Although Pam may be ready to give her journalism career the heave-ho to open her own club (see her post “I Wanna Be in the Club Business” below), I‘m not so sure she should do that quite yet. Not only does this magazine need her as an editor (raise, please, Pam?), but also running a business is hard work. And even more time consuming and complicated than I ever realized. Stuart and I sat in on Alan Roth‘s session on legal issues involving funding, owning and running a small business yesterday afternoon. Boy was it an eye-opener.
Roth said the single biggest issue facing a small business today was having enough money or capitalization. Money can come from a number of places including friends and family or professional investors such as venture capitalists, private equity firms or mezzanine lenders, but one thing is certain: you need a lot of it. Especially because most small businesses have to deal with what Roth calls the J Curve. This curve basically means that you start out low on the revenue side, fall down even lower and then slowly build up to more than you started with as time goes by. On paper, it looks like a "J." Well, that‘s what successful small businesses do. I believe he said about half of them don‘t make it. Ouch.
Roth also went through the basics of forming a business plan and dealing with operational issues. From taxes, retirement issues, licenses, leases and human resources, it‘s quite the undertaking. However, I‘m sure the payoff and work is incredibly satisfying. Just a warning, Pam. --Jennipher