A successful small business of your own could give you a sense of personal dignity.
If you are an employee, you are likely to be supervised, and have to follow your boss’ orders. Some people might like this situation as it frees them from decision-making (and even thinking) responsibility.
Other people might feel that they could make as good or better decisions as their bosses and would prefer to make their own decisions. If you are such a person, you might prefer to run your own business. And if the business succeeds, you might feel a great sense of achievement.
If the business fails, however, you might be worse off in the matter of personal dignity.
That brings us to the question. What is personal dignity?
The only universal definition would perhaps be: You feel a certain sense of fulfilment when you are able to live according to your values. Such a sense of fulfilment could create a poise in your personal bearing. This poise could be instinctively recognized by people coming into contact with you. And they mostly respond with a certain respect towards you.
It is your inner image about yourself that creates the external image that other people see. If you despise yourself, the expression on your face, the posture of your body, the way you behave and talk with others and the gestures you make would reveal your own sense of worthlessness. And people might find no reason to respect you.
Your self-image is dependent on your sense of values. These values in turn derive from your world view. Your world view comes from your early life experiences. [If you have a philosophic bent of mind, you might be able to change this experience-based world view and values, and replace these with more balanced and objective ones.]
Your values tell you what is admirable (or whether there is anything admirable at all in this world). And using this criteria, you tend to admire or despise yourself.
For most ordinary folk, creating a successful small business by doing something that they like to do would come under the ‘admirable’ category. And therein lies the significance of small business for personal dignity.
And if things don’t go right, start again. Learn from the earlier experience and do better next time. Most successful business persons have failed one or more times before succeeding.
Your personal dignity is determined by you, by your own sense of values. Success in small business comes from experience, not from innate personal quality. When you understand this, you will begin to see things in perspective.
Finance and Profits
Finance and profit are different things. Without proper financing even a profitable company might have to shut down.
What’s that? A successful business has to shut down?
You read correctly. Even a successful business might face cash crunch. Cash is not the same as profits.
You earn profits if you sell at a price higher than your costs.
However, you generate surplus funds only if you get more cash flowing in than what is going out.
Now, the catch is that outflows consist not only of production costs. You have to repay loans you had taken. You might have to buy new equipment and/or merchandise to expand operations. The suppliers of these additional requirements might have to be paid now, before you have completed your expansion and started generating additional profits (and cash).
And if you have extended credit to your customers indiscriminately to attract business, you might find that a large percentage of them do not pay you in time, or at all.
Business success itself could bring on a severe cash crunch because you might need to produce or stock more merchandise and give credit on more sales.
So, work out your financial position in advance before making commitments.
What would be your sales? When would the cash from these sales flow in? What are the commitments you have already undertaken? How much cash will be flowing out as a result of these commitments each month? How much cash surplus or deficit would be there? If it is a deficit, who will finance it? Have firm arrangements been made for the finance?
Above all, be realistic. Don’t assume that all your customers would pay you in time. Or that you could get six months of credit from your suppliers (you might, but negotiate in advance and get firm commitments).
Prepare cash flow statements showing inflows and outflows each month for the next year. And for each quarter thereafter, for the following two years. Consider all expansion programs and incidental cash flows.
Clearly understand that cash is different from profits.