I had lunch recently with Sam (not his real name) who owns a property development business.  He company purchases land all over the country, usually close to college campuses.  Their specialty is building apartments for student housing.  They would own and manage the properties for a few years and then sell them.  Life was good for a long time — and then it wasn’t.   

He said the recent recession nearly bankrupted his business.  He ticked off on his fingers the things he had done wrong. 1.Too highly leveraged – he simply had too much debt.  He had mortgaged some of his properties two and three times to get money for new buildings.
2.Low cash reserves – he didn’t have (and couldn’t get) enough cash to make it through more than a few tough months
3.Ignored the warning signs – his instincts told him the good times couldn’t last forever, but he never slowed down and never stopped borrowing money.
4.He loved the game of “find-buy-build” but hated the numbers – only his bookkeeper knew which properties were making money and which ones weren’t.  When he tried to bring up the subject, Sam was always too busy.
The situation sounded dismal, I asked him if he had done anything right and what lessons he’d learned.  He brightened and shared the following. 1.His family was his rock; when business was good they’d taken great vacations, bought new cars and expensive toys and purchased a gorgeous lake home.  Then times got bad.  Instead of getting angry and resenting what they’d lost, they sat at the kitchen table and talked.  Together they decided on a course of action to save the company.
2.His faith gave him the surety that no matter what happened, he would be alright.  He spent many prayerful hours on difficult situations.
3.Cash is king.  Sam’s goal is to save enough money to run his company for one full year if something should happen to him or revenues stopped coming in.  It will take time, but he has a plan in place to do that.
4.He will be a better steward of money going forward; he’ll pay attention to the details and listen to advice from experts.
It hasn’t been easy.  Sam’s company is a lot smaller today, he’s not driving a new car and his toys are getting old.  He no longer owns a dream house on the lake.  But if you ask him if he’s having fun he’ll answer, “I’ve never had more fun in my life”.

And isn’t that what running your own business is all about?