Well, I mean, off the top of my head, the companies that I have had direct contact with include a septic cleaning and portable toilet company, a truck customization company, a temp worker agency, a produce stand, and local handyman. Most of those are not really "monopolies" either, most of them have several direct competitors who have also been in business a long time. These are people that I know personally quite well. Obviously it's not a fair cross-section of the small-business world, but I just find it hard to believe that "almost 100%" of businesses will never turn a profit when there are so many long-running businesses that support families around here.

The thing is, you need a LOT of capital to start up a new business. It's not just something you can just "do" and you WILL be in the red for your first year, and only a very tiny percentage of new businesses succeed. So it is a massive risk

My brother started a window-washing business for about $1000. He's only been at it for 2 years but I'd guess that he's made 20-30 times that. That's not bad considering the fact that it's a mostly seasonal job in my state (people don't care as much about having their windows washed during the winter) & there's very little overhead. He's been growing annually, despite tough economic times. His biggest contracts are with model home companies. He's a reasonably intelligent person with a high school diploma & within the next year or so he'll probably be hiring his first employee. He typically gets a regular full-time job during the off-season but I suspect that soon he won't have to do that unless he just wants the extra money, which he probably does. He's also looking in to expanding in to other areas. He got the idea from a company in another state that he worked for several years ago. They were raking in the dough.

In other words, there are many ways to start a business with little to no risk. You can start off doing it part-time & it's even easier if you have a spouse that works (they can help you on the side as well). Many wouldn't be satisfied with the type of business that my brother has, but he's more motivated by money than changing the world or designing the next social networking site & there's nothing wrong with that.

Your bootstraps argument ignores the issue of saturation. Small businesses are easy to start, but if everyone starts a small business, you'll eventually lose out to market saturation. That leaves diversified large and medium companies, but not everyone can manage companies of that size - managers of small companies among them, not to mention that even fewer have the capital and other resources required to establish businesses of these sizes.

'Profit' does not mean "revenue - cost > 0." Profit means your benefit is greater than whatever you gave up in order to do it.

Unfortunately, there's no way you can move out on £13k, I could only just afford it when I was on £18k.. and that was a studio apartment. Admittedly, living in Milton Keynes isn't cheap but it also isn't London (i dont know where you live, but the further you are from london the cheaper things get but £13k seems way too little imho).

I don't think that anyone here was calling for everyone to start their own business. The vast majority of people will go through life without starting their own business. I think that's just a given. I'm simply stating that it's relatively easy to do & that people that are unemployed or unhappy with their current job should consider the option. I don't really understand why that's so controversial.

I don't think that anyone knew that you were referring to the strict definition of profit. For most people, profit is simply a generic term for income. Many businesses fail for predictable reasons. If you're of reasonable intelligence & are truly passionate enough to learn the ins & outs of your field as well as educating yourself on a multitude of business-related subjects, you're far less likely to fail.

i worked many jobs, and started at 11k a year in a leather and luggage shop.
I couldnt even afford to feed myself and still have debt from that time.

f*ck employment. We're taken for mugs. I have a high IQ and many talents, and yet i'm expected to make do with bollocks like that.

Back to being a student now, if I graduate near top of my class i have a chance to get a good job in the Games Industry or something art related. But i'm best off moving to the U.S.

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By supporting families I don't mean that they break even, I mean that their business gives them enough money to live comfortably and buy things they want.

Jon is taking into account the opportunity cost of starting a business, which nobody else seems to care about. Instead of starting a business that might fail and that will not be profitable at first if it doesn't, you could have found a job that would pay you more and be secure. Thus, even if you make money with a business, you're still probably making less money than if you got another job.

True, but life isn't all about money. I'd much rather make $30,000 a year and be my own boss than make $40,000 a year and have some douchebag telling me to do things the wrong way. Or, as another example, I'd rather make less doing something I love than more doing something mind-numbing. It is entirely possible for a small business to fall into these categories.

