You Saved Nothing For Yourself?

I am frequently amazed at the depth of sacrifice small business owners are willing to endure to succeed. It is endless. Typically, they will take themselves right into bankruptcy while they invest every penny they have, can borrow, or somehow leverage into their business. They use their credit cards until no credit exists, empty their 401ks or IRAs and borrow from their family and friends until there are no other resources and then they tank and die. It’s the end of their business dreams and there is nothing left but debt and obligation for themselves and their family. I understand not taking a paycheck for a while–a short while–while you ride out a downturn, but to never take a check and invest the whole farm into the business… what could you possibly be thinking? This is a business matter, not a matter like your child’s life or death.

Recently, I interviewed a perspective client who had a few million dollars of debt in default, and a company which made upwards of $25 million per year. However, because of both the economy and some major miscalculations and errors, his business is in a massive downturn and he’s barely able to keep the doors open while we perform the necessary surgery to keep his opportunity viable. I asked him what happened to all the cash? He had personally dumped back into the business upwards of $4 million in cash, money that was retained and earned out of his business, that he had paid taxes on and kept as savings. Worse, he had also borrowed a $100k from his father-in-law, a debt he needed to repay at some time. That was all he really had to show for his brilliant success–debt saddled to his family and a house that about to go into default.

Of course, this is not the first time we have seen this as it is the normal course of action for entrepreneurs, small business gladiators, pioneering their vision and implementing bold strategies, willing to do anything it takes to succeed even at the cost of their own and their family’s security and comfort.

To these people I ask a simple question: Does this make sense? That there nothing for yourself, no reserves, nothing to protect your family? The answer is an emphatic NO.

I really don’t get this at all. Small business owners are universally committed to success beyond reason, reinvesting everything they have into a sinking ship, ending up powerless, unable to make the next move and certainly unable to support their family requirements. I understand commitment. I understand passion. I understand believing in one’s mission and vision, but I do not understand self-destruction. Really, how can one reinvest everything one has, right down to the bone, on a wild all-in bet at the expense of one’s family?

It’s not the right thing to do and if any of you are confused about this, allow me to help you out with a brief analysis of your situation. Save for a rainy day, your family is depending on you. Your business can, and will, get to wherever it is going without you dumping your last nickel in. Stop this insanity now! Keep some cash for yourself, your family and to fund your workout and next adventure. It’s the least you should do.