Response from: Harry Goldberg    (05/15/07 10:40am)

I've replied to several comments in this "fleshed out" version of the 20 commandments, but this post makes me wonder. I'm a business man. I run several successful businesses in the greater Philadelphia area. In fact, I'm a VP of business development in the software industry. I'm willing to place my cards on the table, especially in the event of being challenged such as this, if Mr. Hessinger will also place his cards on the table.

I'm reading in this post that you "almost" bought a business? Have you run "any" businesses that we've heard of? I read in another post that you worked on a business proposal for "three years" that never went anywhere. Three years?

It seems to me that the advice on this site is nothing but tips being cut and pasted from other people's websites, with no assurance that the person monitoring the advice knows what is correct and what is not.

Response from: Dave Wright    (05/16/07 7:29am)

Shawn, I've held off responding to your additional comments because I was interested in seeing what you had to say. I would not have been nearly so irrate with the first group of postings if you had simply called them 20 suggestions for new business start-ups, but by labeling them commandments it carries with it a certain weight, or expectation of importance. However, with this recent post on Accounting you have, to my mind, crossed a line from giving bad business advice to actually giving false or misleading information. I wonder if you've ever had a basic Accounting class, even just a year of high school Accounting would be enough to expose the problems you fail to grasp.
To start, GAAP rules are not limited to governments and publicly traded companies as you claim. Were you take a high school level Accounting class you would understand and use GAAP standards on sole proprietorship and partnerships. These are standards that ALL business must follow regardless of organizational structure. These standards are important because all businesses must be consistant when reporting financial results. These standards are in fact used by the IRS for income tax purposes, another point you seem completely ignorant of! Allowable expenses on IRS forms used GAAP standards! You mock a business owner for counting truck tires as a business expense, but depending on the nature of this truck and his business he may have been well advised to do so. You mention an example of someone starting a web-based business. If this person buys a new computer to use as part of that business, GAAP standards allow him to offset the yearly depreciation on that equipment as an expense. This allowable expense is a boon for new owners because it's also a non-cash expense, meaning you don't need to write a check for it like other expeneses--it lowers your taxable income without costing you real dollars! That means that small gains or losses in early years of operation can be offset with these expenses. But you wouldn't know any of these if you limit yourself to advice from bloggers instead of the people that really understand businesses. The only people who have to fear an audit are business owners who don't know GAAP, people I fear who think like you.

Response from: Shawn A. Hessinger    (05/21/07 4:16pm)

To Harry,
So you're from Philly. Small world. My wife is from center city. Anyway, I agree, let's put our cards on the table. As I mentioned in response to another of your posts, I've spent over half my adult life self-employed in one enterprise or another in a variety of endeavors ranging from a contractor for local county government to the sales representative in a family run fruit growing business that supplied local restaurants with produce to operating my own mobile DJ service to running a small independent label that I guarantee you've never heard of but had a small following and supplied a circle of vendors in Northeastern Pennsylvania and by mail order. These may not sound like important businesses to the vice president of a software company, but they are the kinds of small businesses that folks start every day either to support their families or to make extra money on the side. Like the business you seemed to be trivializing in another post that is bringing hope to women in poverty stricken South America. The current blog you're reading is another small business that pays for my son's private school education. The trouble with much of today's business is that it is not interested in anything but monsterous profits because often massive borrowing goes in to creating it in the first place. (You didn't mention whether you started the software firm or any of the other businesses you manage or not. It doesn't really matter.) I also don't think the fame of a business determines its success--despite the fanciful title of this blog. If you mentioned the name of your software firm and I had never heard of it, would that negate your success? I've enjoyed debating business philosophy with you, but I'm not certain we will ever agree. Perhaps it would be better if we agreed to disagree. You also imply I think that since I've started many businesses some of which no longer exist I am somehow unfit to deliver business advice. Like a lot of us, when my life situations have changed I gave changed with them. Many folks I know have gotten out of one business and into another because of a change in circumstance just like people go from one job to another, perhaps to make more money or to fulfill a new goal or meet new family obligations. I only know that the money I have made over the years from small businesses no matter how trivial they may seem to you would have been missed if it wasn't there. It helped me buy my first car (used, of course)in cash and bought my wife's engagement ring as well as paying for many many other things. I don't think you have to run a big company to be in business. A consulting business can be as small as one person. You. And I don't think you have to spend a lot of money to make money. I think the majority of people who trade business advice on this site would agree.

Response from: Shawn A. Hessinger    (05/21/07 4:54pm)

To Dave,
In my several years of high school accounting the most important lesson that has stuck with me is the need to keep ALL finances separate, itemized and clearly accounted for. That includes business and personal but also income from various different businesses. However, it is not necessary to keep separate bank accounts in the beginning phases of a business to do so. A good ledger will do just fine. On the subject of depreciation, hopefully you will not be buying anything unnecessary and will hold down purchases even of things that are necessary as much as possible until you have cash flow to do so. I sense that we are at loggerheads here and are not going to be able to break free, Dave. I think many, though by no means all businesses, can be pared down to a starting format that can generate cash flow first in order to build the business. Remember, if you make no money at all the depreciation won't be much good to you and if you make a little but not enough to cover expenses your depreciation may only save enough on your taxes to cover your debts. (By the way, I'm not mocking someone for declaring his truck tires as an expense. You are the onme who brought up the need to keep personal and business expenses seperate. He should certainly have been able to tell after years of running a business what the total amount of those various deductions amounted to. Unfortunately he had never bathered to calculate them.

Response from: Dave Wright    (05/22/07 7:04am)

Shawn, I appreciate your responses, but I have to say I find them mostly inadequate. On the subject of GAAP standards, you do not address my point that the information you gave was incorrect.
Additionally, the point that Harry and I, and several other responders have been making that the nature of the “commandments” was too over-reaching has not been resolved. As I said before, advice is fine; but calling something a commandment implies a level of acceptance that clearly was not true.
Something you mentioned in your latest response drove home, to me, the difference between the way we view business. You mention holding off on purchasing items, even ones that are necessary, until you have a solid cash flow. However, this makes no practical sense. How can a blogger work without a computer, or a DJ without equipment? I’m sure there are ways, but in the end perhaps it’s best to take a risk. Look at any business textbook for a definition of an entrepreneur, and it will tell you it’s a person who takes a risk by operating a business venture. Is that risk limited only to business failure? No, it’s also a risk to working capital. And there is where we disagree. I think you believe in the risk-free entrepreneur, I don’t believe such a thing exists. If you want to be a blogger who uses computers at the local library because it’s free, fine; but I think you’d more effective owning your own computer. You could borrow equipment to be a DJ, but I think you would be more passionate about your business if you invested your own money into it.
Your advice may be fine if your ambition is limited to being a local work-at-home merchant. But if you want success, you need to take risks. To me, this whole bootstrapping model is designed to be as cheap as possible, and I don’t think it very practical to get into business by asking at the outset: How much isn’t this going to cost me?

Response from: Shawn A. Hessinger    (05/22/07 7:22am)

Thanks, Dave. I really do appreciate your comments and Harry's too. I think it's added alot to the posts.