Most of these start up businesses that fail are a result of moronic business decisions, failure to understand the free market, lazyness, you name it. A little intuition and some common sense, and maybe luck, can go a long way. He's not talking about brick and mortar stores, because in my opinion, opening ANY local retail shop these days is a moronic decision unless you are Lowe's, Wal-Mart, Costco, etc. It requires huge investments and you just aren't going to make it. In today's internet focused environment it's so much easier for the small guy to make money than it EVER has been. I'm talking micro-business. You don't need a second mortgage, or a hundred grand in the bank, or anything else like that. Starting one can require a NEGLIGIBLE initial investment and can be run with almost no overhead (read: Out of your bedroom and with no employees). You guys are internet nerds, go figure it out.

Selling floppy disks you found in an old warehouse by the 100 through the internet.

Jon'C make horrible assumptions but makes some valid points. The likelihood of a business failing is high when the business is financed by startup debt. If you have to borrow money to start a business, you're not ready to start a business. Business that maintain a debt free position are far more likely to succeed even in a depressed economy. Some of the dumbest decisions people make when they are trying to finance their business is to extend their liability to their personal life. It is one (irresponsible) thing to take out a loan to start a business. It is entirely another level of stupidity to take out a second mortgage on your residence to do so.

You make a good point or 2 but I don't know that I would call taking out a loan to start a business irresponsible.

Well, you have to consider that the type of person who is likely to take out a loan to start a business is also likely the same sort of person who isn't prepared enough to start one. They likely would have failed without the further risk that debt adds to the situation.

I can't believe that you're serious. Do you have any idea of how many successful small businesses or even large businesses that were once small have been started with a loan? I sometimes think that you say things just to get a reaction out of people because you can't possible believe half of the things that you say. If everyone followed your line of thinking, we'd have very few small businesses in this world.


I suppose that you think that Sam Walton wasn't ready to open his first department store because he had to borrow $20k from his father? I suppose that he should've just put it off until he saved the $20k? It obviously wouldn't have made a difference in his case, as we know, because Wal-Mart has been a phenomenal success.

If you're simply trying to say that it's better to have 100% of the money up-front then I'm with you, but to claim that it's "stupid" to open a business if you don't, quite frankly, is just "stupid". I think that you really have no idea what you're talking about & that you'd probably be surprised by the amount of businesses that got their start because of a loan.

Actually, I did not speak in absolutes in my post. Also, what I said was stupid was taking a second mortgage out on a personal residence. Maybe you should stop knee-jerk reacting and focus on reading comprehension.

Now, if we're going to stipulate that Jon'C is correct, and I believe that he is, and most small businesses fail, I think it is fair to look at why they fail. I believe that most of them are poorly managed and start out by being in debt. Someone who is wise enough not to start the business in debt, financed with personal liability, is much more likely to also be the person who will properly manage a successful, recession insulated, enterprise. There really isn't anything too controversial in that view.

What? This post makes a very strong claim:


What, he's supposed to know that you actually meant something else? Don't make a claim if you don't mean to make it. You can't expect us to magically know, "well, he doesn't really mean that in all cases."

Here's an idea: admit to saying something stupid instead of backpedaling and accusing others of incompetence.

I think there is a much smaller correlation between ability to make a business successful and amount of money an individual has stashed away than you think there is.

I didn't say anything about having money stashed away. My main point has been about the further risk debt adds to the venture. My three previous posts have all been consistent in that regard so I have no idea what back pedalling Emon is referring to.

Please accept my apology if I'm incorrect but it sounds to me like you're speaking in absolutes ("it is..."). I don't really like to get in to arguments on that level though, so I don't really care, but you brought it up.


With all due respect to Jon'C, I don't believe that he's correct in this matter. I think that it all comes back down to what Dash & I have been trying to say. Taking out a small business loan is only more likely to cause you to fail if you weren't prepared in the first place.

I don't believe in luck. There are businesses that succeeded for unforeseen reasons but they prospered not because of luck but because they had a plan that enabled said reasons. That's skill.



