordinary Events
    On the Line: Positioning Your Small Business to Survive Ordinary and Extraordinary Events
    On the Line: Positioning Your Small Business to Survive Ordinary and Extraordinary Events
    Ebook142 pages2 hours

    On the Line: Positioning Your Small Business to Survive Ordinary and Extraordinary Events

    By Aaron W. Smith and Brenda L. Richardson

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    About this ebook

    As an entrepreneur, you probably know already that your chances of survival are hardly guaranteed. So many small businesses open and quickly bite the dust that I sometimes wonder: If a business falls and there is no one around to hear it, will it make a sound?  The answer is simple: Who knows? Businesses close so frequently that few people notice, but you can be sure that the owner does.  "On The Line" gives you information that helps you prepare for some of the ups and downs of entrepreneurship. I’ve undertaken this work with the intention of helping you plan ahead, so you can avoid the hassles that often plague small businesses.  .
    LanguageEnglish
    PublisherHillcrest Media Group
    Release dateAug 24, 2015
    ISBN9781634135092
    On the Line: Positioning Your Small Business to Survive Ordinary and Extraordinary Events

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      Book preview

      On the Line - Aaron W. Smith

      Thought

      Acknowledgements

      I am grateful for my family. My wife, Patricia and my two children Jasmine and Justin for being supportive during the writing of my second book. To my co-author Brenda Richardson, words cannot express the gratitude I have for her always finding the time to assist me with my writings. I appreciate all who added value to this book by proofing, suggestions, fact checking and motivation. God bless you all and enjoy the book.

      Aaron

      To Aaron and Pat Smith, who taught my husband and me that even individuals of modest means and without professional financial expertise can take control of their money and build a comfortable future. And thanks also to Denise Bridges, one of the best freelance editors in the business. Thanks to all of you for your ministries.

      Brenda Lane Richardson

      Introduction:

      When Stuff Happens

      In the spring of 2013, some residents on Whidbey Island in Washington State were evacuated from an elegant house that was suspended perilously on a cliff edge. With the earth eroding at an alarming pace, it became clear that the house might topple over the edge. The soil movement continued until it pried the house from its foundations. Crossing an invisible fault lineAt the precipise, the house tipped over the edge and crashed into the ocean, upending decades of hard work and destroying the owner’s hopes and dreams.

      Prior to this disaster, a geologist geological volunteer familiar with soil conditions had warned about the dangers of erosion. Although unable to pinpoint which house would perish or when, she said after the disaster, I knew that someday something like this would happen.

      Watching this shattering loss on the network news, I couldn’t help but draw comparisons to hardworking entrepreneurs who might be unaware that, like many others, their own businesses are situated close to the edge of an imaginary fault line. As changes in their lives occur, some feel the ground beneath them eroding. Too many abandon their efforts and call it quits.

      Their plight is not unusual. Starting a small business is not for the meek of heart, a fact that is glaringly obvious to anyone who has watched the reality show Shark Tank, on which aspiring entrepreneurs pitch ideas to a panel of potential investors. Fortunately, the degree of difficulty in the real world does not stop millions of entrepreneurs from pursuing their dreams.

      Let me pause for a moment and explain that a small business is generally defined as a company with fewer than five hundred employees. Reading that definition might leave you picturing sizeable enterprises of 250-plus workers. That is the case for some of the leaders with whom I consult, but keep in mind that 70 percent of the owners of US small businesses are sole proprietors, individuals who are both owners and operators. And 50 percent of US businesses are home-based. My client roster includes small businesses with hundreds of employees, and others run solo or with just a few workers. I also consult with practices run by attorneys, physicians, and dentists.

      As an entrepreneur, you probably know already that your chances of survival are hardly guaranteed. So many small businesses open and quickly bite the dust that I sometimes wonder: If a business falls and there is no one around to hear it, will it make a sound? The answer is simple: Who knows? Businesses close so frequently that few people notice, but you can be sure that the owner does.

      It’s a brutal world, in which small-business owners report working longer hours, earning less money, and feeling more stressed than employees, yet happier and more optimistic than those who work for others. I’d venture to suggest that despite the pitfalls, the positive emotions we small-business owners experience are derived from the measure of control we have over our destinies. Many of us struggle with a roller-coaster of emotions, and for good reason, given the odds of succeeding.

      According to the Small Business Administration (SBA), 10 to 12 percent of firms with employees open each year, and within the same period an equal number close. About one-third of all US small businesses fail within two years. And among all US small businesses operating within a given year—2010, for example—only half of the total of all small companies survive for five years. The statistics only get worse as time goes on. For example, 67 percent of businesses don’t survive beyond seven years. That means that out of tens of thousands of US small businesses at the starting line, merely one-third survive for a decade or more.

