The resilience of American entrepreneurs is not to be underestimated. In just this past week, I've heard from two business owners whose businesses were not able to withstand the recession. Both had partners who saw the world differently. Both realized they could not survive and decided to pull the ripcord, separating from both their businesses and their partners. In both cases, just in time, before putting a lot of personal assets at further risk.
Not surprisingly, this week's news is that both have landed on their feet and started new ventures from scratch. Owing partially to their own experience and partially to ideas, support and relationships they've had in place through Chief Executive Boards International, both have brought new ventures to revenue generation and cash flow in record time -- less than a year.
One of these cases provides a number of lessons others wish they'd learned.
First, that you need to protect your personal assets from getting dragged into the demise of a business. Unfortunately, I have multiple friends and acquaintances who violated that rule and let assets from qualified plans, such as 401(k)s, otherwise bulletproof even from judgments and bankruptcy, get drained down in efforts to keep banks happy.
Second, that it's hard to start a business with no money. In one of these cases, the new business started with a $300,000 line of credit to cover working capital needs on the strength of the founders' balance sheets. Not without risk, of course, but a lot different than liquidating personal assets and putting $300,000 cash at risk.
Third, that bad times create opportunity if you have some dry powder. That same business found Class A space downtown in an NFL city at bargain rates. It is subleasing from a larger company at 1/2 their primary lease rate, including all furnishings right down to the fax machine and water cooler! Even better, at the end of the remaining lease period they own all those furnishings. Wow, talk about a fire sale!
Despite being casualties of the 2008-2009 recession, these business owners have risen from the ashes to fight another day -- to put yet another business on the map, and do so quickly. Statistics are on their side. Many highly successful businesses are founded by people who failed at least once in earlier efforts.
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Terry WeaverCEO
Chief Executive Boards Internationalhttp://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com
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