Ask Ms. Money: Advice for the Fiscally Forlorn

Lonely and Overworked in Louisiana

2006-08-23T09:45:00.000-07:00

Dear Ms. Money:

My fiancé and I have a business which is going rather well. Lately I've noticed that his heart doesn't seem to be in the company anymore. He leaves early, comes in late, and doesn't really have his mind on his responsibilities. What should I do? I'm afraid if I point out his unprofessional behavior, it will wreck our wedding plans. LONELY AND OVERWORKED IN LOUISIANA

Dear Lonely:

Are you sure you have the right advice columnist?

During business hours, Ms. Money would advise you to treat this wayward partner just like any other member of your executive management team. Would you tolerate such behavior from your accountant or sales manager? Ms Money thinks not. After hours, have a heart-to-heart talk with your honey, it sounds as if your worker bee is already buzzing up another hive.

Graciously,
Ms. Money

Confused in Conneticut

2006-08-10T03:47:00.000-07:00

Dear Ms Money:

I'm starting a company, and I've been working on the financial section of my business plan for months, and there seems to be no end to it! I've built this monster-sized financial model on my computer, and what with the P&L forecast, the balance sheets, the cash flow forecasts, and whatnot, I'm up to 42 pages. I know investors need all this to make an informed decision, but this seems like overkill. Have I done too much? Should I stop now? Should I forecast five years out, or three? CONFUSED IN CONNETICUT

Gracious Reader:

Entrepreneurs certainly do get carried away with their forecasts...Ms Money gets roughly ten business plans in the mail per week, and the paper piles up so fast in her office that she had to invest in a gadget that compacts the documents into lovely, long-burning fire logs (the ink makes very colorful flames). For a start-up company all forecasts are essentially a fantasy, you see. So, if you are the investor, would you rather read a sprightly novella of a business plan, or ponderous epic of War & Peace proportions?

I'd suggest you go back to your model, cut out all the "whatnot," and stick to the basics.

The key question is, how long will it take until your business no longer requires the investors' money and generates positive cash flow? And the second thing to keep in mind is making sure you have clearly presented the assumptions behind your (simplified) financial model. Even a fantasy can have a framework.

Also, the further out you go in time, the less detailed your forecast needs to be. The chances of accurately predicting where a start-up company will be five years later are about the same as the possibility of Ms Money being seen having a power lunch at your local hamburger joint. So, when you try to save your spreadsheet and the computer says, "disk full," it's time to stop playing with numbers and get back to work.

Graciously,
Ms. Money

Wilting in Washington State

2006-08-01T15:16:00.000-07:00

Dear Ms Money:

Last year, my wife started a new business venture. Like many small companies, hers did not have enough capital to start with, and it has taken way longer to get the product to market than she had anticipated. My problem is that she is becoming such a stingy penny-pincher, I can't stand it anymore. This winter, she told me that we shouldn't use the heater, until the temperature in the house got below 60 degrees; that we needed "every nickel to go into the business." Do you know how cold you can get when you're in your boxer shorts and it's 60 degrees? Can't even watch ESPN sports. I think this is really unfair. It's her d@mn company, after all. She wasn't like this at all when we got married, by the way. I didn't expect to have to put up with all these hardships just so she could pursue his dream. I'm used to the good life. Call me, WILTING IN WASHINGTON STATE

Gracious Reader:

When you got married, did the ceremony go like this, "For better or worse, richer or poorer, but keep your hands off my thermostat, pal?"

No, I didn't think so. And I believe, from a purely technical standpoint, you shouldn't say, "it's her d@mn company," but rather, "it's our d@mn company." Remember when she took out that bank loan, and there was the formality of having your signature on the document, too? Congratulations, you're in debt along with her, up to your eyeballs or other body parts Ms Money is too demure to mention. Since you own part of this venture, why don't you try making the best of the experience? In most start-ups, there are far too many things to do and not enough hours in the day.

