By Michael Kleen
It is not easy to start, own and run a business, but it is easy to overlook this fact. Most people, after all, have never owned a business.
While clocking in and out every day, it is easy to imagine that your employers are living the high life while you and the other employees toil around them. Reality is much more complicated, however, and it may just be the simple wage-earner who has the last laugh.
For every successful business owner, there are many more whose businesses failed, or who have struggled for years just to stay above water. Whether it is a mom-and-pop store or multimillion dollar operation, the fate of every business is ultimately determined by the whims of the marketplace.
Circuit City, Frontier Airlines, Hollywood Video and Borders Books are just a few of the hundreds of companies that have gone under in recent years. Each one represented the dreams and desires of an entrepreneur or group of entrepreneurs. Each took years to build and seemed, at one time, to be unstoppable.
Those are just some of the most prominent examples. According to a special tabulation by the Census Bureau, 25 percent of businesses founded in 1992 did not make it past their first year. By 1997, less than 50 percent of those businesses were still in operation, and by 2002, only 29 percent were still operating. Of course, those numbers vary according to industry, but overall, they paint a very grim picture. For every business that survives to its one-year anniversary, there are many more that never even make it to opening day.
Several years ago, a friend of mine took over his father’s restaurant in a small town in central Illinois. He had grown up in that restaurant, and he was an excellent cook with an outgoing personality. What he did not anticipate, however, were the numerous repairs his father left him. Equipment started failing. The roof leaked. There was not enough money coming in to pay for all the maintenance.
Then, one day, another entrepreneur approached him with an opportunity. This entrepreneur was opening a dinner theater and wanted my friend to cater for him. This would mean an almost guaranteed stream of income every month. This entrepreneur had a great-looking business plan, and his establishment was highly anticipated in the community.
Then, the day of the grand opening came, and the doors never opened. The dinner theater was dead on arrival, because its owner had spent all his capital fixing up the building and designing the interior. He either lacked the capital or the will to go on. Unfortunately, this is a familiar story to many in the business world.
Small businesses fail for many reasons, but among the most common are lack of planning, inexperience, poor management and insufficient capital. Most businesses will not begin to make a profit for their first two or three years, so the owner (or owners) has to be prepared to pay expenses while he or she works to increase sales, along with the public’s awareness of his or her product or service.
There are not just business expenses to consider, either. Will you, the owner, be able to keep food on the table and the lights on in your home while you work 10- to 12-hour days trying to make your business a success?
No one starts a business believing it will fail, but it is very easy to think all bases are covered when they are not. It may cost more to operate the business than was anticipated, or perhaps demand for your product was not as high as believed. One fatal flaw may be enough to destroy months — even years — of preparation and anticipation. The loss can be devastating, not only financially, but also psychologically. Families can be broken, friendships lost and relationships ruined.
Entrepreneurs put everything on the line to succeed, knowing the odds are stacked against them. Yet, they continue to try, in spite of everything, because of the distant promise of success. Sometimes I wonder whether this is really the more fulfilling life.
My father tried to instill in me an appreciation for simple, honest work, the kind of work millions of wage-earners do every day. Perhaps, given all I have experienced in the years since I decided to go into business, I should have listened more carefully.
Michael Kleen is a local author, historian, and owner of Black Oak Media. He holds a master’s degree in history and master’s degree in education. Read his previous columns online at makleen.com.
From the Aug. 22-28, 2012, issue