Why Small Businesses Fail and How to Avoid the Pitfalls

By: Lynn Green

It is a well known fact that most small businesses fail within the first year and many fail within the first 6 months of opening. I just read a book called The E Myth Revisted by Michael E. Gerber. I would recommend it to every new business. In fact, it should be required reading for every business. It outlines the reasons most small businesses fail and gives a plan which, if followed, will significantly decrease the probability of the businesses faltering.

The crux of Michael Gerber's argument is that small businesses literally need to think through every operation and ultimately set themselves up the way franchises do. He used McDonalds as his primary example. If a person does not really have a business mind, yet purchases a McDonalds franchise, the new owner should still succeed because McDonalds trains all new owners and they have nothing to plan. It's a "turn key" business so all they need to do is follow the business manual and the business will literally run itself.

What Michael Gerber said is that every small business needs to sit down and write out such an in depth plan, that if the originator of the business were to die today or tomorrow, someone could pick up the Operations Manual, read it, follow it to the letter, and succeed.

I'll end with this. I enjoy eating healthy meals and being in the company of people who are health conscious. So imagine my happiness when, approximately a year ago, a black-owned restaurant opened up in a small neighboring town called Mt. Rainier. That particular strip of Mt. Rainier has several black owned businesses and I often go down there simply to support them.The small, black owned restaurant took off quickly. The black and white community supported them and the house was always packed. But there were some issues:

a. It could easily take an hour and a half or more from the time you ordered to the time you got your meal. Why was this? It was partly because they made everything from scratch, fresh. When you got your meal, it was beyond delicious. However, they should have found a way to have the ingredients at least chopped up and ready to cut down on wait time. I'm positive there are things they could have done.

b. They were a "cash only" business. No credit cards or debit cards but people worked around that.

c. They went from being open 5 days per week to only opening on Fridays and Sundays. That was terribly disappointing and frustrating. They were over extended and apparently unwilling to hire and train new cooks. They were doing on the side catering which took time. And then they offered a few classes, some to teach people how to cook healthy meals and another health class. But the restaurant still was only open 2 days per week.

d. They started to experiment with and change recipes, yet not change the name of the meal being ordered. So, if I ordered lentil soup today, it would taste a particular way, but if I ordered it tomorrow, it would have a totally different taste. They did that often, in spite of complaints. Customers even advised them to simply add on other names, while keeping the variations. So, for example, there could be the base line lentil soup...and a person could elect to order lentil soup with "x" added to it.

e. They would take popular items off the menu for no known reason. They certainly did not adhere to the "if it ain't broke, don't fix it" rule.

f. Next, they started putting signs up on the door saying that they would only open one day a week, on Sundays and that families, etc. who wanted to eat there should call and make reservations.

It was at the point that I personally threw in the towel and gave up. Their vegetarian and vegan food was beyond delicious. The cooks were exceptionally clean. The place was spotless. The atmosphere there was heavenly. I loved it. But somebody did not know what they were doing. After several months, I was curious about them and called. Their phone was disconnected. I drove down there.

There was a huge sign on the door from town administrators saying that they had not updated their Use and Occupancy Permit and that they would need to renew before continuing to do business there (the permit costs about $135).

The place now looks like death valley. All the beautiful furniture and equipment is still there. The floors are as immaculately clean as they always have been. Yet, no one has been there in months and no one knows where they are. The rent in that place is at least $3,500 per month, maybe more. And I imagine they took out loans to buy all that expensive equipment in the kitchen. With no business coming in, they are lost.

What a sad, sad situation because they could have made it. The community loved them and supported them. Had they stayed open until 9:00 at night, they would have had customers to occupy the space. They simply did not know how to run a business.

I still hang on to their menu in hopes that a miracle will happen and that they will reemerge.I can't help but wonder how many other black businesses out there were "meant" to make it but did not because the owners simply had no clue as to how to run a business. Read The E Myth Revisited. Great book. Very inspirational. I highly recommend it, especially to small businesses that are in the process of failing.

