A Scary Phenomenon Seems to be Going on in this Country

Random Ramblings
1

I was recently having a discussion with a few web marketing consultants about a very disturbing and dangerous trend that seems to be happening among many who have lost their jobs during this down turn, and have become so discouraged with the inability of landing a new job, they decided to open up a NEW business. :rolleyes

Now, most people would say that it’s probably a good idea and what else should a person do in order to put food on the table. The only problem with this is, these new “business owners” have been out of work for some time, so they have basically emptied out their savings, retirement investments and dumped what ever they had left on their new ventures. So these people have literally bet the house in hopes of this thing working out and spitting out money, while looking up a shot gun barrel pointed to their foreheads. FIRST BAD MOVE

On top of financial inhalation, these people have NEVER owned or ran a business before, they went from employee to being the captain of their own vortex in no time. Anyone who has run a successful business will tell you that being an employee and being an owner are worlds apart, and it’s true. Most of these poor bastards are working 16 hr days and about 8-10 bucks an hour. Not a good ROI after dumping every penny they have on these suicide missions.

To add insult to injury, these people have NO idea how to setup business systems, how to hire, how to fire, what the life time value of a customer is, how to separate them selves from their competitors AND HOW TO MARKET AND ADVERTISE THEIR NEW BUSINESS TO GET NEW PAYING CLIENTS. These people think “word of mouth will spread and everyone is going to be lining up to buy from them. " I think these gullible ladies and gents may have watched too much fantasy island as kids and “the plane” ain’t coming.” :banghead

If no one knows of you, never the less know what you have to offer, this goes for ANY business (think in terms of RE), your chances of making money with any venture is going to be SLIM to none, unless of course you are well known and are well trusted, but this isn’t the case here. And the insane part about all this, these ships are sinking and the captains (owners) don’t want to know, hear, learn, never the less, spend money on any sort of marketing to get the word out. :help

So what do you think is going to be the long term impact on this country, and all of us, with all these people who have been (or will be) financially wiped out? What would have been a smarter path to take?

2

Power to them for having the guts to open a small business,about 20 years ago I went to work for a very small company, we were barely making it,then things turned around, later the company was purchased for $5.7 Billion (not a typo, billion)

One of the owners worked the 16 hour days you talk about (ok a lot of us did),he just won the NBA championship as the owner of the Dallas Mavericks,I agree some people aren’t prepared to start a business,but the courage to do so is what makes this country GREAT

3

This is a great post and really an interesting topic.

I think, like in any business situation…SOME of these people will be successful because they have no other choice. MOTIVATION is a big part of running a successful business and having NOTHING to fall back on can be that motivating factor.
Having said that…The MAJORITY of these people will crash and burn.

As far as the long term impact on our Country???

Here’s the deal…Some of these business failures will result in the former owners going back to ANY JOB they can get…A N Y T H I N G…Add in the NEW AMERICAN RETIREMENT PLAN which is…

YOU WORK UNTIL THE DAY YOU DIE!!!

And THAT is the future for a LOT of Americans.

What BLOWS MY MIND is how LITTLE these people have been TAUGHT about MONEY.
In most cases these folks have COLLEGE DEGREES yet know NOTHING about how to take $1 and turn it into $2. These people have been FED a pile of BULLSH-T their entire LIVES…

  1. You MUST go to COLLEGE for JOB SECURITY and CHOICES.
  2. YOU can’t invest your own MONEY…You need a PROFESSIONAL to do it for you.
  3. Buying a HOME is a GREAT INVESTMENT.
  4. A REALTOR is a professional and can find a CASH FLOWING property for me.
  5. My 401k will provide for my retirement
  6. MUTUAL FUNDS are managed by pro’s and THEY will watch my money

I could go on and on…

The bottom line COULD be THIS…

A whole BUNCH of Americans are about to get their first REAL EDUCATION!!! Some will PASS, some will FAIL.

4

The Wall Street Journal pick up on this last week.

Want a Job? Become a Landlord: http://online.wsj.com/article/SB10001424052702304451504576394083152168562.html

I predict a stream of burnt out landlords in a couple of years willing to sell cheap.

5

Also a IU (Indiana University) graduate Ide like to add :cool. GO HOOSIERS!!! :beer

6

actually the chairman of the board (Mark) and the CEO (Todd Wagner) , were both IU grads

7

Has anyone seen college conspiracy? Hope its not too controversial to post on this thread.

http://www.youtube.com/watch?v=VpZtX32sKVE

8

Yep some businesses will make it but, as you said, most will fail and fail miserably. And I don’t see failing at your first, second or even third try in business as much of a problem, than the fact these folks WON’T have the chance to go through those tries because they won’t have the opportunity.

