My Financial Implosion: Bad Business
‘œSuccess to me is not about money or status or fame, it’s about finding a livelihood that brings me joy and self-sufficiency and a sense of contributing to the world.’ ‘“ Anita Roddick
When I graduated with my degree in Computer Information Systems in January of 1989, I thought I would have a relatively easy time finding a job. Most of the guys I knew from my major had been given multiple and highly-competitive job offers; I naively expected the same. Despite my high grade point average, and relevant on-the-job experience before and during college, I received only one offer. It was for a data entry position that paid $6/hr and had no benefits. I turned it down since I could make $10/hr working as a self-employed housekeeper.
I decided to return to my hometown, hoping my job prospects would be better, but was again disappointed. Eventually, I received an offer, but the wages weren’t competitive, I wasn’t sure I’d like the corporate culture, and I knew I would hate the commute. Although I had large doubts about the job, I accepted because I needed the work.
I soon regretted the decision. The job made me so miserable that I used up my sick leave and vacation days as quickly as I earned them. I hated the culture, the work and the drive. One day, after being screamed at for no good reason by a manager I barely knew, I decided to look for another job.
I found a new position and gladly gave notice. The new job was a dream. The work was interesting, the pay was amazing, and there was no commute. Unfortunately, it only lasted six weeks. The company was a start-up, and they had failed to secure an important round of funding and had to lay everyone off.
My man became angry because I was out of work. He pressured me to take the first job offer that came my way, so I ended up working for another large corporation. Although my boss was a decent guy, and parts of the job were interesting, the working conditions were unbearable. The company operated under extremely tight security; those without the proper clearances and credentials had to be escorted everywhere, even to the restroom. My days became sheer hell when the woman who was left in charge of escorting me made sport out of refusing to take me to the toilet.
I never complained. I was only 24 years old and very stupid; it didn’t occur to me that I could complain to my boss. I figured that since I’d been there for a few weeks, and my tormentor had been with the company for more than a decade, I wouldn’t be believed. I became so depressed I would drive home like a maniac, praying I’d get into an accident so I wouldn’t have to go back to work the next day.
After trying and failing three times to find a decent corporate position, I figured that I wasn’t cut out for a regular 9 to 5 job. When my maternal grandfather passed away, I received some money from his estate, so I decided to start my own business. It was early 1990, and I decided to start a BBS system because I thought it would be fun.
BBS systems, for the unacquainted, were multi-line computer systems that pre-dated the popularization of the Internet. My customers would connect their personal computers to my system to chat and play multi-player, text-based games. It became fairly popular and grew to a total of 36 phone lines and about 2,000 customers.
In some respects, it was a dream job. I got paid to do what I would have done for free. I chatted with users, played online games, and helped other players advance. I set up social events including pizza parties and camping trips to foster a sense of community.
Although my business was hugely satisfying on an emotional level, it had one terrible drawback: it was not profitable. The hardware and software used to run the system was enormously expensive, and the costs of maintaining the many telephone lines, the Internet connection and the office space were astronomical. My customers thought I was becoming rich; in reality, I was nearly starving.
During the first five years I ran my business, I went through a series of part-time jobs. I worked as an instructor for a computer learning lab for a few semesters. I took on computer consulting work. Later, I became the part-time computer guru for a woman’s health clinic, where I endured the world’s most abusive boss. I took on caring for my disabled boyfriend. None of these jobs were particularly lucrative, meaningful or enjoyable, but they kept me semi-afloat so I could continue doing what I loved.
After three years with the women’s health clinic, I finally quit. I’d reached the limit of the abuse I could endure from my boss, so I decided to focus all of my efforts on my business. I thought that if I just gave it 100% of my attention, it would turn the corner and become profitable.
I was wrong. The telephone company soon doubled my rates and began offering unlimited dial-up Internet accounts for a few dollars a month. My customer base declined, and my adjusted gross income for that year was only $8,000. I had to give up on my dream, so I landed a full-time job. I kept the business running for a while, but by the summer of 1997 I was in over my head and filed bankruptcy.
Lessons learned:
1. Don’t let desperation drive your career. In nearly every case, I accepted work because I was desperate for a job. Rather than taking time to evaluate whether the culture, work, and environment would be a good match for my personality and talents, I accepted without question because I didn’t think another position would become available.
2. Don’t let abusive bosses or co-workers mistreat you or steal your self-esteem. Learn your rights as a worker. Although I’d learned a great deal about my chosen profession in school, I was taught nothing about my rights as an employee. As I found myself in increasingly bad jobs, it nibbled away at my self-esteem, making it harder to sell myself and land a better position.
3. Don’t start a business without a solid business plan, and don’t fall into the trap of believing you can finance your way into profitability. The start-up and operating costs for my business were enormous, and I didn’t do a good job of calculating my return on investment. I thought that my love of the job would be enough to create a virtual world that would become profitable. It was a bad decision.
4. Secure financing before you start, and stay within budget. During the seven years I ran my business, it seemed that profitability was just around the corner. I had no budget, and when I ran out of my own money, I started putting business expenses on a credit card, hoping that it would eventually turn the business profitable.
5. Know when to quit. As I became more and more indebted, I became more and more creative in ways to cut my living expenses. I disconnected my cable television, I kept the lights and heat in my home turned off, and I got my groceries from the local food pantry. I did everything I could do to save money, but I failed to address the real problem. My business wasn’t profitable.
6. Keep emotions out of business decisions. Instead of focusing on the dollars and cents of my business, I focused on what would make my customers happy. Even though the business was obviously not viable, I didn’t shut it down for fear that it would make my clients, many with whom I’d become friends, angry.
Next in series: Bad Decisions
Photo credit: stock.xchng
Wow, thanks for the insight Alex. This is really important for anyone who’s considering going into business for themselves. With the current economy, I assume a lot of people are considering this.