…and the most intense.
If you really want to get acquainted with your fellow man, if you want to understand people and society, start a business. I’ve run a business since January of 1978. Originally it was in musical instruments. First repair only, but that quickly led to retail and installment sales. It’s a walk-in store and shop, plus we do on-location sales, sound system installation and setup, and on top of all that I was part of a performing group (sound engineer) that also traveled. All that’s still going on, but I’m now doing the design, manufacturing and internet sales thing with the gun accessories.
Please; this is not about me, though it may sound like it. It’s really about you. And people. It’s about the world.
You cannot really understand your fellow human beings until you’ve sweated, worried, obsessed, invested, committed, risked everything, issued credit, and experienced the range of reactions, to that effort, from your fellow citizens. You end up knowing the bank managers (they come and go) on a first name basis, the county clerk on a first name basis, several lawyers, teachers, fellow business owners. You end up in small claims court, as a repo man, in debt yourself. You end up in district court and in federal court trying to defend the property you sweated, cried, and devoted your life to. You develop a relationship with the local collection agency, the local churches, and the local schools. You deal, haggle, plead with, and give charity to, many people per day, every day. In our case it was six days a week, plus weekends in the taverns, conference halls, churches, farms, businesses, and convention centers playing music. One gig was in the garage/shop of a trucking company, for a company party. Another was for a wedding of two friends. Later, we played for their “divorce party”. We played for a lot of weddings.
You deal with many thousands of people on a very personal level. You learn of their troubles, their struggles, their marriages, their kids, and their extended families– their successes, their failures, their medical problems, their births, their schooling, their graduations (and do come, please) their weddings, their new children, and their deaths. All of those things become part of your business. They buy things from you, they utilize your services, and many of them owe you money. They are your life. One family could no longer pay us because their mother was in jail. Another customer could not get into the Air Force because he’d rented a saxophone from us and immediately pawned it for cash, eventually losing the pawn, and had never paid us. He eventually got in on a promise to pay, but I must have spoken to four or five base commanders on several continents, before we ever saw one payment. Another family invited us to their son’s graduation party, being as we’d been so much a part of his music education.
You owe a lot of other people money. You get to know your account rep at General Motors finance, at TransAmerica, and at Textron Financial. You get to know the sales reps at the manufacturers, while you must see and judge the credit reports of hundreds of your customers. Can these people be trusted with a thousand dollars worth of my sweat, blood and tears. They sure think so themselves, but that’s not the benchmark. The proof is in the pudding.
Wal Mart gets to know millions of people– their habits, their wants, their needs, their strengths, their weaknesses, their successes and their failures. They have to. It’s how they stay in business. Some people love them, some people hate them and want them eliminated, and some don’t care– all for the same things Wal Mart does.
Then there’s hiring and firing. You find out what’s being taught at the universities. And what isn’t. You make friends, and then you have to fire them. You make other friends that are permanent. You share in their successes and their failures, their sickness and their health, in good times and in bad. You learn of their families, and their extended families, and you meet their circle of friends.
You learn more about life than you can ever tell. You learn that utility rates (phone and power) are nearly double the rates paid by residents. You learn that property taxes are also nearly double the rate for a live-in home. “Home Owner’s Exemption” they call it here. You learn that property tax isn’t just paid on real estate. Those tools you built yourself? Those are property too, and subject to the same tax. You wanna spend forty grand to beautify the exterior and improve the sidewalks of your downtown business? That’s gonna raise your assessment, and increase your tax bill, you money-grubbing motherfucker.
You get to know the police, too. Very well. You end up testifying as a witness when that customer you though you knew, ended up embezzling the entire trust fund his bed-ridden mother signed over to him as executor. You end up in federal court when you refuse to hand over an instrument that you’re still making payments on, but a customer rented it (on a rent-to-own plan which is deemed legally as a “purchase”) and then filed bankruptcy, and it’s a big no-no when you try to exert your property rights without permission from the trustee (you also find out how a trustee can get a personal hatred for business owners who try to assert their rights without permission, and launch into a years-long vendetta).
Back when we were still operating, out of a one-car garage in my brother’s back yard, our competition in town (a music store that had been in business for many years, was much bigger and had a downtown location) started to lose franchises. Having no one else to sell to in the area, the factory reps came to our garage. We eventually bought a pathetically few instruments from them. A personal friend of the competition in town reacted by visiting us to yell at us for “grabbing up all the business”. Yeah; that’s us. Two kids in a garage we’d rebuilt ourselves, in a backyard. It had no inside walls– just bare insulation. Living hand-to-mouth. Virtually no assets other than our brains and our hands. We’re the “privileged class”. We’re “The Man” out to suck the life out of the righteous, with our dirty, no-good instrument repair tools (many of which we built ourselves) and little more than the trust and faith placed in us by some wholesalers’ credit departments.
People are funny that way. You’ll never be able to please all the people all the time, but you can sure as hell please a few of them some of the time. That’s the best anyone can do, and in the process you’re being as sociable as sociable gets. You’re participating in life, and interacting with the community, to a degree that few people ever experience.
Sometimes it is very, vary sweet to be alone. Only for a while.
What a wonderful, moving endorsement of small-business ownership. I never thought of how intimate it is. I have to say, however, that it has thoroughly convinced me that “neither a borrower nor a lender be” is the way to go… it sounds like most of the “bad” things (other than taxes) grow out of borrowing money or selling on credit.
