On Thursday, October 30, 2014 5:30:24 PM UTC-5, Ignoramus28704 wrote:
We all have heard of "poverty cycle", where people are trapped in low
paying jobs, have to work a lot just to make ends meet, have no time
for education, start drinking on top of that etc.

This poverty cycle is real, and while it is possible to get out of it,
it takes a real feat and a superhuman effort.

What I want to bring up is that there is an analogy of poverty cycle
for businesses. This is includes one-man businesses, just as well as
larger companies. The poverty cycle for a company is being trapped
in a low return, high hassle business. Similar problems accompany
companies in poverty, such lack of funds to improve, lack of time to
think about doing things differently, being unable to reject
undesirable clients, etc.

A big effort needs to be made to stay out of the business poverty
cycle. Getting out of it, may be completely impossible (unlike for
people).

i

Iggy, (at the risk of breaking the off-topic cycle)

I spent many years in sales and marketing for an auto parts distributor. I visited independent auto parts stores all over Texas and Oklahoma. Many, many of them were Mom and Pop outfits that were in a decades-long rut, making maybe $30K/year net, working 6 days a week, and no vacations. They had a business that was unsellable, and were flat worn out. Those people were trapped in their cycle. Usually the best thing that happened to them was when they finally had that bad month that broke the back of the company. They had to get a job, and they were much happier. I spent a lot of time and effort helping my customers break that cycle and move their business to the point where they could hire some help, take some time off.
I know a guy like that right now that let his store (in Dallas) get reduced by the big national chains until he isn't even making a living. He has a good job waiting for him, but he has to unload the inventory first. He calls me once a week to help him find a buyer. And it's *real* cheap right now. Anyone want to buy a complete auto parts store?
The other side of that job was working with people looking to buy a business. In so many cases they were planing to quit a job and buy a store with their life savings. After visiting with them, looking at their business plan (if any) and running the numbers, most of the time they would have been "buying a job". Those people I encouraged to re-think the plan. They would have ended up 10 years later trapped in a store, savings gone, and making less money than they did working for The Man. Oh, and no benefits.
Math skills: You would e surprised at the number of business owners who do not know the difference between markup and margin. I have taught that subject many, many times.
ROI is another eye-opener for most of them. I would tell a store owner "Oil is the most profitable product line in your store". Of course, most hated oil. They made 10% (markup!) on it, where they might make 35-40% on an idler arm. But that idler arm sat on the shelf for a year waiting for a sale, where their entire oil inventory would turn once a month. I still did not convince many people.
There are still people doing quite well in that business, but the ones that excel - and escape the trap - are the optimistic, pragmatic entrepreneurs that have fun playing The Game. If the business isn't growing, it ain't fun.

But those people, and those skills aren't that common. And people that can maintain all that over decades of time are exceptional.