The Three Rules

OK there is nothing worse than unsolicited advice and over the years I have been given lots of it. I may have given it out as well, probably with good intention rather than malice aforethought. But when I filter through some of the nonsense purporting to be good advice, I discover there have been a few gems. This is about the three rules of business and they could not be simpler:

  1. Don’t have partners
  2. Don’t employ anybody
  3. Always use someone else’s money

Yes it sounds a bit twee but if you strive towards these and consider them goals more so than rules, then they have some merit.

Partners

They cause the most concern. People change, people get greedy and before long you end up with a committee style management  were individuals do what they always end up doing, they look out for themselves

Employees.

Who in their right mind would want to employ anybody these days. Unfair dismissal, payroll tax, theft etc. you train them and then they take everything they have learnt and either use it for the next employer or for themselves.

Money

We all know in construction there is a merry go round of clients paying contractors and contractors paying subcontractors. In most cases everyone is waiting to get paid whilst the costs of running their businesses just keep coming in. So we end up funding the very people who owe us money and how do you build that into shrinking margins.

It is a simple task to highlight the problems of standard companies with partners  employees and overdrafts, so what is the ideal business. I reckon one of my good friends has the answer. He buys electrical cable wholesale. The kind that is used in domestic situations. It is sold in hardware shops, it never changes specification, unlimited shelf life and a large amount can be stored in a relatively small area. He has a simple machine which unwinds the large cable drum and winds it onto smaller cable reels, then he has it picked up by couriers and sent out to he various outlets he services. The business consist of him, his machine and space under his house. On delivery the payment goes straight into his account so he is always paid before he has to pay his supplier.

He has no partners to consider, no whingeing employees, always cash positive, earns a very good income and above all – he is happy doing it.

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