Today I was driving home from a meeting, and a familiar song came on from Brad Paisley. And although I know most of the words to a “Letter to me,” and have sung along many times, this time I started thinking…what would I tell my 17 year-old self?
More specifically, if I had a chance to look into the crystal ball for my business BEFORE it was incorporated, what do I wish I knew then that I know NOW? Thoughts came flooding through as fast as those flying past me on the 495 Express Lane. By the time I reached my office I realized that if I could do it all over again… there are three things I’d change.
And because I feel so strongly about each topic, I am going to spend three weeks revealing each humbling learning.
Lesson #1: Debt is a four letter word.
As a small business owner, it’s our nature to always see the glass as half-full. To see every obstacle as an opportunity; to see our future as bright with zero detours and zero failures. Unfortunately, most of us aren’t blessed with perfect batting averages. Which means that of course, at some point in our business- we will sweat making payroll or miss a very important payment.
Truth be told, I took on a serious loan in 2010 when I began to expand across our tri-state area. And although I had done plenty of spreadsheets and created a plethora of probable outcomes whereas I’d be able to cover this very expensive debt service; I never in a 100 years expected to be hit with a catastrophic flood in 2012. That same flood, completely killed my 6-month-old store at National Harbor, Maryland. And with that loss, came the unfortunate news that I had no insurance on that property because my agent made a careless and honest mistake.
Was the loss of an entire store and all it’s contents in any of my forecasts? No way. Do I still have the same loan to pay back to the bank? You betcha. Do I still look at the glass as half full? Yep. But after this loan is paid in full, I will never, ever, take on any additional loans- for any reason.
After that major loss happened to my business in 2012, we obviously suffered from significant loss of cash flow- since I was having to pay off vendors, contractors and the bank with one less profit center.
It was tempting to extend credit, and take terms with my vendors. However, I decided that if I couldn’t pay for what I wanted/needed with cash or check… then whatever it was, would simply have to wait until I could pay for it with zero debt or credit.
Frankly, after having been in business for five years and constantly negotiating the longest possible terms and discounts with which to pay vendors, this was a radical change for our business. But I actually think that by instituting the pay-in-full, and pay-up-front concept, I have learned a bit about self-discipline.
It’s not unlike going shopping: you see the latest dress/purse/shoes that you really must have. But you forgot your credit cards at home. And a week goes by, and you’ve forgotten about the dress/purse/shoes. If we really need it, we find the cash. If it’s just a “nice to have” and not a “necessary to have” – then we can’t afford to extend our payables to have it NOW. Instant gratification is rarely the best solution.
I am about four years away from paying off that very large loan. And with every payment, I am keeping my eye on the prize- my financial security. Isn’t that the reason we go into business for ourselves anyway?
Until next time, here’s to big wishes and pixie dust.