If you want to find out why most small businesses fail, simply read articles & studies on the subject. There are quite a few out there & not many of them cite taking out loans as a reason. Insufficient capital, yes. Lack of planning, yes. But not because you take out a loan. Like I said before, if you did your research & you actually know what you're doing, you'll be prepared for dealing with debt. Managing debt is just one of the million hurdles in planning & running a business.


Unfortunately, it's a risk that many successful small businesses had to take.

If you notice in the first quote, deleting my opinion placed in parenthesis might change your inference. I am not saying that taking out a loan is always going to lead to failure. My general opinion is that the poor position it starts a business in is a contributing factor, among other things I alluded to. Now, I do absolutely believe that taking out a second mortgage and other things that directly lead to putting vital aspects of your personal life at jeopardy is incredibly stupid and irresponsible and that would be an exception to my statement that my posts were not worded absolutely, which they generally weren't. Notice, I am using words like generally alot in this discussion as there are always exceptions.



I have thought about stating this earlier but I sort of inferred, and I do believe it is implied, that when we talk about people starting a small business we are more referring to first time small businesses. I am sure that subsequent small business ventures have a better rate of success based upon the experience gained from previous failures and, let's face it, we all learn more from our failures than from our successes.



Let me just use as an example the following simple small business. Say I want to start a lawn care service. I could take out a loan, purchase new equipment, truck, trailer, maybe a shop or storage facility or some such sort, etc. Or I could use an existing vehicle or purchase a used one, my own garden tractor, lawn mower, weed eater, and purchase a trailer of some sort, start smaller, cash flow, begin to purchase additional equipment better suited to the business as I build capitol because I didn't start by placing myself in the position of a debtor.

I could expound on this simple example but I think you can see that my point is starting smaller, leaner, and smarter could provide more benefit in the long run while decreasing the risk of failure that debt adds to the situation.

oh my goodness you guys! there are plenty of small businesses that succeed, a lot of them take out loans to get things started. if, on the other hand, you are not prepared to begin with then taking out a loan will only multiply your problems. can this be settled now?

Oh, I know I didn't make it very clear but I whole heartedly support starting one's own business.

I think we're more in agreement on this matter than I had initially suspected, based upon my interpretation of your statements & plan to leave it at that. I don't really disagree with much, if anything, that you said in your previous large post.

Okay, here's a business idea for free (it's actually been done, but I doubt it's at saturation point).

Furniture E-Commerce.

You negotiate with suppliers for them to arrange delivery (maybe you compensate them for cost), so you never have to buy in stock without being able to sell it. The vast majority of furniture is bought based on look rather than brand, which means there's a huge number of small companies out there that produce furniture without any viable route to a big market (they're normally small shops in small towns). You sell for lower than RRP (because your initial overheads are almost nil you can afford to do this) and make a bit of money at almost no risk.

The biggest risk in ecommerce is in buying and storing stock without being able to sell it, if you can cut that part out by connecting buyers directly to manufacturers (and taking a cut) it should pretty much be a license to print money.

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I am NEVER telephoning for a takeaway ever again.

See I work for myself and have a full time job, Im planning on leaving retail at the end of the year and going full time self-employed. I do a lot of on site stuff for about 4 business, tech support in mixed enviroments of both Mac and PC, I look after their email and webhosting and basicly make sure things are running smoothly. I get some bug jobs in sometimes, new server and PC's to install into a network, re-wire a office, network up a office with about 60 network and comm ports, yeah all good fun, means im working 6 or 7 days a week, but it brings in another 6-8k a year, having the skills and offering bespoke services that can mix together is a great opportunity to get into small companies that cant afford a full time IT support system, but willing to pay per hour/ per incident and have the big jobs when its needed. Offer services that spread and allow you to up sell yourself, I have just taken on a Online backup storage company that will provide online back ups for my customers, I sell the solution, make some money off that, install the solution and maintain, gives me a nice chunk of money then a monthly top up.

Thats a lot, but it works, I have been self employed, then had to move in with the wife so needed normal job to pay for things like food, and I plan to do it all again now. The only draw back is lack of holiday, accounts, and eats all your free time.