Maybe you have some skills or talents that could be of use in getting the company going. Perhaps you took some marketing courses in college. (Or did you just major in whining?). Then, years from now, when the company is a big success, you can call it, "our success."

Ms. Money

Talkative in Tennessee

2006-07-30T13:03:00.000-07:00

Dear Ms Money:
I've bought a telephone listing of wealthy individuals, at least that's what they're supposed to be, and plan on calling them to find investors for my new product. An acquaintance of mine did this and said it really was effective. Can you help me with the script for this cold calling? TALKATIVE IN TENNESSEE

Gracious Reader:
Dialing for dollars is for dumb-dumbs. Were you aware that what you plan on doing is breaching federal and state securities laws, never mind that it's rude? One can not solicit for investors without being properly registered. (Even in that certain county in Nevada, the solicitors must be registered, but that's another story).

Ms Money suggests you leave your acquaintance's method out in the cold, otherwise you just might effectively find yourself in the Securities and Exchange Commission's office and not even Ms Money could script your way out of that.

Ms. Money

Family Fun in Fargo

2006-07-29T15:40:00.000-07:00

Dear Ms Money:
My sister, my brother-in-law, my husband and I are thinking of going into business together. If we pool our savings, we have enough money to purchase this wonderful 50-seat Italian restaurant in our neighborhood. We all get along so well--we spend nearly every weekend together--and our friends all love our cooking--that it seems a natural for us to do. What are the pros and cons of going into business with relatives? FAMILY FUN IN FARGO

Gracious Reader:
Oh, there are pros? I wasn't aware of any. I'll have to check around and find out. Ms Money has her own Theory of Relativity: it goes: related individuals + business stress + hard work + long hours = inevitable disaster. The theory works no matter how close or how friendly the relatives are. Ms Money has an older sister, a smashingly gorgeous woman. We both got Master's Degrees, graduating with honors from a prestigious Eastern university, and though we both set out to make a fortune, we were smart enough to not work together in the same field. I entered finance and am working on the becoming a multi-millionaire. She married one. Both are valid approaches to achieving wealth.

Ms. Money

Lazy in Lubock

2006-07-23T22:00:00.000-07:00

Dear Ms Money:
My company is just starting out and doesn't qualify for bank financing, and my personal credit is a little shaky as well. I don't have any funds of my own, and I don't want to bring in an investor or a partner, why should I share the profits? I've heard that there are grants that I can get from the government that will help me get going. Where can I apply? LAZY IN LUBOCK

Gracious Reader:
Welfare for the we wanna be in business? Is that the program you're referring to? Ms Money knew that the entitlement mentality was going to fall to this level eventually. Why oh why, would the government just dole out dollars for delinquents like you? What you should be applying, is not for a freebie from the feds, but your backside to hard work and perseverance in building up your business on your own efforts. While there are grants, such as the Small Business Innovation Research grants, they are awarded competitively, (an activity Ms, Money does not believe you are familiar with) not on the basis of need or want.

Ms. Money

Drowning in Detroit

2006-07-10T07:08:00.000-07:00

Dear Ms Money:
I'm president and founder of a $50 million a year distribution company that has grown like crazy over the last five years. As we've gotten bigger, so have the stacks of financial reports, industry surveys and other information on my desk. I never get caught up on all that reading--even taking the reports home at night and on weekends-- and I still feel as though I don't really have my fingers on the company's pulse. What can I do about this information overload? DROWNING IN DETROIT

Gracious Reader:
Yes, yes, we live in the "Age of (mostly useless) Information", where the new business status symbol is how much data you can collect. Some sage advice comes to us from a gentleman named Henry David Thoreau, who said, "Simplify, simplify." This was easy for him to say, of course, because he didn't have a laptop and cell phone with him at Walden Pond. Nonetheless, you're just cluttering up your mind with meaningless statistics and dubious data, diverting your attention from the real management issues concerning your business. A dear friend of mine, who runs a vastly successful electronics company, and a strategic genius (though a tragically inferior bridge player I must add) keeps tract of things with a ONE PAGE report he receives each morning containing the key indicators of his business' performance. By not generating all that paper, his mind is free and he saves many a tree.