SUPPORT A BLACK BUSINESS

Today I call on all of you who are dedicated to the empowerment of people of African descent throught the diaspora to get involved in an issue of critical economic import.

Let's cut to the heart of the matter. Your friend, fellow blogger, a humble Black businessman needs your assistance. I own Exodus Tax & Business Services. We are one of only a few tax planning and preparation companies in the country where the principle tax person is a lawyer. Most tax lawyers go to work for a big four accounting company or major law firms. They make obscene amounts of money to insure that wealthy people pay far less than their fair share in taxes. (You may remember John Grisham's seminal novel "The Firm" and the movie starring Tom Cruise; well it was about tax lawyers.) When I went to law school I never had any intention of working at some big firm working with big rich corporate clients. My goal from day one was to make the same level of expertise available to my community; a community that was sorely in need of quality, high level, professional knowledge in the area of tax, business, and finance.

Since 1997, I have endeavored to empower and uplift my community by offering an unheard of level of expertise on taxation and business services. Although it has been my great pleasure to have assisted thousands of people to a better understanding and much more favorable outcome on their tax and financial affairs, I struggle constantly to find enough clients who truly want to do better. Unfortunately many of us do not even realize that we are not getting the information and knowledge we need, and many of us just don't even seem to care.

Today, I am appealing to my community. As intellectual people, most likely gainfully employed or economically viable, you or people you know are in need today of professional tax services. Either you are delinquent in filing your taxes for whatever reason, or they were done improperly by whomever did them originally. Some of you may even need information and advice on tax planning issues as this year is closing out. The simple fact of the matter is that each of you reading this either need our services yourself or you know someone who needs our services.

You need me, and I need you. I need 20 new clients this month and next month, so that we may continue to grow. I am offering special pricing of only $200 to accomplish any tax planning or preparation for any single tax year. You will pay this much just talking to the little old lady at the local Block, Hewitt, or Liberty who has had a total of 40 hours education on taxes, most of which was spent teaching her how to navigate through their tax software. You undoubtedly have other things that are higher on your list of priorities than taking care of your tax issues. This is an opportunity for you to help someone else while helping yourself and getting a tremendous value at the same time.

Please support this Black business and be blessed with the knowledge that you really have made a difference and contributed to someone's economic empowerment as well as your own. Spread the word that a black business needs some community support. Ask everyone you know if they need some help with their taxes, help them pay the fee if they can't cover it. Everything you do to support us will be greatly appreciated.

Visit www.ExodusTax.com to learn more about our company, and to contact us.

How To Save The World

Upfront, I do not know this guy. I just found this info and blog thanks to Prometheus 6. I make no claims as to the background of the author. Having said all that, if we are planning to work on Black economic empowerment, there are some systemic issues that must be understood. Let's not pretend that it's as simple as figuring out a way for a few of us to make some money. I've resigned myself to the fact that very few people think like I do. At heart, I'm a big picture guy, and often I find that people with a more focused view of things are challenged by my thought processes. But I find it really hard to work up the motivation to struggle to make it in an economic system that I firmly believe is traveling at breakneck speed directly towards a crash of epic proportions. That's what this guy, Dave Pollard, from the How To Save The World blog, talks about in an article entitled "Will Increased Income and Wealth Disparity Lead to Generational Class War?"

"In the US, reports USA Today, all of the increased wealth since 1989 has accrued to those 55 years of age or older. Like in the UK, the big losers have been those who are now 35 to 50. This generation doesn't look poor -- they have as much stuff or more than previous generations at the same age, but their debts are astronomical. They are horrifically vulnerable to an interest rate spike (even a small one like the one that has, along with the US housing crash, created the current credit crisis). The disparity is expected to increase, and accelerate."

"There are only three things keeping it from blowing:
1. Ignorance: The majority of people think they're financially better off than they really are. They don't realize how vulnerable they are to economic downturn. Just listen to people who have just been laid off, or who realize (and this is the rich, older, boomer generation) that they can't ever afford to retire.
2. Shame: The propaganda machine, especially in the US, has convinced most of the poor that their situation is somehow their own fault.
3. Economic Overextension: The economy is wound up tighter than a drum, with all the dominoes propping up each other. It depends on sustaining high ROI on listed stocks, a continuing housing boom, perpetually artificially low interest rates, fuel costs and manufactured goods costs, and the continued and uninterrupted exploitation of labour and natural resources of struggling nations. None of these things is sustainable.

