Start ups and new businesses are big money for Government and the Corporates - 600,000 targets a year and rising.
When people start selling stuff they often mislead. When people make speeches they often exaggerate. When people are on camera they often pretend. Hands up! I know because I've done it too. You can catch me out on my YouTube channel.
People excuse their misleading, exaggerating and pretending as normal for their work role. People that are honest with their family and friends behave differently when they put on their work clothes.
If I was a politician I might say it was ‘only spin’. If I was a celebrity I might say it was ‘only publicity’. If I was a company executive I might say it was ‘only business’. If I was a motivational guru I might say it was ‘only being positive’.
I've even been stung in a business partnership with someone whose ‘it’s only business and being positive’ meant they couldn't remember what they’d promised me.
A start up business owner is vulnerable to the Government or Corporate huckster selling loans, credit, insurance, premises, technology, online easy monthly payments, advice, investors, seminars, conferences - you name it they're selling it.
Self employed people are earning 20% less on average than in 2008. The UK is a low pay economy and self employed people and micro business owners are part of the low pay population. They're not working less hours and they're working smarter but their costs are rising often because of the debt they have from being mis-sold loans, utilities, products and services for their business.
Does the snake oil and debt matter?
It matters a great deal to me when the ‘mistruths’ wreck people’s lives. The people that are most harmed are often those that are vulnerable because they so want to believe it. There are many $billions being made out of duping people who want ‘freedom from bosses forever’ – to start and run their own business.
I do know how these $billions are made. When I resigned from my last job to start our business, in 1986, I was CEO of Amway UK and Vice Chair of the Direct Selling Association. Since then we've had many major clients in the business opportunities, financial services and government sectors.
If you want to see the worst effects of getting into debt through the business opportunity industry – go to "MLM: The American Dream Made Nightmare" website.
If you want to see the worst effects of getting into debt through the financial services industry see how many millions unnecessarily buy or are mis-sold insurance, funding, investors, credit cards, invoice discounting, short term loans, pensions, equity release and mortgages.
If you want to see the worst effects of getting into debt through government schemes see how many start a business without real or even test traded customers. Yet they've left a job or come off benefits and are really struggling to make ends meet. Some can’t repay a government loan. The coach/adviser/mentor they're allocated may not even be a business owner that understands the start-up's potential market.
Stay away from the snakes and climb some ladders
So, my advice to a potential Start Up is to stay away from the snakes and look around you for some ladders. Learn from those that have done something similar to what you want to do. Learn from asking questions of your customers.
This is why every day I tweet:
“#Start Up? 1. Ask for help from a business owner 2. Test trade first (preferably whilst you’re in a job) 3. Bootstrap don’t borrow”
There’s nothing better than running your own business and my tweet isn't negative. It’s a plea and a reality check against the smart, bright, looks-like-the-establishment and mega-persuasive huckster.
Bootstrapping buys you time to build your customer base and then you'll be able to know your numbers, plan for the ups and downs ahead and know what you can afford to buy from whom. In my opinion, no-one should be allowed a Start Up Loan until they've been trading at least 6 months.
Many people offering 'business support', especially if they haven't successfully started and run their own businesses, speak with a forked tongue and can hide behind a spiral staircase. Look for the ladders instead. They're usually provided by other micro business owners