Here let me read it to you. Best to listen straight off Spotify though, the browser version is buggy.

---

Go where nobody is the boss of you

So many people with a stable corporate job fantasise about sticking to the man and setting up their own business. Where nobody is the boss of them, and they can chart their own fabulous destiny.

Obviously I’ve written a lot of stories encouraging people to do this, and I can’t recommend it too highly.

But I don’t want you to think it’s easy. Or that everyone can do it. Or should.

Last week we caught up with one of our newer business partners, who has just moved from a prestigious executive job to a hands-on, working class, tiny-team gig. It’s a very different field to our normal business. It won’t stay tiny-team for long, but it’s a big recalibration for him to be the one who must do everything.

If you come from that sort of background, there are none of the armies of people you once had to research that new plan, write that report, check the relevant wage awards, go to client meetings, or even clean the bathroom. In this case, it’s him and a handful of others, and I’m not sure on their views on helping him clean the bathroom.

Cash is 90% of your problems

It’s quite the jolt, and 90% of the stress is about cash. Unless cash flow was your job, chances are you just think cash appears by magic, in the way no fish ever thinks “wow, look at all this water around me”. It just is.

Leave the big company, and now you’re a fish flapping around on the beach, wondering why everything suddenly turned so difficult.

Pay day seems to roll around every 36 hours. Customers email late to postpone projects you were sweating on.

Or if they do give you the work, they “didn’t get your invoice” when you chase them 30 days later. Their wages get paid like clockwork every fortnight. So they make no connection at all between them forgetting to process your invoice, and you not being able to afford your kid’s school excursion.

If you’re serious about starting a business, stop watching Gary V clips and study a copy of Cash Flow For Dummies. Doesn’t matter if your idea is a Next-Level Game Changer, if you don’t understand cash flow, you’ll be run over by a bus in year one.

Lots of small business people monitor their entire financial health by just looking at today’s bank balance. I can already hear the squeal of bus brakes on full lock. You don’t have to be a financial genius to do this, it’s just adding and subtracting. I’m an ex-creative director who gets microsleeps when you show me a spreadsheet, but I worked it out. Because it’s not that hard, and the alternative is a lifetime of sleepless nights and other people having you over a barrel.

It gives you respect for how hard it is to get money in and keep it there, and that infuses everything you do.

Hair-raising risks employees don’t know about

Outsiders think being a director of your own place is prestigious. It is good in so many ways, but also a world of hair-raising risks salaried people don’t know exist.

Every day you are asked to do things that seem innocuous but may come back to bite you on the arse. Documents are thrust upon you when you’re busy fighting fires. You just sign them so you can keep the flames at bay.

In another meeting last week, we were told of someone who had signed a director’s guarantee on a credit application for a supplier. Later on he left the company, sold his shares and resigned as a director. Three years after that, the company defaulted, and guess who got pursued for the debt. He explained the situation, assuming the supplier would say “oh, sorry for the misunderstanding.” No, they still came after him hard with a pack of lawyers. He eventually fought them off, but it was expensive.

Avoid signing those bastards wherever possible. Fill in the credit application and leave that guarantee bit blank. If they pull you up on it, push back. Tell them it’s your policy not to sign them. Do they want your revenue or not? Or find a way to pay it COD. Otherwise you’re building a minefield you’ll have to tiptoe through for the rest of your days.

On the flip side, if you’re the one thinking about granting credit: avoid it wherever possible. You’re not running a 1950s general store. If people choose to not pay, you have no power over them at all. We used to grant credit to people we knew, and plenty of them would spin out payment for six months.

In a way, the small ones are worse than the big ones. You end up with this long list of debts for puny amounts like $28. You have no idea how it came to be there. It will cost you $300 in time to generate the invoice and collect the payment. You will have meetings over that $28 which will piss you off and distract you from the business. Get the money up front.

And if you want more on how being a company director can fuck up your personal finance life, read my own mortgage horror tale The home loan nightmare for business owners: traps you should know.

How your bank can help you

A endearingly innocent idea you hear a lot from employed people is how to get money to start a business. You just come up with a great idea, then you go to the bank and borrow the money. Even though you don’t own a house.

Ahahaaaaaa no that is not happening.

The bank is not loaning you a penny unless you borrow it against your house. We got started using mortgage redraws. Fifteen years later we’re large, national, with a very strong balance sheet, and the answer from the bank would still be: no loan for you.

Bank ads love to feature plucky small business people, up early baking hot-cross buns, pulling coffees, installing solar systems, shaking hands over a desk with a kindly “relationship manager” at their local bank branch.

Here’s how it works in the real world.

Another of our business partners is re-financing his home mortgage. They asked for P&L’s and balance sheets for his business. We’d had a very profitable year, enough profit to buy half a million dollars worth of new income-earning assets to grow the business. Obviously we used the handy COVID-era instant asset write-off to depreciate them 100% on the spot. So on paper there’s a large, artificial depreciation expense.

Two of the major banks declined his application, because “the business wasn’t profitable”. Absolute face-palm work. Banks will demand all your business figures, then put them in the hands of people less able to read them than your dog.

Don’t start a business thinking you can count on anything from your bank other than transaction accounts.

Don’t have your good idea killed by cash issues

Anyway I don’t want to make the entrepreneur life sound too terrifying. It just saddens me to see people go out there with a good idea, then fail because nobody warned them of some obvious dangers.

Our new partner was already sweating the cash flows like a hardened, realistic pro, and that’s one of the reasons we backed him. Despite it being a whole new world of DIY and street-fighting, he’s loving it.

Welcome to the jungle baby. Enjoy the fun and games.

---

Got a comment?

I’ve stopped moderating the blog comments because I get like 50 Russian bot comments a day. But why not drop your comment over on this story on LinkedIn? Keen to hear from you.

Also, if this story was useful or entertaining for you, why not help me out by sharing it? It’s a ton of work getting these stories out, and more readers really helps me justify the insane effort each week. Bless you.

Why not buy this nice book?

Want a book on how to break free of a job that sucks and set up your own business that you don’t even have to work in? We did that, and here’s the story: Undisruptable: Timeless Business Truths For Thriving In A World Of Nonstop Change.

Zoë Foster Blake said: “Ian is a cheeky, funny, disruptive (and proven: important) business rascal and thank goodness for that.”

Every week since it came out 18 months ago, it’s the #1 Review-Rated biz book on all of Booktopia. On paper, electronic or audio book with me reading it. Get it here:

Also I write a story each Tuesday, drop your email here to get it in your inbox.

For those of you in geo-blocked countries, here’s your non-Spotify audio: