Recession thoughts

Filed in Thoughts on August 05, 2009



I caught up with a business friend of mine tonight and we started sharing what we have learned over the past three years about business and money.  I thought I would pass some of it on to you as well.

In 1999, I started my business selling nutritional supplements online and was able to quit my software job and focus on just my business in 2001.  During those days, making money online was very easy, even during the recession back in 2001-2003.

As things went well, I began to get bolder and try more aggressive ideas.  Enough of them went well to make me successful.  Probably, this period also made me overconfident.

About three years ago, things started changing.  All of a sudden, the same things were no longer as successful and I had to work harder.  We had to make more dramatic investments and take more risks.  In general, things were not as easy.

At the same time, I began buying into the deceptive euphoria of debt leverage.  We built a warehouse and bought other businesses with credit.  And for the first time in my life, I began to understand the extra pressure of having debt.

To further compound things, about 18 months ago, all the rules of business we were used to began to change.  While banks had begged to loan us money a few years ago, they began to put rules on us that limited the amount of debt we could hold.  When that happens in business, it essentially makes money disappear within a business.

In my discussions with other business owners, I can see that many of them took a similar path.  They saw great success, started to get overconfident, took risks, accumulated debt, and then went through tough times.  Unfortunately, the debt eventually destroyed many of them.  I know numerous former business owners that went from millionaires to bankrupt.

There is a lot of talk about the recession being over.  I am not ready to call it over but I certainly am hopeful.  And if it is, I am very thankful that my business survived and even thrived in many ways during an incredibly difficult time.  God has been good to us.  I certainly know many smarter business people than me that did not make it.

The man I was talking to tonight is a survivor but just barely.  He told me that his new business rule was to never take on more debt.  He has learned his lesson.  I agree with him.



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