Ms. Money

Duped in Duluth

2006-07-03T03:19:00.000-07:00

Dear Ms Money:
I've been thinking about joining one of those affiliate programs, where all I have to do is post an ad on my web site or in my e-mail signature? Do you think MLM is passé? I'm leaning toward one where you they give you your downline, you don't have to invest in inventory or advertising, in fact about the only thing you do is cash the commission checks. Or maybe I should try one of those send $1.00 to the first six people on the list, delete the first name and add your name to the bottom? What do you think? DUPED IN DULUTH

Gracious Reader:
What does Ms Money think? Of you? Not much. Playing the slot machines in Atlantic City would be a more honest way to make money and probably has the same payout ratio. To be successful at any business, (and affiliate programs, and Multi-Level Marketing are businesses) one must work--as in contribute effort.

Ms Money feels obliged to tell her other readers that the "sending a buck to six people"
program is illegal. It's also known as a Ponzi scheme, chain letter, or pyramid scheme.

Ms. Money

Surprised in Surprise

2006-06-24T12:55:00.000-07:00

Dear Ms. Money:
I just don't understand my banker! I am starting a company that will be successful, I just know it. But my banker refuses to consider any loan to my new company without a personal guarantee. What's the point of having a corporation to protect my personal assets if I have to guarantee them to get a business loan? SURPRISED IN SURPRISE, AZ

Gracious Reader; Tsk, tsk, tsk, so you expect your banker to lend money to a company with no track record and not have any method of recouping at least part of the loan? Silly entrepreneur, this is not Las Vegas. Bankers are not in the business of gambling. While you may be positive that your business will be dealt a winning hand in the game of success, your banker looks at it as a dice roll. In other words it's risky to the banker. To offset that risk bankers require your personal assets as collateral. If you're not ready to put your money where your mouth is, then Ms Money feels you're not ready for business.

Ms. Money

Baffled in Boston

2006-06-22T11:01:00.000-07:00

Dear Ms. Money:
I know my company has great potential even though we currently don't yet have a product ready to market, revenues or any assets. So why am I having trouble finding an investor who will be reasonable on their percentage of ownership? I mean 10% of my company for $500,000 is a real steal. BAFFLED IN BOSTON

Gracious Reader:
No assets, no revenues, no product, and you think your company is worth $5 million? No wonder you haven't found an investor. What you seem to be looking for is a fairy godmother. Would you pay $5 million for your company? Ms Money thinks not. Investors invest in companies to make money. And to make money they invest a reasonable amount of money for a reasonable ownership share. Stop reading fairy tales and start being realistic.

Ms. Money

Confused in Conneticut

2006-06-11T09:52:00.000-07:00

Dear Ms Money:
I'm starting a company, and I've been working on the financial section of my business plan for months, and there seems to be no end to it! I've built this monster-sized financial model on my computer, and what with the P&L forecast, the balance sheets, the cash flow forecasts, and whatnot, I'm up to 42 pages. I know investors need all this to make an informed decision, but this seems like overkill. Have I done too much? Should I stop now? Should I forecast five years out, or three? CONFUSED IN CONNETICUT

Gracious Reader:
Entrepreneurs certainly do get carried away with their forecasts...Ms Money gets roughly ten business plans in the mail per week, and the paper piles up so fast in her office that she had to invest in a gadget that compacts the documents into lovely, long-burning fire logs (the ink makes very colorful flames). For a start-up company all forecasts are essentially a fantasy, you see. So, if you are the investor, would you rather read a sprightly novella of a business plan, or ponderous epic of War & Peace proportions?

