I’m So Worried I Can’t Sleep

“I wish I could be like you … and own my own business”, said a friend to me this week.

I bit my tongue.

Far as I can tell, he gets paid a comfy salary to essentially sit in meetings, drink coffee, eat nice pastries, and burp out the occasional “well, moving forward, we’ll cross-collaborate on our KPIs to achieve operational synergy with all stakeholders”.

(Okay, so that’s not all he does. He also spends quite a lot of time emailing … about upcoming meetings.)

Ain’t no small business owner I know who’s got time for that. We’re in the trenches, baby!

Small business owners are a different breed: they work their guts out — risking it all — even though the odds of success are well and truly stacked against them.

Case in point: this week I received this email from Tania, whose small business is at the crossroads.

I’m So Worried I Can’t Sleep

Hi Scott,

I feel sick to the stomach. After five years of owning our cafe (which we bought for $100,000 with a loan), we are still only earning about $45,000 a year. That’s after we pay the interest on our loans, and there are a lot of them!

We now have around $220,000 of debt across around seven sources (mainly one bank) and repayments are around over $1,600 per week. So far we have been able to meet loan repayments but are feeling financially stressed — not to mention the day-to-day running of our business.

The business is profitable but, with the debt the way it is and some bad advice that was given to us, we seem to be going backwards. We need to address this ASAP, so we are considering consolidating all our debts into one loan for $220,000 at 15 per cent, which would be only $1,000 per week.

I don’t want to go bankrupt as we are profitable, but we are experiencing a bad run. I am also wary that we have a portion of debt secured against our in-laws’ home. We are making changes to improve our business but it’s not fixing our debt issue, and I am concerned about being able to pay our suppliers and make all our debt repayments.

I am so scared of what could happen and am losing sleep.


The answer I have for Tania is applicable to many small business owners. Here it is:

The Crossroads

Hi Tania,

You’re at the crossroads.

Actually … no you’re not.

You were at the crossroads a couple of years ago, but for some reason you decided to put the pedal to the metal, speed through the stop sign and hope for the best.

And now you’re face to face with a huge debt truck that could wipe you out. (Guess who watched a bit too much of the Melbourne Grand Prix last weekend?)

Okay, so I’ve helped hundreds of small business owners over the years. While they were all different — and in vastly different industries — every one of those who went broke had two things in common:

1. They Take on Too Much Debt

Despite the marketing hype, banks generally don’t like lending to small business owners — unless they can get security over their family home (or, in your case, the in-laws’ home!). Then, when they’ve got the security, they’ll give you enough rope (credit) to hang yourself.

Here’s the thing: having the family home on the line compounds your stress dramatically — because it’s a highly emotional investment. No one wants to lose the roof over their head, or your in-laws’ heads.

Strewth! Christmas lunch at your house must be a real hoot. (Don’t even put butter knives on the table.)

2. They Don’t Know Their Number

As a small business owner, I’m obsessed with my ‘break-even number’: how much I need each month to keep the lights on and the employees paid (including my most important employee — me).

It doesn’t need to be fancy. Grab a piece of paper and write down — line by line — all your expenses (both variable and fixed). That’ll give you your break-even number. Then match that number against your expected revenue, minus 25 per cent straight off the top for tax.

Just being aware of your number can be enough to boost profitability.

‘Cashflow problems’ are weasel words — a fancy way of saying you’re spending more than your business earns. Other than making more sales, the only way to guard against going bust is to consistently focus on cutting your overheads and transferring those savings into a business Mojo account.

Assume Crash Position

This advice is all well and good for business owners approaching the crossroads, but not for you.

You bought the business for $100,000 five years ago. You now owe $220,000. Your profits haven’t increased.

That tells me the business isn’t paying its way.

Honestly, your chances of consolidating your debts without additional security are slim. More honestly, the biggest beneficiary of your business is the bank, from all the interest you’re paying them!

I don’t like the fact that you’re sick to your stomach and can’t sleep.

I don’t like the fact that you’re earning less than you could earn scrubbing dunnies.

And I certainly don’t like the fact that your parents have mortgaged their home for your business.

I’m all for the thrill of being in the trenches, but sometimes you need to wave the white flag.

Or, to quote esteemed management consultant Mr Kenny Rogers:

“You got to know when to hold ’em, know when to fold ’em, know when to walk away, know when to run …”

In your case, I’d fold ’em.

Tread Your Own Path!