Re-Start Your Career by Starting a Small Business
Yes, small business start- are the fuel of capitalism. But don't forget that they can also be powerful agents for personal change. You can create your own job, and perhaps dozens of others; you can build your bank account; and you can find satisfaction not usually possible in corporate employment. With a startup, you are master of your destiny.
Yes, building a business is risky: 95 percent of startups fail within the first 10 years, according to the Small Business Administration. But for those who make it, life can be very good. The trick is to start small and make your inevitable mistakes on a survivable scale.
Thirty-two years ago, I did just that. I started the WinterSilks catalog using mostly borrowed money. It was October 1979, during the beginning of a serious recession -- very similar to today. But starting up then had many benefits: It made me pay attention to every detail, every dime and nickel.
I sold my house and borrowed against the proceeds, and established tighter performance standards in my entrepreneur's mindset. When the economy recovered, the business grew rapidly. It made Inc. magazine's list of America's 500 fastest-growing privately held companies, for three years in a row, and had steady, 20-percent, pre-tax profits. I sold it in a bidding process a few years later.
Key to Success
The key to success was surviving the early years. My wife and I -- and soon two infants -- lived on a shoestring while I survived ongoing foibles and failures, and learned from mistakes. The first project was re-publishing my grandmother's cookbook, which had been through 20 printings. I ended up with most of my revised edition sitting unsold in my basement, nearly 5,000 copies of it. Friends laughed at my stupidity in leaving a good job for a ramshackle office in my attic and no prospects for anything but bankruptcy.
So I tried to sell the cookbooks by mail order, in the process creating a catalog with a country store motif and a few natural-fiber clothing items. One group of clothing products, knitted silk garments for winter warmth, turned out to be best-sellers. I dropped all the other items and concentrated here, and developed related silk garments that I imported from China, Hong Kong and South Korea. My wife and I came up with the name "WinterSilks -- The Ultimate Winter Warmth" on a sweltering hot day in August.
My start-up was somewhat out of necessity. I worked as a newspaper journalist and magazine editor after college, but after six years I was still nearly broke, since publishing just doesn't pay much. That's why, at 28, I went out on my own.
The difficult parts were: Finding a product line upon which a business could be built and expanded; getting financing from banks; finding and keeping key people; keeping up with seasonal demand; and surviving off-season months. The biggest surprise was that most employees took their paycheck for granted; they assumed that the cash flow would automatically materialize out of the sky to cover their wages.
From Startup to Sale
The most rewarding aspect of the journey was getting a good management team in place to enable me to take some time off after years of 60 to 90 hour workweeks. Building that management team also enabled growth to occur more comfortably. When the company was sold, I still owned 100 percent of the stock, since I had used debt financing instead of venture capital. "Chicken Lips, Wheeler-Dealer, and the Beady-Eyed M.B.A; An Entrepreneur's Wild Adventures on the New Silk Road" chronicles my entrepreneur's life from startup to sellout. I wrote it because I came to realize that almost no one, except other entrepreneurs, understands the rigors of starting a business. I figured that if I could tell my startup story well it might end up telling a much bigger, more important, story of our financial landscape, and the forces that drive it.
The storyline of "Chicken Lips..." is a reminder that small business startups let people take charge of their destinies. Unfortunately in the U.S. these days, this powerful force is underutilized. Our entrepreneurial landscape needs to be more like Hong Kong's dynamic economy by encouraging business startups, whether they are one-person shops or multipartner enterprises. Tiny or huge, startups can spell success for everyone involved. Just mix the human desire for independence and economic self-determination with good products and services, commercial credit from banks and investors, and great things can happen. It's a recipe that is thousands of years old and, properly nourished, has never failed.
I am often asked if having an M.B.A. is important in starting a business. I think the answer is: yes and no. It's "yes" if you can afford the time and money for an M.B.A. from a school with a strong entrepreneurial program (Babson College, Indiana University, St. Louis University and Cornell, to name a few). It's "no" if you can only afford some accounting, finance and marketing courses at a local community college -- which may be adequate. I also strongly believe that business plans, beyond a certain point, are a waste of time, since inevitable setbacks -- and their costs -- cannot be predicted.
My book's "Lessons Learned" appendix gives a chapter-by-chapter analysis of what was done right, and wrong, and teaches would-be entrepreneurs to learn from my step-by-step journey. Readers can thus more easily navigate their own startups and maximize chances of reaching the winners' circle -- and its considerable payoffs.
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