So when the economy unwinds, will the poor overcome their ignorance and shame and rise up in mutiny against the old rich elite that has hoarded 100% of the benefits of economic development for a half-century?

Do your ideas on economic empowerment include any consideration of the possibility of the overall economy not being the unbreakable force we are led to believe it is? If not, why not? If so, how have you factored in this possibility?

First Suggestion: Forex Trading

Sorry, that I have not posted here yesterday. I’ve been busy. I’m a bit busy today as well, so this will be a short intro post.

Ok. It’s time to deal with one of the concrete ways black folks can make money.

Foreign currency trading.

The Foreign Currency market (Forex for short) is the largest market in financial assets, period. Any other market: Oil, commodities, and, in particular stocks, pales before the Forex market.

The market is open on a 24 hour basis from Sunday afternoon to Friday afternoon New York time. What is traded are words: US Dollars against Euros against Yen etc. None of these different currencies are backed by anything or are physical things. Nonetheless, they are used to exercise power.

Getting into the Forex trade is easy, not that risky, and requires almost no capital these days. Moreover the leverage is astounding.

While in the stock market one may work with a margin of 50% (that is the broker loans you 50% of the purchase price of the shares you want to buy), in the Forex market you only have to put up 1% or 2% of the amount of the currency you are trading. That means that with $100.—one can control $10,000.--. Of course I would not recommend to anyone to use this kind of leverage.

The other thing that is of a great advantage is that there are no brokers or brokers fees involved. Market makers solely make their profit of the spread. That is the difference between the purchase price of a particular currency and its sale price. The spread is usually negligible.

Given the great amount of leverage involved, your capital can get lost as quickly as you can make it. This is why you should not begin with more than $100.—and at the most with $1,000.--. The most crucial thing here is money management. That is, finding the right leverage to work with. 20% should be ok for a beginner.

More later…

The Essence Of Money

"mon•ey (mŭn'ē)
n., pl. -eys or -ies.

1. A medium that can be exchanged for goods and services and is used as a measure of their values on the market, including among its forms a commodity such as gold, an officially issued coin or note, or a deposit in a checking account or other readily liquefiable account.

2. The official currency, coins, and negotiable paper notes issued by a government.
3. Assets and property considered in terms of monetary value; wealth."


A medium that can be exchanged for goods and services.

Let that sink in.

If I have money I can get you deliver to me goods and services. Cars, food, houses, maid services, plummer services. I can get someone to clean my toilet, deliver pizza, provide me with sex, whatever.

That means I can get people to do things for me and give me things. That’s power, ain’t it?

"Power : possession of control, authority, or influence over others"

If the ability to pass out money confers power, then every unit of money is an expression of a unit of the conferee’s power.

Power is a social relationship. It is a social relationship that confers control onto someone over someone else.

So let’s call money by it’s real name: Each unit of money (one Dollar, one Euro, one Yen, one Yuan) then is, logically, a unit of an Expression of Power. Less confusion. Let’s stick with this term for now.

So how do the folks who possess these units of Expression of Power obtain them? Do they dig them up somewhere?

Nope.

They are created out of nothing physical and they are not physical. They are just words. The authority to create these words here in the United States has been conferred to the Federal Reserve. To create them out of nothing. The Federal Reserve is the central bank (the “Boss” bank) of all the banks in this country. It is owned by the big banks such as Chase, and the Bank of America. Anytime these banks need some of the Power words they get them from the Boss Bank. The Fed.

Now imagine that each one of you could create unlimited amounts of units of Expression of Power. At will. Out of nothing. You could pass them out and get whatever you wish in return. That’s about as close as to the power of a god that you can get to. A wet dream, ain't it?

