"The time to correct a mistake is before it is made." Henry Buckley The other day I was told a tale of business failure that should be a page in anyone’s lesson book of self-employment. It was a story of a middle- aged lady so hung up on owning a thriving business that good judgment and reason succumbed to the misguided belief that will power over comes all obstacles. As she jumped into business, she trusted her faith in the future and faith in her ability to turn the odds in her favor regardless of circumstance and other’s opinions. She was like so many others who pride themselves on being what they call “positive thinkers.” Individuals who tout the cliché “failure is not an option.” Persons who believe that superimposed inner strength will over come all odds. If you are about to start a business- watch out for such thinking. Many have lost their nest eggs and more, mixing up caution and prudence with negative thinking. If you believe will power will accomplish it for you, try willing a slot machine in Vegas or Atlantic City to fund your retirement. Now back to our tale of defeat. A few years ago, a lady who over two decades had accumulated three homes, a sizeable bank account and a few other trappings of middle class prosperity, caught the contagious thinking of “entrepreneurial fame and fortune. Going into business became her goal. She was obsessed with the idea. And so she did. With encouragement from a “new “friend- a younger man with like minded ideas and ambitions filled her mind with the joys of launching the next “Subway” or “Starbucks.” As he was a short on cash, he would make it up with sweat equity, determination, and ideas. And so hand in hand off they went through the tulips looking for the holy grail of yachts and mansions. Three years later, she found herself facing middle age--busted! She lost her homes, her retirement nest egg, her art collection, and her car. As you may imagine she was stressed out, depressed, and bitter very bitter. If you were to mention the words positive thinking and entrepreneur in any sentence it would trigger a rush to the nearest lady’s room. Our couple rushed into business with a groundwork laid for failure. But if you mentioned such a possibility as they were starting out you would be accused of being a curmudgeon or a soothsayer of failure. Worse yet, you were being negative-God forbid! The phrase “failure is not an option” was their business motto. It appeared on their stationery, on cute signs in the office and on their business cards. It was almost as if these words were some from of spiritual shield from the possibility of problems. To begin her journey to financial Hades, she put up her cash and pledged her assets as her share of the partnership. It was a partnership fueled by ideas of grandeur--just that, ideas, research, and doubt was for those of little faith. The capstone of her disaster was incorporating-as the lawyers advised-but she circumvented the limited liability protection by offering personal guarantees to vendors, the landlord, and the bank. After all, so they believed, such guarantees were immaterial and only details--you must have faith in the future. If you are positive, “failure is not an option.” And fail they did. The market was not there, their sales forecasts were dreams. And the rush to success was based on illusion. As their venture burned up cash to cover expenses and bills, the debts piled up and her bank account shrunk to the size of a weekly Christmas club account. Still in need of cash, and denying reality, their easiest source was a series of second mortgages and home equity loans on her houses. After all, no risk, “failure is not an option.” Late notices and bounced checks turned a walk through the tulips to rock climbing. The trip to tragedy and stress could have been avoided. As I say, here is a page for your lesson book. First, if you go into any partnership, have a written agreement, define responsibilities and the ratio of ownership must be based on the amounts of money each contributes. Never, join up with any character that has glib but no gelt. Ask yourself why should such a successful person be broke? Secondly, check your plans with other business owners who have struggled through the start-up phase of a business. If they greet your plans with skepticism, raise the red flag. And lastly, never, never, give personal guarantees exposing your personal assets to creditors. You may be equal partners, but collection attorneys don’t care which partner pays, they go for the “deep pockets.” And unlike those who won’t see beyond their optimism, if things don’t work out, you must plan an exit strategy. Anyway, so much for “failure is not an option.” Copyright 2003 Dr. Paul E Adams, Professor Emeritus Business Administration Ramapo College of New Jersey Author “ Fail Proof Your Business: Beat the Odds and be Successful.” Available from Amazon.Com. If you have questions or comments- contact me: drfailproof@earthlink.net