HowBusinessesFail

What I find is that there actually are not that many poor business ideas. Businesses fail through poor business practices that are nearly universal. Outside of freak incidents – such as medical events, or something like the period during Covid 19 for a couple of years, business failures often have common factors. 1. Overspending on the unnecessaries. Attorneys and doctors are particularly notorious about overspending on expensive cars, nice offices, etc, particularly early in their careers. I have seen multiple incidents where cash flow was good, but too many bills on the frivolities. 2. Underspending on the essentials. Penny pinching as a business owner is often necessary, but you have to do it in the right way. 3. Poor financial management. When a check comes in, it should automatically be deposited, logged, and the money assigned to a purpose. What I find for failed businesses is that when money is flowing fast and easy, it can cover a ton of bad practices that may not become evident until times get tight. Good, automated financial processes are essential. Good businesses have a fighting chance in hard times with good practices. 4. Short-term thinking. Going cheap on something in the near term could be more costly in the long run. While there is a necessary balance here, being cheap as policy is part of the recipe for failure. I think I see this particularly for technology. 5. Improper debt load. Getting too little debt to grow properly can be as big a mistake as taking on too much debt to cover nonessentials. While leverage may be necessary, some businesses are married to the idea of leverage for every purchase.

@charlie_grafton @MikeCalcara I'm referring to motor/trans, not all the other stuff that tends to wear and needs replacing.

@BizFailures @MikeCalcara As a dude that owns Land Cruisers, you mind telling me which toyota motors are doing 300k on "just oil changes"?

Client called me looking for a BMW X7 M60. For context, the X7 M60 is essentially a full-size family SUV with a twin-turbo V8 that'll do zero to sixty in 4.1 seconds. It's also pushing $130,000 fully loaded. He was convincing. Had already picked the color and trim. I asked him one question and instantly knew what was going on. Do you have kids? Yes, three. Ages 4, 7, and 9. Walk me through a typical week. School pickups. Soccer practice. Costco run. Saturday date night with his wife. The X7 M60 would've been fine for all of that. But when in that week is he actually using the M60? He's not launching off a highway on-ramp with three kids in the back. He's pulling into a school parking lot at 3pm behind a line of minivans. He was paying a $40,000 premium for a version of a car that his actual life would never let him enjoy. On some level, he already knew that. The M60 was about how he wanted to feel. What he wanted people to think when they saw him pull up. And that's completely human. I'm not judging it. But I am going to tell you the truth about it. Car buying decisions are made emotionally first and justified logically second. You fall in love with the car, then you build the case for why it makes sense. He ended up in a standard X7 xDrive40i. Still a stunning car. Still makes a statement. Saved himself $40,000. He drives it every day and loves it.

@jennyrozelle Nope. Not when there are judgment creditors around.

Just for the record... Wills do not avoid probate.

I don't know that anyone really is anymore, honestly. We hit an interesting peak in the early 2000s with a combination of reliability and affordability with a lot of manufacturers perfecting some technologies and it seemed almost every brand had at least one good platform that gave 200k-300k miles with just oil changes and basic wear parts, and now we're beyond that and there is a genuine concern with too many electronics and such, I think.

@charlie_grafton @BizFailures agreed on this for sure. toyota is not what it used to be

@charlie_grafton @MikeCalcara Yeah, I've heard a bit of Toyota's post-covid issues. Is that BMW motor good now for 300k on just regular oil changes?

@BizFailures @MikeCalcara Might want to check your calendar there chief. The new corporate TTV6 that Toyota/Lexus has put in all their big trucks has had a pretty rough couple of years. Recalls and full replacements. The B58 I6 that BMW has has been pretty bulletproof.

@charlie_grafton @MikeCalcara General reliability, though that may be changing. BMW's have typically been done at 100k miles. Lexus/Toyota barely broken in.

@BizFailures @MikeCalcara What does Lexus have that competes with the X7, realistically. The GX and LX are BOF boats, and neither are realistically 3 row vehicles. Great trucks, but a different segment besides price. The TX is cheeeeeap and barely feels more premium than a highlander.

@BHRondeau_ @LeeHepner Blocked for your dishonesty and misrepresentation.

