My friend was a business woman herself. She had a costume jewelry manufacturing company and had been in business for decades. Yet she envied me, an employee.
As an employee, I had a stable monthly income. I never had to worry about paying for the business costs, about paying the salaries of my workers, about not being able to sell enough to pay all these bills. As an employee, I just show up at work and collect my paycheck evey month. She envied me.
To make matters worse, competition today is keener than ever. More so if you run an internet business which was what I had set my heart on. If you run an internet business, you compete with the best such businesses all over the world.
When she saw I was determined to do it anyway, she gave me this advice. Advice that I will always remember and follow.
When times are good, you can feast all you want on lobster. When times are bad, you may only be able to afford plain rice and salt.
She went on to explain that in the eighties, business was booming. Everyone made plenty of money in the costume jewelry manufacturing industry. She was a wholesaler. So was her neighbour, the store beside her. Those were the good old days.
Things changed drastically since then. The cost of production here has gone up dramatically. Now, she can barely make enough to break even. Her neighbour had it worse. Former neighbour actually. He couldn't even pay the rent.
When times are good, plan ahead. Don't spend all the money. Set aside some for a rainy day, which will come. Business is cyclic. During bad times, at least you have some money to go by while you work to recover your business.
I went ahead and left my job. I knew my job was far from secure. I actually started a website on starting a business right after quitting hoping that it might benefit others in the same boat as myself. I wrote about why I chose this path in Job or Business.
Several years have passed.
I have gone through good times. I remembered her advice and was prudent in my spending. I saved what I could and only spent where necessary. The internet world is so volatile. One moment you are right on top. The next, your business could go plummeting down like a deck of cards. Sudden entry of massive competition. Competitors with VC funded bottomless pockets who gobble up your niche. A paradigm shift. These things happen... all the time.
In every business, one has to be prepared for change. To adapt to new surroundings.
I always kept her advice in mind. Thanks to her sound advice, I have savings to live on. I am able to pay the bills while I work twice as hard to salvage my business, with both eyes wide open, adapting to new circumstances.
The writer is the webmaster of www.independantlife.com