      It must be a relief if you’re a small-business owner and have so far survived the odds. Survival might have you thinking more optimistically about your future. But the fact that you have survived also suggests that you realize thinking positively isn’t always what it’s cracked up to be. I certainly have learned that in my own life’s work.

      I’m a business consultant who started out working solely as a financial adviser, helping to shore up the lives of individual clients and couples. I founded my company in 1993, along with Patricia Smith, the wonderful woman to whom I’ve been married for twenty-one years. For a while, we worked from a spare room in our apartment. As the parents of then-young children—Jasmine, now 19, and Aaron Justin, now 15—Pat and I used our steady incomes from day jobs (I was a credit analyst, she a bank assistant) as our financial safety nets.

      I’m glad to say that our investment paid off. A.W. Smith Financial Group, Inc. now has offices in Virginia and Maryland. Guided by a mission of helping clients achieve financial security and independence, our staff of five and I manage a roster of one thousand individuals, and, following rigorous training, I now consult with scores of businesses.

      It feels great to share positive news about our company, but for the sake of our clients and my family, I’ve developed a healthy respect for the power of negative thinking. That doesn’t mean that I focus solely on unhappy outcomes. I treasure good news and am thrilled by success. In business, however, as in all of life, there’s a time and place for everything.

      I have found that most owners are so busy running their small businesses that they don’t take time for the business of preparing for life’s changes. Without a doubt, many run into the common frustrations connected with financing, management, marketing, and competition. You can find hundreds of books to address these issues, because they are the subjects most people focus on. But a singular focus leaves them unprepared for the multitude of changes they are likely to face.

      On the Line is one of the only guides available for those determined to protect their established businesses against rarely discussed issues that cause tens of thousands not to succeed. Notice my wording. Not to succeed is different from fail. As USA Today columnist Rhonda Abrams pointed out in a 2011 quiz on small businesses, among the 50 percent of small-business owners who close their doors within five years, many ended their businesses for personal reasons unrelated to business success.

      So what does that mean?

      It means that tens of thousands had good reason to believe that they were doing everything right, and they may have been to an extent. They may have developed winning business plans, generated sufficient cash flow, found good locations, launched creative marketing campaigns, defined their niches, identified their brands, hired good workers, and yet their personal/business issues positioned their businesses on the fault line.

      Most of my business consultations are with owners who are determined not to cross that line. Like just about everyone, they like being recognized for their achievements. And that’s easy enough to do, because in general 80 percent of their strategies are probably working for them, while only about 20 percent are not. I focus on the 20 percent, because I want clients to be the best at what they do. On June 9, 2013, the Wall Street Journal’s Daisy Maxey explained in The Downside of Entrepreneurial Success that advisers in my field often step in to try to prevent what they see as dangerous lapses in judgment. In other words, I advise clients about what they can do now to avoid hassles that can later cause them not to succeed.

      On the Line is written to teach you how to prepare your business for the kind of seldom-considered issues that throw entrepreneurs for a loop. Like some of those Whidbey Island residents with cliff-front properties, you may already be positioned on eroding soil. I don’t know what action those homeowners will take, but it’s interesting to note that, faced with a similar problem, some residents in Aptos, California, hired a construction crew to cement the cliff side and foundations beneath them. For the time being, with their homes secure, the residents can rest easy.

      The question, when it comes to your small business, is, Have you put protections in place so that you, too, can rest easy? Sometimes that process can begin by simply discussing what-ifs. Of course it’s easier to expect the best and hope for continued success. But I am often reminded that my clients depend upon me to ask cynical questions. Here are a few examples of clients who had to come to terms with the kinds of issues that lead so many others to cross over the fault line.

      · A Question About Partnership: Ellen’s best friend and real estate partner was in remission from breast cancer. I asked, God forbid, but what if your partner passes away? Didn’t you tell me that her brother is difficult? He stands to inherit her half of the firm. So what if he insists on taking your partner’s place?

      · Marital Troubles: Lonnie, a professional athlete, is running a thriving company with his wife, Anita, assisted by their two adult children. Lonnie and Anita hope their extra income will allow them to maintain a comfortable lifestyle after Lonnie retires from sports. Like many of my clients, the couple started their business because they wanted their family to enjoy financial security. When I first spoke with them, they admitted that they had discussed getting a divorce. I asked, What if one of you does decide to end the marriage? Could the company survive if one of you wants to be bought out?

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