“A man who makes a big splash may be a man who has gone overboard.” Parkes Robinson Most of us love instant gratification. We hope to be blessed with instant riches, especially wealth without work. We play the lottery, we head to the casinos, we sign on to programs that promise prosperity. And some of us approach going into business with the same mentality. We get an idea, we draw up a so-called business plan--with more dreams than detail--we borrow a few dollars and we are on our way to quick profits and the American dream. The ever-present stories of quick fame and fortune fuel such dreams and paint an unrealistic picture of what going into business is all about. Here is a letter I received this past week from David M, who wrote me about two of his clients preparing to jump into business with same emotional brain waves that drove so many to bet the family farm on dot com stocks before the bust of 2000. He worries about the lack of reality that clouds the dreams of these would be entrepreneurs. Dear Dr Adams, I have been enjoying and learning from your columns and have passed them on to others. So thank you. I am a business press agent and know of a few situations you may be interested in writing about: A client and his wife want to open a winery and just purchased a home in the Catskills that has a wine making history to it. I have been trying to advise them to be cautious, although it looks like its full steam ahead for them. Any advice to these dreamers about the reality of start up costs? David Dear David, Before they hype themselves up on becoming a household name, they had better do some “number crunching.” If they wish to enjoy the “fruits” of their labors, a long-range cash projection is first. Dreams of fame and fortune are just that--dreams. Reality for some would be entrepreneurs is like a cold shower. Establishing a winery is a long-term proposition, with a long-term cash drain and a stream of income in the distant future. If they have the resources and can support their life style and the start up expenses of such a long-term venture- fine. However, as I frequently state, when starting any new business, plan on the ubiquitous “Murphy’s Law” to be operating full time. While cash and expense planning can be a droll, it is basic to survival – so sit down with your client and be the bearer of not so good news. Paul Adams Dear Dr. Adams, I have another client who is an award-winning author and has developed a line of special sauces that has just been introduced to the market. The other day, I attended a meeting with her and her husband (who is a writer for a national magazine and does not have a background in retail/wholesale food) at their accountant’s office. Much to my surprise, the husband is talking about quitting his job and living off the business because he is having contract negotiations that are not going well. They are also expecting twins in April, and she is going to have to be on bed rest starting Jan. 2004! Her product has gotten great press, and appears to be moving well, but has been on the market for only a month! I was surprised their accountant hasn't done any of the legwork with them regarding a business cash flow projection. The accountant kept talking about the big picture, such as when supermarkets start ordering this product. I interjected that this probably won't happen immediately. Also, her product has a shelf life of 8 weeks! What is it about people that they can't foresee the startup costs, business, and personal overhead clearly and why accountants aren't hip to this? They have invested about $15,000 for start up costs, and assume they will start getting immediate income. Best Regards, David Dear David, Dreams, dreams ,dreams--we all have them and so many of us use dreams as fuel for motivation and a smokescreen to filter out our problems of daily live and bread winning. You are so right--caution is missing in this situation. I suggest you tell them to create a financial business plan. Cut out the smoke and mirrors from the sales forecast and determine a break ever position with their current expense- they will discover if are to survive they will need the husbands income. Patience and humility are important assets during the difficult and tension producing start up stage any new business. Euphoria and unrealistic enthusiasm can take budding small business owners down a financial path to bankruptcy- by the way; they may not like your “negative” suggestions. However, bearers of “bad” news are no longer executed. Paul 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 Amazon.Com. If you have questions or comments- contact me: drfailproof@earthlink.net