When The Best Advice Is No Advice

Follow all the recommendations on offer for the would-be entrepreneur and you’ll be bust before you’re even started.

“Get legal advice here, financial advice there, insure yourself against this, that and the other, back-up everything, design and pay for disaster mitigation strategies, get in creative consultants, website designers, marketing people, human resource consultants.” The list of demands goes on … and on … and on.

Success in business is about making good decisions. The first decision is whether to go into business for yourself. The second is what business to run. Then you have to decide how to spend your money wisely.

Of course, that’s not to say you never need a lawyer or an accountant. Far from it, used wisely these people can save you a fortune.

But, the savvy entrepreneur avails himself of as much knowledge as he can. Perhaps 75%, maybe even 95%, of the questions put to professional advisers could just as easily have been answered by spending half an hour poking around on the internet. And, accounts are easy to learn too – you probably new all the maths by the time you were 12. What makes them seem so impenetrable is the archaic terminology and formatting.

So why do we get so much bad, even irresponsible advice?

It’s plain cowardice. Rather than be honest about what it takes most advisors pretend anyone can run a business. Well, they can’t – just as I can’t play cricket or football. Wish I could, but I can’t.

Anyway, who is actually running a business if everything that is done, and every decision made, is farmed out at vast cost to somebody else? Are these advisers so really out of touch that it isn’t blindingly obvious there’ll never be enough cash to finance their fancy whims?

Scared of risking blame for giving duff advice they pass the buck. “Ask a professional” they cry when the proper answer is “learn what you can for yourself, preserve resources, spend wisely and take responsibility for your own decisions”.

Everyone from banks to government sponsored business support organisations are falling over each other to tell us how to run a small business.

All these people imply they know how to do it better than its owners. Yet few are prepared to run the risk of setting up a business themselves, or share the risk in the businesses they advise. Frankly, most simply don’t have what it takes to run a business of their own. Just because you’ve read a couple of books, or even taken a course, doesn’t make you an expert.

A bureaucrat who has spent his whole working life climbing the hierarchy of a bank or a government department will have no practical knowledge of what it takes to run a business. His opinions and priorities will be irrelevant, even misleading. Like learning to drive, there is no substitute for direct experience – it can’t be learned from books alone.

Many organisations offering “business advice” realise this, and will claim their advisers have great experience of the small business sector. What this usually means is that they have great experience of advising the small business sector, on a comfortable salary with benefits. It rarely means they have hands-on experience of the gut-wrenching work of setting up a new company, keeping it going, and building it up against the odds.

Some will claim that they do have experienced businessmen acting as advisers. Usually, this means old Harry, the manager’s pal from the golf club. Harry most likely worked his way up the ranks of an established business before taking early retirement. He therefore knows less about being an entrepreneur than a teenager who has just spent his first day running the first business he has ever set up.

And, an extra word of warning about bank small business advisors – whereas most advice comes with a heavy dose of incompetence and unreality the banks actually have an incentive to give advice that is in their best interests rather than yours. They want to sell you services and banking products and you must apply a heavy discount factor to anything they tell you.

All this should not make the entrepreneur too arrogant about getting advice. Good counsel is a valuable commodity. The key is to find someone trustworthy, someone without an agenda, someone who has been a real entrepreneur, and someone with something to lose if the business gets it wrong.

September 2005