So what is this power based on? Well, take out a dollar bill (if you have one) and look at it. Right up there to the upper left of slave master number one, George Washington, it says “This Note Is Legal Tender for All Debts, Public and Private”. Note the term “legal”. Legal means by law. Law is a rule of compulsion. The ability to compel is power, and that legal compulsion is based upon armed force.

That means that I can obtain a car from you. You might want payment in gold, oil, or paper mulch in exchange. And I might agree, but if I decide to give you banknotes instead, and you don’t accept them, because I tendered these notes to you and because they are legal tender for all debts, public and private, I still will have extinguished my debt to you and be able to keep the car.

Thus, the value of money, of these units of Expression of Power are based upon compulsion, and the ability to compel is based on the force of law, which in turn is based on the organized force of arms. That is, military power.

Again: The value of any particular brand of money is ultimately based on military power.

So what does this all have to do with the how and where of us black folk acquiring money?

Well, stay tuned.

Move On Out

Ok. Before we get into the meat of things, let’s talk about some basic truths.

First, it is vital to understand that we are involved in a war. If you believe that the white supremacists packed up their bags, relinquished power, and got out of Dodge in the late 1960s because MLK lead a movement of Negro supplication, I got a bridge in Brooklyn to sell you.

King was assassinated when he moved from Negro supplication to the advocacy of black power, of naked force in resistance.


"These are revolutionary times. All over the globe men are revolting against old systems of exploitation and oppression and out of the wombs of a frail world new systems of justice and equality are being born. The shirtless and barefoot people of the land are rising up as never before. 'The people who sat in darkness have seen a great light.' We in the West must support these revolutions." Beyond Vietnam: A Time to Break Silence, By Rev. Martin Luther King, 4 April 1967


Wars are only about military conflict as an after thought. Read Sun Tzu. The application of violence in war is always a last resort measure. The Japanese attacked the United States in 1941 because the United States was conducting economic warfare against the Japan Empire and sooner or later would have strangled the Japanese into submission.

The same with black folk.

There is a reason we are economically behind most everybody.

Which is…

You have to understand that white people in general and the white folks who run this system do not want to see us collectively succeed economically.

Let’s repeat that: They do not want to see us as a people collectively succeed economically.

You need proof? Well, open your eyes and look around you.

Since we are engaged in an economic war which has been thrust upon us, we need to function like economic soldiers. Disciplined, with clear plans and objectives. And since we are engaged in a war with the most awesome organized economic force in the history of humankind, we have to do what all disorganized weaker forces must do: Approach this economic war like an economic guerilla.

A guerilla carries only what fits on his/her back. A guerilla is above all flexible. A guerilla starts off with no weapons and needs to manufacture none. Why? Because a guerilla forces his/her enemy to be the source of his/her supplies.

Guerilla Economics.

Another thing. Warfare is about serious business. Particularly economic warfare. You can not win if you do not have a winning team. That means, if you have a spouse, partner, lover, whatever who are not as disciplined as you are and have to be and have no inclination to become such, who are spendthrifts and financial black holes, if you want to be a survivor or even successful in this arena of economic warfare, you have to ditch them. Now.

Remember, everything we do henceforth is for our children, grand-children, and great-grand children. They are supposed to reap the benefits of our efforts.

Lastly, if you came here 'cause you think I've got all the answers, I've got another bridge to sell you. I think I have some answers. However, we're going to have to figure this entire thing out together.

Ok. Let that sink in for now.

I got some homework for you to do.

I want each one of you who is a registered member to let us know what you think money is.

Make it two sentences or less. Certainly no more. Focus.

Use the comments section.

Do it by tomorrow evening.

Let's Focus...

I'm sure all that background info on energy is very useful, but this is what we need to know:

How can we get into the energy game as an individual black person who needs to generate a pretty much immediate benefit, has less than $1,000.-- in upfront investment ($100.-- would even be better), and enable that person to make a comfortable living.

Guerrilla economics.

Rack y'alls brains on that one.

In the meantime, I'm gonna get some sleep and start on my contribution tomorrow.

See you all later on Tuesday.

Do you know what time it is?

The time is NOW.