Hard business lessons.

36 years owning Pegasus Books.

I made a lot of mistakes in my first 18 years of business. That's why I recognize the warning signs in others.

I'm upfront about it, too. I try to warn people, even competitors, because I believe that healthy businesses are an overall good. Unhealthy businesses, especially competitors, are a drag. I'd much rather compete with a smart competitor because chances are they are living by the same rules I am.

We all live by the same rules. Overhead, profit margins, business ethics, location, location, location, and so on. Anyone who somehow tries to live by other rules will find out eventually that it won't work. No one lives by a magic formula. Even competitive advantages eventually shrink. (I had a competitor once who was operating on half the margins I was--I found out later they had free rent. When the free rent dried up--and of course, that will happen--so did their business.)

But despite all that, chances are that most small businesses will make a ton of mistakes--if they last 18 years at all. Either they learn or they're gone.

For the last 18 years, I've tried to apply all the lessons I learned in the first half of my career. Most often, my conclusions have only been confirmed. I've spent most of this time building the business back up again on a more solid foundation.

Only in the last six years have I given myself substantial time off. It was time anyway. I was no longer the most effective salesman. I was cranky and a bit burned out. So having Sabrina and crew being the face of Pegasus Books has been a good thing.

I wonder if it is even possible to learn these hard business lessons without experiencing them.

Everyone makes less at first than they think they will.
Everyone thinks their "hobby" business will be "fun."
Everyone gets fooled into thinking advertising works.
Everyone will be tempted by a "cheaper" or bigger location.
Everyone thinks "image" is more important than it is.
Everyone puts the promotion cart before the selling horse.
Everyone overspends on fixtures and accoutrements at first.
Everyone thinks selling cheaper will make more money.
Everyone underestimates the importance of inventory.
Everyone offers "service" beyond what is sustainable.
Everyone expands to the point of incompetence.
Everyone struggles at some point and reacts badly.
Everyone overworks, burning out.

It's that last one that is most hard to convince others.

But I'll always maintain that burnout is the cause of as many business failures as not making money. (Usually, one leads to the other, of course.) The level of energy you bring to the business at first is simply not possible to sustain forever.

Anyway, I throw out these tidbits once in a while. Of course, other long term businesses may have different advice. The above is tailored to my personality.

 But I think it is roughly right.