Why Mom Entrepreneurs Go Broke

Guest Post by Carol Tice :: It starts with a flash of inspiration. It starts with a dream, to start our own successful businesses, keep our own hours, spend more time with our kids, be our own bosses, determine our own destiny.

Unfortunately, too often, things go downhill fast from the high of telling your friends, “I’m starting my own business.”

The Small Business Administration reports half of all startups are dead within five years. Three of ten are gone in the first three years.

What kills all these businesses?

Once we’ve tasted the sweet freedom of life without a cubicle and an overlord, only one thing will make us crawl back to a day job.

We run out of money

Most businesses close their doors because they simply cannot continue. They are out of funds to keep successful businesses going. It’s time to find another way to pay the rent, before we’re out on the street.

There are two ways to run out of money in business. Either not enough money is coming in, or too much money is going out, or both.

Recently, I wrote a book all about how to save money in your business. It gave me a chance to talk to business owners of all types — retail, resale, e-commerce, service, you name it. I learned what made successful businesses thrive and floundering ones fail.

Here’s the nub of it: Inexperienced new business owners often waste a lot of money running their business. There isn’t a focus on cost control. It’s all bright shining eyes and the freedom of the entrepreneur lifestyle. And of course, for Founding Moms like us, we’re also busy juggling carpools and homework and family life with our successful businesses.

Then we run short of cash and get trapped in a borrowing cycle. Soon, interest costs add more expenses to an equation that already wasn’t penciling out. The next thing you know, it’s over.

The best way to ensure your business survives is to make sure you save every dime you can, especially in the tender startup stage.

The lower your nut, the longer you have to figure out your business model and find customers before your financial resources are exhausted and you have to give up.

Attacking insidious costs

One of the sneaky places that costs add up in our businesses are recurring monthly services. I’m talking about the phone, Internet, email marketing program, trash hauling, utilities, maid service, accountant, and any other ongoing services you use.

We tend to forget about these costs and accept them as an unavoidable part of doing business. But they’re not.

Electric bills can be slashed by switching to more efficient bulbs.

Internet hosting and service offers change quickly — if you haven’t rebid these in the past six months, take a look at what’s out there now.

Maybe a free trial of Freshbooks could help you keep the books straight at first instead of a paid service or professional, or free Mailchimp (to 2,000 subscribers) could manage your email list.

You might swap your services with a webmaster or designer to cut or eliminate website costs. For instance, I used a teenager for the first 18 months of my freelance writing business at a very low rate, and swapped a designer some website copy to get graphics I needed.

Most of all, develop the discipline of questioning every cost, and trying to figure out if you could find a way to shrink or avoid it.

Keep an eye on expenses and you’ll create the ideal conditions for your business to be more than “busyness,” but something that delivers the profits you need to pay your bills.

Keep your business alive! Join me and The Founding Moms’ Jill Salzman for a “Fix Your Business” money-saving brainstorm mentoring session live, tomorrow at 4 pm Pacific/6 pm Central/7 pm Eastern. Register and get the details here:

Listen in and type questions at this URL and use password: savemoney

If that doesn’t work for you, call in on the phone:

Primary dial in number: (206) 402-0100
Secondary dial in number: (206) 494-4023

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Enter this code: 656133#

See you there!