The January Bloodbath

Plus, the Updated ‘Bulls%$t’ book.

Every January, lots of small businesses close (plus a lot of people file for divorce). This year has been particularly brutal in Covington and Cincinnati for small businesses, and the carnage is getting a lot of press coverage.

When the owners of the failed business are asked why they failed, their answers seem disingenuous.

“It was the economy. We had problems with suppliers. We did not get the support of the community.” Or my favorite: “Factors we couldn’t control.”

As someone who started and ran a business that failed (a newspaper in Frankfort, Kentucky) and now runs one that hasn’t failed yet (Lost Art Press), I declare “shenanigans” on the above explanations.

To put it in woodworking terms, this is like saying that the project on your bench is going badly because trees don’t want to become furniture¹. And that trees resist your every effort to transform them into objects. Or that your project failed because you couldn’t find any wood (uh, it’s literally on the roadside). Or that your door doesn’t fit the face frame because your family doesn’t like how much time you spend in the shop.

Below are the reasons small businesses fail (in my view). It is also the roadmap we follow to avoid becoming January roadkill.

It’s Not the Economy, It’s You

Sorry, but no. It’s usually not the economy². This country is always awash in ridiculous amounts of money, even in the worst times (we started Lost Art Press in 2007, so we know). In fact, I think what bonds most Americans is the fact that we all buy and sell stuff. It is stupid easy to start a business in the States (I know because I’ve studied the process in other countries). Right now you can say the following sentence aloud: “I am now a professional woodworker,” and poof, you are one. There is no license, no test, no magic papers from the government required.

In fact, our government views every American as a “sole proprietor” of the business that is their name “Jane Doe.” And your EIN (employer identification number) is your social security number.

There is money everywhere. The reason most businesses fail is because you didn’t figure out the revenue-expense thing for what you make³. End of explanation.

‘Always the Same’ Isn’t Boring

So let’s talk about the “thing” you sell. Obviously, it has be desirable or “good” – for lack of a better word. And it must be worth something. I think that’s the easy part. The hard part is doing it consistently every day, for every transaction and with every customer.

One of our mantras is: “Treat everyone the same, always.” Sounds boring, but it is the core of the business. That’s why we rarely put things on sale (so everyone pays the same price). It’s why our authors all get the same contract and royalty. It’s why everyone in our company is offered health insurance. It’s why one difficult customer is treated the same as 1,000 good ones. It’s why we always make our books in the U.S.

I think inconsistency is a reason a lot of restaurants fail. (Yes, it’s a tough business with terrible margins. But also, everyone has to eat.) I know a lot of restaurateurs who can cook an incredible meal. But can they do it every time, every day, for every person?

Put into woodworking terms, it’s like we build one kind of chair. We don’t carve, do marquetry or kitchens. Just this chair. Every day.

Know Every Expense

Every day, my first hour of consciousness is spent reviewing every expense against our bank account. Every month, we categorize every charge on our credit cards. We always know exactly what we are spending and where the money is going. I can tell you our bank balance on any given day.

This is the opposite of fun. But it colors every decision we make.

To put it in woodworking terms, we do a lot of sharpening.

Pigs Get Fat, Hogs Get Slaughtered

We love slow growth.⁴ When we grow (adding a new employee, buying a building) it is because we have no other good choice. When we first hired employees and then bought the Anthe building, we were long past the point where we should have hired employees or bought a warehouse. Both of those big decisions actually *reduced* our expenses (to freelancers or to third-party fulfillment centers).

This is not a fun way to run a business because it means you are working a little too hard. For me, the hard work is worth it. I am a human donkey.

In woodworking terms, this is like running a cabinet shop with a 12" portable planer.

Pay Fast, Pay Well, Pay Up

You want suppliers, vendors and authors to be happy to hear your voice. Immediate payment is way more effective than anything else.

The Lie of ‘Community Support’

The “community” doesn’t owe you anything. If people aren’t buying your stuff, it’s because you have messed up somewhere else (usually with consistency).

Said & Done

I think this gets back to consistency (almost everything does). Saying “yes” or “no” has real consequences. Say what you mean. Then work like hell to deliver.

I’m sure that a business consultant could list 100 other things that cause businesses to fail, but the above list is what I ponder every day. (When I’m not thinking about stick chairs, possums or Lucy’s butt.)

Other Business: Speaking of Chairs

Kara and Megan have edited my next book, “Build a Chair from Bulls%$t,” and you can click the link below to download the sleeker, updated version. This version also incorporates many changes suggested by y’all – thank you for your thoughts.