The title of this Mark Cuban interview by Bloomberg sucked me right in, "Only morons start a business on a loan." Even though I bootstrapped my way through the first three years of my business and saw wonderful, surprising growth, I think this spoke to me because I recently took out a loan for my business. Earlier this year, feeling that I truly knew my market and seeing that the profits were rolling in at a steady pace, I took a small loan for $12,000 to boost my inventory. The catch on this particular loan was that it was all due back in a matter of 6 months. I saw the principle payments due back, the overall interest payments and thought it was a great deal. And it was, still is. The terms were very acceptable, I just didn't know how to be a borrower. I had always ponied up the capitol myself.
It was all working so very well, until the fifth month the loans were due back. I just was not making enough to pay back the loan AND continue to grow. I felt stifled by these payments and I definitely feel that the progress I'd made immediately prior to taking on the loan was eradicated. I felt that was essentially starting back over now that the last payment is scheduled for the end of this month. I didn't get nearly what I thought I would out of this sudden infusion of cash.
I'm excited to get back to my normal that I'm so very used to, especially during my business' peak seasonality. I'm not saying that I wouldn't take out a loan again, but I certainly would like to have more of my own cash on hand to combat the payment periods during the slow time of the year. How ironic - you have to have money to borrow money. Or I might take out the loan just before a natural boom in sales. I regret taking out this 6 month loan just before the slow time of year. That was definitely something I would not recommend or repeat.
At any rate, there were a few other awesome nuggets in this video. The grittiest of us will like what he has to say at 1:30 "Small business don't fail for lack of capitol, they fail for lack of brains, lack of effort." Love it!
Let's "grit" our heads down and work, entrepreneurs!
I'm sitting at my beautiful West Elm desk, typing on my super fancy Apple Macbook Pro laptop, drinking expensive Teavanna tea while crunching numbers and ordering inventory that I no longer even touch, lift or pack myself. As I looked over my recent sales and expenses, lamenting how large my business loan payment seemed this month, really thinking that I was bootstrapping this business together. Hanging on to make it work. Gritting my teeth and scraping the barrel...
When I see an old man stop in front of my house to dig through the bulk trash we've put out. I couldn't believe the things he found value in! Just last night, I finally threw out the window blinds the previous owner had stored in our backyard shed. They were bundled together unceremoniously in a stack, bug leavings and strings everywhere. I cut the strings that had become interwoven so that I could move this mess to the curb in manageable hunks. Not even one set of blinds were spared from my crazy knife wielding exercise. I finished by piling the rest of our stinking, sopping wet trash on top - I had collected random bits in our wheelbarrow before it rained heavily this week.
Nothing stopped this guy! He examined each of the sets of blinds and found three that were in reasonably good shape. As I watched, I said out loud, "Really, dude? They're all broken and worthless!" Then he dug through the box of soaking wet, old electronics I'd dumped on top - stirring the box with a nearby stick. He didn't find anything he was interested in, but he was sure to look thoroughly.
As I type, here comes a second trash capitalist. Today is the day the pickers come out to pick - just a few days before the real trash men come to collect! However, his style is very different. He has a business partner, it seems. He sent his passenger out of the truck a ways down the street and they reviewed the piles on each side of the street and met back up mid-street, in front of my house. Much like how the laziest parents trick-or-treat with their kids!
It occurred to me that as gritty as I think I am - this guy had me beat by a long shot. He was out there digging through refuse to fund his small business. Saving reusable consumer goods from the garbage dump and reselling them to less picky buyers at some sort of secondary market outlet. Perhaps he's a professional garage sale-r? Perhaps he fixes up the trash and goes to trades day events. Who knows, but after I finished my critical thoughts and opinions, I was struck that entrepreneurs really do come in all shapes, sizes and styles... Do you think he's incorporated?
All jokes aside, this reminded me of a bit of motivational advise my sister passed on to me years ago. And it happens to be exactly how we both got started in our small-business ventures. If you're broke, but you are an entrepreneur at heart, there is money somewhere in your house. We started with our college textbooks. I don't even recall how much money I made on Half.com, but it couldn't have been too much more than $500 because many of the books I listed were outdated by the time I got started selling. I sold these books, however, because there were community college courses using these outdated books to keep the overall price of their courses low. The content was still perfectly viable.
At any rate, I knew Half.com wasn't where I wanted to stay but it sure got me started and watered the seed! It taught me the true meaning of the old adage: someone else's trash can be someone else's treasure. It taught me to look for any and all avenues in which I could sell. This same seed, I feel, is still being watered and developed. I want many streams of income and I'm excited to develop the streams of income I've found so far, but am anxious to find more.
My observation today also reminded of my absolutely favorite TED talk...the one that really got me excited about being an entrepreneur early on, Cameron Herold's 'Let's raise kids to be entrepreneurs.' He tells his story about feeding his entrepreneurial monster by selling none other than the dreaded... "wire hangers!" back to dry cleaners... among a number of other incredibly insightful and opportunistic ventures. Cameron Herold is one of my favorite creative thinkers and bootstrappers. Enjoy:
I hope this got just one other person's cogs turning! Remember, grit don't quit.
