January 8, 2015/0 Comments/in Articles, Hairdressers Journal /by chris

As we approach the end of 2014 I thought I would take some time to do some looking back, at the year and at things in general. One thing is very clear, many things have changed and are still changing. And Im only talking about my own lifetime, let alone our entire history. But another thing is also evident and that is that with all our technology there are still many things that have not changed.

King Solomon, known for his great wisdom, wrote these words about 3000 years ago, “What has been will be again, what has been done will be done again; there is nothing new under the sun.”

Can this be true today? Surely that was only applicable because he had not yet experienced all of the modern developments and triumphs we have recorded in history since then? With all our developments in technology and information can it be that we still experience the same things as Solomon did in his day, surely not? We are so clever these days, we have solved so many problems, life is easy – or is it?

Let’s take a look at some old proverbs that can still be applied today.

For by wise guidance you will wage war, and in abundance of counselors there is victory (Old Testament Proverb)

If you are considering starting your own business be careful. Although you are not going to war with competitors in the traditional sense of war, there is a sense in which you will be fighting for a share of the market, and you will fight many battles on many fronts along the way.

This ancient wisdom urges the reader to get wise guidance before going to war, speak to many wise counselors so that you can ensure success. In the same way, before you go into business for yourself talk to people. Talk to the salon owner that you work for, talk to other salon owners, talk to suppliers in the industry, talk to other business owners outside the industry. Find out what has led to successes and what has led to failures.

Failure in business can have severe consequences with much personal devastation and should therefore not be entered into lightly. Being your own boss is not for everyone. This also should influence your attitude to your current boss, if you work for someone else. Show them the respect that they deserve (even if they don’t always deserve it).

The rich rules over the poor and the borrower becomes the lenders slave (Old Testament Proverb)

Be careful how you finance your business! As soon as you take money from someone you are in debt to them, they potentially have a say in how you run your own business and this negates why you may have opened your own business in the first place, ie to be your own boss and do things your way.

Now, you may need to borrow money in order to start your business and there are many success stories that have arisen from borrowing money, but going to bed each night knowing that you have to make Rx.xx amount of money each month just so that you can pay back your loans is not a great feeling. So approach finance very carefully.

Be especially careful of private finance, ie from one of your clients or friends. These kinds of arrangements are often less formal and less thought out than, for example, borrowing money from the bank. The bank will be very clear about the terms of the loan agreement. There will be an interest rate, a repayment term, action for breach of contracts etc.

However, when it comes to someone private this is often not the case and down the line this often leads to trouble. A private financer may have a very different idea of what they are going to get back from the business compared to you. It may be that they want a say in how things should be done, especially if they feel they are in jeopardy of not recovering their money. They may ask you for your financial information each month so that they can ensure that you are not trying to hide money from them, especially if they feel they are entitled to a share in the profits of the business.

In cases where you start out as friends the result can often be a loss of the friendship and this is even worse when it happens to be a family member.

Be as formal as possible, protect yourself and also protect the person who gives you the money. It would not be right for you to enter into an agreement with the hidden agenda of never paying back what you owe and it can get ugly, especially if they have more money and therefore more legal power than you.

When you have money think of the time when you had none (Japanese proverb)

In business there will be profitable times and there will be less profitable times. The danger often comes in the times when you have money. In the times when you do not have money you tend to make very wise choices, like spend wisely, cut costs, pay close attention to your business, motivate staff, ensure that you retain clients, save money for a rainy day and so on.

However, when money is coming in we tend to become reckless. We spend on things we don’t need, we don’t worry if we lose a client, we stop paying attention to the details of our business and we don’t plan for rainy days and we don’t re-invest wisely in our businesses.

Therefore, if you are doing well then remember a time (if it exists) when you may have been struggling. This should sober your approach to what you do with your money. It does not mean that you don’t spend it, but it means that you may need to spend it more wisely.

One of the best places to spend it is in your business. However, the goal of doing this is to ensure that your business keeps making money, even in hard times.

All the usual financial planning rules will apply, have a budget, cut costs, maximize profits, know your breakeven point, store away money to cover your monthly budget for x months. Pay yourself a set salary and then only take a portion of the profits periodically, don’t drain your business of its cash flow. Take care of your staff, but don’t overpay them so they become lazy, or too expensive to retain in hard times.

Do not withhold good from those to whom it is due, when it is in your power to do it. Do not say to your neighbor, “Go and come back, and tomorrow I will give it,” when you have it with you. (Old Testament proverb)

Pay your bills as soon as you can if you have the money. Not only does this keep you out of trouble, ie it keeps the lights on, the shelves stocked and your staff coming back, but it also takes care of the needs of the people that have supplied you.

Pay people what you owe them as soon as you are able, else you will spend the money and run into troubles later. It is very liberating being able to pay people what you owe them.

Now when David reached an old age, he made his son Solomon king over Israel

If you own your business are you teaching it to run without you or does it fall to pieces whenever you are away? Maturing your business to run without you frees you up to rest when you need to but also allows you to grow the value of the business apart from yourself. This is the equivalent of buying a house and adding value to it by adding a bedroom or a some other home improvement. By adding this value to the house you’re likely to get much more than you paid for it when you sell it.

In the same way, by working on your business you stand a better chance of handing it over to a successor like your children or getting a better price for it if you sell and less chance that you will have to continue working there once you have sold.

Conclusion

As you can see, in the profound words of The Pretenders, “some things change, some stay the same”. Our civilization solves some problems and then is faced with new ones. Some problems remain unsolved and seem unlikely to go away and we will need to keep applying ancient and modern wisdom to our lives as technology is just a tool and not a solution. (References: Proverbs for Business, Steve Marr)