Last week the Washington Post printed a hilarious article on page one about women and how they view their bodies. The author compared the self-images of women across racial lines. A conclusion was that African American women view themselves more favorably than white women. Nothing funny there. The centerpiece of the article was a woman, who teaches ten fitness classes a week and is at least fifty pounds overweight. The hilarious part is that she describes herself as in much better shape than the average woman. I assume this article was the first in a series. This week we will read that prison inmates believe they are innocent, and next week we will read that mental patients believe they are sane. I'm not making fun of fat people. I used to be one and may again in the future if I don't lay off the craft beers. I'm making fun of fat people, who delude themselves into believing they are in shape.
The Washington Post article panders to a particular audience, and the author confuses survey results with reality. I don't care that survey results show a lot of big women, including the trainer, believe they are beautiful. Beauty is in the eye of the beholder not the beholden. Two plus two equals four, even if the survey results say two plus two equals five. Don't raise the bridge, lower the river. Don't lose weight, redefine beauty. People have an endless ability for self-delusion. Yes, I know I will never be a stunt double for Brad Pitt, but the key point is that I'm not applying for that job. Jennifer Aniston loves me just the way I am.
How does my rant about fat trainers relate to screwing up your business? The very first thing to evaluate when you consider starting a business is whether you really are a business owner. Most people aren't. You can dress a sow in a prom dress, but that doesn't make her the homecoming queen. Although at the post prom party, some drunken senior will probably wrestle her into the back seat of a car. You know who you are, guys.
Here is a quick test to see if you are a business owner. It won't cost more than ten bucks on Amazon.com. My current bathroom reading is a book called Waiter Rant by Steve Dublanica. Smith has spent most of his career as a waiter at various New York restaurants. He writes about the dark side of the restaurant business, and how poorly he and his co-workers are treated in restaurants by customers and restaurant owners. You don't have to read more than three or four chapters to get the gist. Life as a waiter sucks for him.
Here's the owner test for you. How do you feel about him after reading a few chapters? Do you feel sympathy for the way he has been treated? Or, do you think, “Hey dude, the front door wasn't locked at any of these places. Get your ass on down the road”? You should know the answer without my explaining, but....
If you are sympathetic to the plight of the poor put upon working man, you are not a business owner. Keep your job and health insurance benefits. Maybe you should even join the communist party (I'm just kidding. Maybe.) If you are “get your ass on down the road” type, you are possibly a business owner. One of your core beliefs is that none of us are guaranteed anything, jobs, profits, or even health insurance. I'm not dissing people, who are employee types. I am dissing employees masquerading as business owners.
The employee versus owner personality type has ramifications for you even if you are definitely the owner type. It should determine whom you choose as business partners. Choosing an employee type as your partner can have devastating consequences. I have not always made the best choices in business partners. In fact, I am one for three in that area. Both of my mistakes resulted from choosing as partners people better suited to the safety and security of the employment world.
In the early nineties, Paul and I opened an office in Norfolk, Virginia dedicated to providing accounting software technical support. Our method in choosing a partner was backwards. We had the partner and then we decided to open the office. Instead we should have made the decision to open the office and then looked for a suitable partner. Our partner in that office approached us. We knew of her, but really didn't know her. She had never started a business or been a partner in anything. She had been an employee all her life.
Her idea of business ownership was cashing big checks. She ignored all the annoying hard work that goes into producing the big profit checks we never got. Good weather on a Friday meant she would cancel her appointments and take her kids to the beach. Work was fine as long as it didn't interfere with fun.
The business was named Stitely, Karstetter & Associates. We did that because our name was much more of a brand in the tech support world than her name was. And, we wouldn't let her borrow money, because of the nature of the business. In a non-seasonal service business, you should never borrow money to pay salaries except maybe sparingly to finance receivables. Salaries are sunk costs after they are paid. If you haven't already earned the money to pay the salaries, you never will. Borrowing to pay salaries in a service business is an admission you're losing money.
After a few years of zero profitability, she came to us and asked to change the name of the business to her name, Morotini & Associates. She told us no one was taking her seriously as a owner since her name wasn't on the building. We agreed. What she didn't tell us was that the people she was trying to impress were people she wanted to borrow money from. Fortunately, bankers still didn't take her seriously. She tried, but banks wouldn't lend without Paul and I being on the hook for the loans. Unfortunately, she was able to get credit cards. She used the credit cards to run up big bills for nice furniture. She had far better stuff than we had in Chantilly. She also opened credit accounts with vendors and signed a lease for class A office space in Oyster Point. She hid the spending by only booking the minimum credit cards payments as expenses.
Of course, hiding expenses didn't work forever. Soon she couldn't even handle the minimum payments. Around the time she came to us for more money, an employee tipped us off that she was bartering the company's services for personal purchases. She was having work done on her house at our expense. Paul and I drive to Norfolk, fired her, and closed the office. During tax season, I got the joy of closing down all the vendor accounts and filing all the tax forms she had never bothered with. She was supposed to be a bookkeeper no less.
The mistakes we made should be pretty obvious. We picked a partner, actually she picked us, who had no history of running anything even so simple as a pay toilet. She had no concept of the responsibilities of a business owner. When there ain't no money, there ain't no pay for the owners. She was into the benefits of ownership, but not the pain. She wanted her check even if she had canceled all of her appointments to earn that money. As a business owner, she was the fat woman teaching fitness classes – utterly delusional. At least we caught on to her before we lost a lot of money. We just lost a lot of time.
If you are a business owner, the lesson you should have learned from my pain, is to think long and hard before making an employee your business partner. It rarely works, and then you get to buy them out to get rid of them. If you are an employee, honestly consider of you have the characteristics to be an owner. Of course, if you really have what it takes, you probably won't listen to me anyway.
Thanks for reading. For real tax and accounting advice, please visit our main web site at www.skcpas.com. If you see Jennifer Aniston, tell her I said hello.
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