@BizFailures @LeeHepner Now you’re lying. Because we were talking about taxpayers paying for things with taxes.

PACER's new authentication app requirement is the latest barrier to public court access. I'm now 74th in line to talk to a PACER customer service rep because I can't log in to manage my authenticator app without an authenticator app to log in with. Make PACER free. Damnit.

Not a new one. I'm a poor. But I know enough regarding long-term maintenance issues and I know that time is of value. Why would a wealthy person want to have to take time to even get someone else to deal with a maintenance headache at 50k miles - and possibly a new vehicle every 2-3 years? I just don't get that mindset. I also don't have the money to get it.

@BizFailures You have never driven a BMW then have you?

@BHRondeau_ @LeeHepner Nope, you misread my original intent. Didn't change what I meant at all.

@BizFailures @LeeHepner Ah. Moving the goalposts now. Remember, lift with your legs, not your back.

@BHRondeau_ @LeeHepner I'm talking about the stuff you get at the store or the other non-government services you pay for.

@BizFailures @LeeHepner “ We do it for everything else.” We most certainly do not. My taxes get paid, and I have NO say in how they’re allocated, most of the to things that don’t benefit me at all.

@BHRondeau_ @LeeHepner Honestly, we should probably see more of this. Directing taxpayer funds to those things they actually use. Not asinine at all. We do it for everything else. It would also limit excessive and unnecessary usage of specific services.

@BizFailures @LeeHepner Using your logic, or lack thereof, a person’s taxes should only go to things that directly benefit that taxpayer only. Do you realize how utterly asinine that sounds?

@BHRondeau_ @LeeHepner That's no reason to put something else onto the taxpayer. Fee for service should be more widespread.

@BizFailures @LeeHepner So? Our taxes go for other things that aren’t actually necessary. Sit down.

@BHRondeau_ @LeeHepner "Free" is mis-defined here. It just passes the cost onto the taxpayer.

@BizFailures @LeeHepner They’re all public documents. Access to public documents should be free.

@IRS_MEDIC @LeeHepner What is your regular spend on PACER per month?

@BizFailures @LeeHepner Ah yes. The debt collector says the fees are negligible and affordable. Thanks for the tip!

@IRS_MEDIC @LeeHepner The paywall is negligible and affordable.

When the powerful can hide the law behind a paywall, and the courts insist upon it, we no longer have a republic. PACER is an abomination, its premise and its execution. 2FA is abomination, its (now obsolete) premise and its execution. So really top government work designed to restrict access in a complete insurgency against the US Constitution.

@LeeHepner Also, fastest way around the matter is to just create a new account. Personal experience.

@westonlegal I do commercial collections. Debt validation letters to me actually speeds up the suit process, and makes you more likely to get sued.

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@JonathanShoff Not just that, but make it an automatic process with every dollar, that way you don't have to think about it.

Here's something that catches new business owners off guard every single time. When you own a business, the profit from that business gets taxed on your personal tax return at the end of the year. Unlike a W-2 job where taxes are withheld from every paycheck, business profit has zero tax withholdings happening automatically. None. So what happens is someone has a good first year and makes $100K in profit. Then April rolls around and they owe $25K to $30K in taxes. They didn't save anything throughout the year and the money's already spent. Now they're scrambling to figure out how to pay this massive tax bill. This is why I tell every business owner to set aside 25-30% of their profit specifically for taxes. Put it in a separate savings account if you have to. And pay quarterly estimated taxes so you're not hit with a huge bill and penalties at year-end. The IRS expects you to pay as you go, not all at once in April. Trust me, your future self will thank you for planning ahead on this. It's not fun to save that money, but it's a lot less fun to owe five figures when you're not prepared for it.

Nope. Too many people don't realize that there is a difference between running a business and doing the job. The principles of running a business are universal, basic, and fundamental. Bookkeeping is one of them. If you're not doing the bookkeeping, you're not running the business properly. Period. If you don't want to run the business, go be an employee.

Bookkeeping is underrated. Many SMB owners still see it as a waste of time and money. Only a few recognize it for what it truly is: an investment. And those few? They often grow faster than the rest. Coincidence?