I learnt all of my small business tax and training off of my dad, Noel, and his partner, Bill. In particular, I used to answer to Bill. He was a tremendous boss who really understood small business and tax, and all of the processes and procedures involved with both.
After about six or seven years of working with Bill and Noel, I came across a client in fibreglass. They had an opening for someone to come in and help out with financial management. I went to Bill and mentioned that I wanted to get an equity stake in their fibreglass business.
Bill responded negatively and said I was making a huge mistake. “They’re dills Pat” were his exact words.
But I did it anyway. I sold my house in Glen Waverley so that I could join the fibreglass company.
Three months later, I LOST ALL OF MY LIFE SAVINGS. I had no money left in the bank.
And guess what? Just to add to the burn, the house that I sold in order to fund the fibreglass company became close to the number 1 capital growth property in Melbourne.
The truth: it was all my fault and I had to take full responsibility because it was small business.
There’s a couple of lessons to learn from this.
You must understand the business operations
What did I do? I joined a fibreglass business although I had no idea what fibreglass was all about.
Everyone entering into small business should fully understand the operations of that business.
At Paris, we get plenty of clients who want to open something like a café or a gardening business, but often they have no idea how to make a coffee or plant a tree.
This is a crucial mistake. We advise these people to spend at least 3 months working in the chosen industry to see if they are cut out for the hours, working conditions and indeed the operations of that industry.
Successful people starting out in business know their operations because the business is within their chosen area of expertise. They “stick to their knitting”, which is vital.
Don’t bet the farm
If you’re going to go into small business, never put your life savings on the line.
You are risking losing it all. I was 30 when I lost my life savings and so I’ve had time to recover. Don’t make the same mistake I did. Don’t bet the Farm.