What I think these people should be doing is downsizing their lifestyles, get rid of that houses they could never afford to begin with, since more than likely they already sucked every penny of equity out of it anyway, hold on to what they have for cash and retirment savings and go try to get a decent job. If they can’t go get a decent job, learn some skills that will allow them to get one. The truth of the matter is most of the people in this situation are white collar workers who were fairly well paid paper pushers. They don’t have any in demand skills.

What blows my mind is not just the fact they have been fed the Bull and fell pray to the work/spending sytem, but the fact they never took the time to take advantage of all the great financial education avilable through well written published books accessable to anyone. And nevermind all the FREE information available through their computer screens. These devices we are on right now aren’t just good for playing games, waste time on facelessbook and all the other crap people do on them, these are tools one can literally learn just about anything they would want to know about if they just took the time to learn how to use them. For the love of God, if they read a portion of YOUR posts they would be light years ahead of where they are now.

It’s sad, but you are right these people are about to get hit with a 500lb hammer and won’t even know what hit them. And I’m affraid a number of them will end up on some sort of Goverment assistance, which we will need to flip the bill for.

9

I think Multis will make a big come back in the future. Updated and well taken care of houses will end up going for top dollar when the buying frenzy comes back.

10

REIER,

Your point about the new business owners having to FAIL a few times before getting it right is dead on. And your other point about these people having just ONE SHOT because they rolled everything they have into a make or break venture is down right scary.

Great points by you and a very thought provoking post! :beer

11

I agree with a lot of what was said, but I also think some of the points are skewed. There are plenty of good affordable public colleges that anyone can take advantage of. I went to a public University and feel I got a great education from it. I had a small loan when I finished and paid it off in a year. Of course never lived on campus, but I still had fun, met some great people and grew as an individual. I also never expected my degree to get me a job, I sold my self and got a job.

12

Fdjake,

Thanks for the kind words, I just enjoy exchanging thoughts with the small, but fantastic group of intelligent people we have here. And I certainly have enjoyed and learned from many of your posts, you have helped me in more ways then you will ever know. :beer

13

The problem with the economy is that if you take the prescribed education in this country you can no longer get a middle class job. America doesn’t make anything but websites anymore. As manufacturing goes off shore there is no job that a high school graduate can do to become middleclass. England went through this over the last century. They went from the sun never sets on the British empire to a more modest country. We need to look to our strengths and build there. We have a military. Maybe we could be the world’s police force or something.

14

Even in the 1950’s you couldn’t walk out of High school and get a middle class paying job. It was called SKILLED LABOR…If they needed was someone to screw the tops on ketchup bottles, that job paid sh*t even then.

Skilled labor involved getting out of high school and spending TIME LEARNING your trade.

I see kids today that waste their time going to college for degrees in Political Science, or “management” and are WORTHLESS right out of the shute. Take the same kid and send them to a trade union for PLUMBING and that person will have a skilled trade that within a few years will pay him $40/hour.

THAT is a middle class wage.

We STILL have those jobs in this country…

The PROBLEM is our KIDS have been BRAINWASHED into thinking they ALL need a college education.

I have friends that have received their MASTER PLUMBERS LICENSES through their trade union and went off on their own to make HUNDREDS OF THOU$AND$ a YEAR with NO COLLEGE DEBT.

Hell…They MADE $40/hr LEARNING their trade!!!

15

Hi,

In the US this year, last year and every year in modern history businesses have been started and most financed by Venture Capital, Angel Capital, Raising Capital through Regulation D offerings (504, 505 & 506), SBA Loans, and financed through small business credit lines, business Visa cards, and through capital raised through friends, family and acquaintences!

In broad terms roughly 650,000 new businesses were started last year and approximently 585,000 businesses went out of business last year. Of the 585,000 who went out of business some of those businesses were purposely closed by the owners because of age, retirement, strategic sale, merger or physical / health related problems!

Most businesses started will fail, the current failure rate is roughly 4 of every 5 new businesses, although most new businesses will fail in there 2nd year, some may go on for years before ultimately going out of business.

Poor planning for sufficient capital to survive forward to a point of viability is a leading cause of failure!

Of existing businesses 39% are actually making a profit, 30% are breaking even in there industry and 30% are losing money but staying in business because of capital infusions to develop a science or technology requiring long term research and development! Other businesses may stay longer than viable because of continued capital infusions by private owners into entities which are no longer viable!

It is no secret that new businesses are created every year, however back about 5 years ago the number of new businesses being started was twice that number today!

We have been risking capital to start new enterprise, and although failure rates are 4 out of 5, most investors who work in business development make good returns because of the successes of that 5th business, and ultimately make sufficient returns to wipe out the losses of the 4 businesses that go under!

           GR
16

Gotta give them credit for attempting to open a business. At least they are not sitting on their asses waiting for a handout.