I'd suggest you go back to your model, cut out all the "whatnot," and stick to the basics.

The key question is, how long will it take until your business no longer requires the investors' money and generates positive cash flow? And the second thing to keep in mind is making sure you have clearly presented the assumptions behind your (simplified) financial model. Even a fantasy can have a framework.

Also, the further out you go in time, the less detailed your forecast needs to be. The chances of accurately predicting where a start-up company will be five years later are about the same as the possibility of Ms Money being seen having a power lunch at your local hamburger joint. So, when you try to save your spreadsheet and the computer says, "disk full," it's time to stop playing with numbers and get back to work.

Ms. Money

Curious Clothier From Clevelend

2006-06-07T21:06:00.000-07:00

Dear Ms Money:
I got a glitzy invitation in the mail about a seminar titled, The Secrets of Selling Your Business For Maximum Value. It's being put on by a well-known business brokerage company. I am considering selling my clothing store at some point, so I thought I'd go and learn. The cost of the seminar is steep, though, $750 for one afternoon. Is that too much? (They do promise a nice lunch is included). A CURIOUS CLOTHIER FROM CLEVELEND

Gracious (and apparently rather hungry) Reader:
I hope they are serving filet mignon, but I fear baloney is on the menu, because you are paying someone $750 to sell you on the idea of retaining their company to market your business. Not bad work if you can get it, Ms Money would hasten to add, perhaps somewhat enviously. I would predict that the ratio of valuable information versus raw sales pitch in the seminar would be about 1:5. If you like this self-serving seminar, here are some other ones you might want to go to: Bill Gates Presents: Don't worry .Microsoft Isn't Trying To Take Over the World; and There's No Such Thing As Having Too Much Insurance! Please, if you insist on going, at least come home with a doggy bag of significant proportions.

Ms. Money

Overworked in Louisiana

2006-06-04T02:25:00.000-07:00

Dear Ms. Money:

My fiancé and I have a business which is going rather well. Lately I've noticed that his heart doesn't seem to be in the company anymore. He leaves early, comes in late, and doesn't really have his mind on his responsibilities. What should I do? I'm afraid if I point out his unprofessional behavior, it will wreck our wedding plans. LONELY AND OVERWORKED IN LOUISIANA

Dear Lonely:
Are you sure you have the right advice columnist?

During business hours, Ms. Money would advise you to treat this wayward partner just like any other member of your executive management team. Would you tolerate such behavior from your accountant or sales manager? Ms Money thinks not. After hours, have a heart-to-heart talk with your honey, it sounds as if your worker bee is already buzzing up another hive.

Ms. Money

Stuck in Saugatuck

2006-06-01T12:02:00.000-07:00

Dear Ms Money:
I have a wonderful idea for a business, and have been developing the concept for more than two years. I could launch it at any time, but something seems to be holding me back from getting started. I even went so far as answering a quiz in a business magazine titled
"Do you have what it takes to be an entrepreneur?" According to the results, I fit the psychological profile of someone who could start a business. Why can't I just get going?
STUCK IN SAUGATUCK

Gracious Reader:
Because if you don't ever get started, you won't ever fail. The safe harbor of dreaming about creating a successful enterprise is preferable to the choppy sea of building a business (you can tell Ms Money has just returned from a cruise--or needs to go on another one right away). Having a "wonderful idea" is just the first tiny step in the process. Do you have the energy--and passion--to complete all the other steps? It takes an unusual person to accept the consequences of failure, not just financial but emotional and psychological. One way to look at it is: if your first venture failed, would you be able to pick yourself up and start another one, or would that be it for you as far as entrepreneurship? You are correct to agonize over the decision whether to get started or not. It takes honest self-analysis to go from telling yourself, "I am a person with an idea," to "I am an Entrepreneur." It's like the bridge Ms. Money crossed when she went from telling friends, "Of course I'm a natural blonde," to "No, I've just been out in the sun a lot lately."

Ms. Money