Introduction

Small business is many things to those of us who have participated in it or have dreamed about participating in it. Without a doubt, the concept of “being your own boss” is an alluring one.

But not everyone should be their own boss — at least not a good or successful one. If you’re currently someone’s employee (not a boss), fantasizing about owning a business of your own is perfectly natural on those days when you’re fed up with your current boss or job. Your fantasy is made even more attractive by the rags-to-riches stories you hear about entrepreneurs who’ve turned their visions into millions or even billions of dollars.

Please know, however, that small-business ownership has some not-so-appealing aspects as well. Most often, you have to spend many years working hard and making tough choices before the risks you take turn into rewards. Furthermore, a significant percentage of small businesses don’t survive to enjoy the long-term rewards. And perhaps most difficult of all, the entrepreneurial career can be lonely at the top.

Of course, the thrill of being the ultimate decision-maker may be exactly what attracts you to small business in the first place. But you need to realize that this attraction also has its downsides, the most prominent of which is that it breeds trial and error, and trial and error begets mistakes. Mistakes are the most expensive (and most dangerous) way for the small-business owner to learn.

But wait! Before you plod back to your day job, we have some good news for you: The mistakes that you’re likely to make have already been made by those who have gone before you — including us. If you can somehow avoid the trial and error that leads to mistakes (which is what we’re here to help you do), your chances for success multiply many times over.

Despite the previously mentioned downsides, it’s impossible to describe the sense of accomplishment you’ll get from starting and running your own successful business. Like so many before you, you’ll know the thrill of creation, you’ll feel the pride of watching that creation grow, and you’ll realize that your work and your vision have filled an identifiable void for your customers, for your employees, and, of course, for you and your family. And for those of you who rise to the top of the small-business pyramid, you’ll enjoy the greatest upside of them all — unlimited upside.

Although you can find plenty of small-business books out there, most of them aren’t worthy of your time or dollars. Forbes magazine once said of the marketplace for small-business books, “Warning: Most how-to books on entrepreneurship aren’t worth a dime.” The marketplace apparently agrees — the vast majority of small-business books don’t sell after their first year or two. We’re proud to say that this updated and revised sixth edition launches the 20th year of this book’s history! We’re grateful for reviewers’ kind words, such as the praise from Hattie Bryant, creator of the PBS series Small Business School, who said of our book, “No one should try to start a business without this book.” Thanks, Hattie!

Michael Gerber, author of The E-Myth series of business books (HarperCollins), makes the point that “the one common denominator in every successful entrepreneur is an insatiable appetite to learn.” If Michael is right, and we believe that he is, you’ve passed the first test of the successful entrepreneur: By purchasing and reading this book, you’ve displayed a desire to learn. Keep it up — you’re on the right track.

Small business isn’t rocket science. You don’t need to be a genius to start and run a successful small business. What you do need is help, which is exactly why we wrote this book. We’re pleased that you chose us as your guides into the stimulating world of small business.

About This Book

The following backgrounds and philosophies serve as a guide to the advice we provide — advice from the field that makes our small-business book stand out from the rest:

• We’re small-business experienced, and we share the benefits of that experience with you. Between us, we have seven-plus decades of experience in starting and running seven successful small businesses. In addition, we’ve worked with thousands of small-business owners. Jim has led numerous small-business peer-networking groups and has provided volunteer counseling services to small-business owners. Eric has conducted financial counseling for small-business owners, taught financial-management courses, and worked as a management consultant.

  Throughout this book, we share the experience we’ve gained, in the hopes that you’ll use our advice to purge the trial and error from your inventory of management tools. We also share an ample collection of straight-from-the-horse’s-mouth anecdotes, each one based on a true story.

• We take an objective view of small-business ownership. Although we firmly believe in the creative power of small business, we’re not here to be its pitchmen.

  Sadly, too many small-business books are written by folks with an agenda: a franchise to sell, a multilevel marketing scheme to promote, or a high-priced seminar to foist on the reader. Free of conflicts of interest, we’re here to pass on the truth and let you decide. If you’re the type of person who wants to get into this competitive career field, we’d like you to enter the race informed as well as inspired.

• We take a holistic approach. Because small business can at times be both demanding and intoxicating, running your own shop can threaten to consume your life. Although everyone knows that life is more than just business, striking a balance and staying in control can represent a colossal challenge. With that in mind, we take care to present the realities of running a small business within the larger (and more important) framework of maintaining a happy personal and financial life.
• We look to the future. As this book is published in 2024, the concept of Artificial Intelligence (AI) is going mainstream. Both AI and ChatGPT (just one of AI’s many tools) increasingly should be considered by small business owners. However, just as with any other technology or innovation, we help you to weigh the costs against potential benefits in deciding which tools and strategies may make sense for your specific small business.

We’re committed to updating this book so that you have the best and latest information and advice at your fingertips. Tax laws change, benefits change, technology changes, and so do many other facets of the small-business world. That’s why we’ve remained on top of these changes and revised this book.

Foolish Assumptions

Many small-business books assume that their readers are ready to make the leap into small business and are cognizant of the risks and pitfalls. We don’t make that assumption here, and neither should you. That’s why we include sections designed to help you decide whether small business is really for you. We spell out the terms of starting your own business, break down the tasks, and point out the dangers. We don’t think that you’re incapable of making the decision yourself; we just know that time is your most precious resource, and we think we can help you save it. You’ll lose too many years of your career if you make the wrong choice.

Much of this book is targeted to running and managing your existing small business intelligently. Even if you have a great idea, operating a small business is much harder than it appears, so we show you the best ways to manage and grow your enterprise.

We’ve organized this book to satisfy different reading and personal styles. Some of you may read it from cover to cover, while others may refer to it to answer a specific question or address an immediate concern. For this reason, each chapter of the book is designed to stand on its own. We’re flexible — read it as an all-in-one project or use it as a reference guide.

Icons Used in This Book

To help you find the information you need to assist you on your entrepreneurial path, we’ve placed icons throughout the text to highlight important points.

This icon asks you to do some thinking and checking before you take the plunge. You have a lot of important choices to make when running a small business, so don’t rush in.

This icon points out stuff too good (and too important) to forget.

If you like to sweat the dull stuff, this icon points out the inner workings of the business world that you’re likely to ignore as you get down to the real work.

This symbol indicates time-tested tips to make your small-business journey more profitable and easier. Often straight from the heart of experience, we clue you in on what works for us as we navigate the oft-troubled waters of small-business life.

We present tales from our own experiences (and others we’ve been privy to) to save you some trial and error. Enjoy the company of your fellow entrepreneurs and benefit from the lessons we’ve learned.

The path of small-business ownership can be fraught with peril. Some deals may be too good to be true, and some people may have their own interests at heart, not yours. This icon points out the dangers and helps you steer clear of...