Gene; In some businesses, you couldn’t be open for more than a day unless you extend some form of credit. Take automobile sales for example, or real estate. Once the price gets into the thousands, people will follow the best financing deal, or they will often go without. Even in the repair business alone, some people want an extended payment plan. Then there are those who bring something in for repair, can’t pay the bill, and you’re faced with holding onto it for years or selling it. Same sort of drama can happen there.
I hear you, but now we’re getting even deeper into societal and human behavioral issues. The best thing we ever did (and one of the most difficult) was go deep into debt and buy the downtown buildings for the two music stores we are in now. They’re both now paid off.
When financing goes wrong, there are two basic categories of reasons for it;
One is that the person receiving the goods and making the promise to pay is being unrealistic about his ability to repay. That’s where education ALWAYS fails us and our kids. They never talk about this stuff. They typically wouldn’t know what to say if they wanted to address it. That’s also why we have to look at credit reports. If someone wants your goods, and is falling all over himself to promise, promise, promise to pay you later, like you’re his best friend ever, as often as not you’re going to be his worst enemy when that first payment comes due. You look at his history with other creditors and that tells the real story. If he’s screwed other people, he’s going to screw you. A friend of mine liked to tell the story from his general store in a remote village; if he extended credit, the customer would get behind and then never come in a buy anything more. They’re embarrassed to even walk into the place. If he avoided extending credit, he’d have a regular customer. We did keep a sign on the wall; “Credit makes enemies. Lets be friends” but many sales never happen without credit of some kind.
The other reason is an unexpected event or expense for which the customer is not prepared. There are lots of those. Disease, accidents and deaths.
I’ll also point out that bad credit and bad marriages go together. Not sure which is the cause and which is the effect, or whether both result from the same cause(s), but they very often go together.
To add another issue; lawyers can be your friend, or they can set out to screw you. One guy we had hired to look at the rent-with-option-to-buy contract for a building turned out to be our adversary. He was trying to get us to push for a change in the lease, from “exclusive and irrevocable” (right to purchase at a pre-determined price) to “right of first refusal”. Now, even I can understand the literal meaning of “exclusive and irrevocable”. Turns out he wanted the building, and wanted us to get the language changed so he’d have a shot at it.
There’s also a level of “tightness” in your credit policy that can reduce your bad accounts rate to near zero, but it will reduce your profit to near zero along with it. There is a level of bad accounts losses that is optimum, and the numbers would shock the shit out of you. Some might suggest that this is tantamount to “predatory Lending” but they are ignorant to the extreme. The predators are the people who take goods and services under the promise to pay, and don’t pay for them. The victims are those who owned the goods and provided the services to begin with. Consumer credit laws are all in favor of the consumer and extremely hostile to the producer. I’ll call consumer credit law, as it exists today, another wealth redistribution scheme.
Here’s another way of looking at the relationship; Having a bad credit rating is seen generally as something bad for the consumer in question. However, what it means is that this person has ripped off several producers (one bad account does not a bad credit rating make). Worse than being an inconvenience to the consumer with bad credit, it means the person has dishonored himself by failing to live up to his promises. No one talks about this stuff.
I’ve been in business since 1990. I face some similar issues to yours but I face a lot of different ones too. (My biggest monetary losses have been from shoplifting or from something akin to smash and grab.)
Taxes and business costs vary from state to state. California is actually quite reasonable the tax area.
Lyle:
I’ve been on the other end of things for all my life as an employee, rather than employer. To be quite honest, I’ve never had the ambition, drive, or maybe just plain guts to attempt to create wealth on my own. My first job out of school as a design engineer was going to work for a relatively small, family-owned business run by a man who started it, literally, out of his own garage. I had the privilege of joining the company after it was well under way, with a tiny engineering “department” (me and my boss). It was still sort of hand-to-mouth at that point, and one time the owner had to ask us to delay depositing our paychecks so that a customer’s payment could clear the bank…one or two people couldn’t wait, but the rest of us agreed and it was not a real problem to keep the company afloat.
Shortly after that he sold a 49% interest to a BigCo, which ended the short-term financing problems. Their management pretty much left the LittleCo alone, but things never quite felt the same. I left the company after the owner retired, having groomed Idiot Son to take over.
My respect and admiration for people who start and run productive enterprises is unbounded. Despite that last, poor decision on the part of the owner, I STILL have enormous respect for him, and for the willingness to put everything (second and third mortgages on their house, just to make the payroll) on the line to make it work.
I’m currently working for MegaCorp as a “senior” design engineer (that “senior” means the hair is turning gray), and my drive as an employee is two-fold:
– Make sure that the company makes a profit by my employment (do more to produce a profit than I consume in wages/benefits)
– Design and build equipment of which I can be proud, and that will serve the customer well while providing good value
If I can do these things, I can feel that I’m a productive part of the world, rather than one of the parasites. But I always know that the start, even of this MegaCorp, was one person with a vision for providing a product or service that was wanted by other productive people.
“Illegitimi non carborundum” (don’t let the bastards grind you down) when you’re faced with the challenges of parasites, whether of the government or of the non-paying customer type. Your customers will always give you what Heinlein referred to as the most sincere type of flattery, the one that says, “Pay to the Order Of…”
Blackwing1