This is the next installment in an ongoing series where I talk about my history in business starting all the way back when I was a child to now in my late forties. Feel free to read parts zero, one, two, three, four, five, six, seven, eight, and nine if you haven’t yet to get some context.  

We last left off in the late 90s, when I was 27 years old, when I finally hit my ten-year goal of making six figures…  

Mid 1999 – Mid 2001  

With my new six-figure income I felt more confident and powerful as a business owner. I decided to expand. 

• I moved from a single-room office to a multi-room office in the same building with its own entrance. 
• I hired a full-time administrative assistant to handle my office work, or at least most of it. 
• I hired my brother full time to help with back-office technical work we needed done for clients. I would still go out and do the on-site work, but he would do the hardware work in our workshop. 
• I had an actual sign made up for the outside of the office and had it professionally mounted. It made my inner Alpha Male 1.0 feel proud to see the name of my company on the outside of a building.  
• I moved my family out of my small home in an old neighborhood to a brand–new home with four bedrooms in a newer (but still very cheap) neighborhood. 

All of this business and personal expansion felt very good. For the first time in my life I felt successful.

The problem was that while I had mastered how to make over $100,000 a year (and my income was barely over this number) I still had absolutely no idea how to manage it. I was still a kid and wasn’t organized at all. 

Most of the things I was spending the new money on were things I should not have. My budgeting skills were pretty bad. I was semi-regularly behind 15-45 days on my bills and scrambled every month to cover all the expenses for my family and the office.  

I also started going into debt, big time. For example, a client would order $14,000 of new computers from me. I would order the computers from the manufacturer using a line of credit, then deliver the computers, and get a $14,000 check from the client. Instead of paying back the line of credit like I should have, I instead said, “Wow! I have $14,000 extra this month! Cool!” Then I would spend it, leaving me a debt of $14,000 on the credit line. I did this several times, on top of maxing out credit cards and similar debt. Very foolish.

Every time tax time came around, I owed thousands of dollars because I wasn’t paying my taxes correctly. I could never afford it, so I had to call the IRS and local state government every year to come up with a payment plan. This just increased my debt yet again. 

On top of all of this, I wasn’t building an Alpha 2.0 business. Instead I was building the typical, location dependent, sell hours for dollars, high overhead, hire a bunch of salaried employees type business that usually ends up enslaving the owner instead of freeing him. I was excited and working hard yet digging my own grave, and I had no idea. 

I kept cranking things. The added overhead and employees actually increased my average weekly work hours, since now I had to not only take care of clients, but I had to monitor employees as well. My employees were good people, we got along great, and they did quality work. The problem was they were traditional employees. Traditional employees need to be managed. Moreover, I was not a good manager. 

For example, my admin assistant had a bad experience with one of the companies she was working with over the phone. She was furious. The next day, she spent most of the entire day, six hours, crafting a well-worded complaint letter that she wanted to send to the company.  

I don’t remember what I was paying her per hour, but whatever it was, it was something I could barely afford. When she proudly told me she had spent most of the day doing this, I realized I had paid her for six hours of her time to write a fucking complaint letter that was completely irrelevant to the day-to-day operation of my business. 

This wasn’t her fault. It was mine. I never provided her with a clear vision, agendas, objectives, or limits. I did what I did with all of my employees back then. I said, “I need this and this done. Okay, bye!” Then drove off to work with my clients. 

Thinking back on all of this today, it makes me laugh. (I was actually laughing while typing this article.) I was so inexperienced and over my head back then. If that version of me had hired the modern-day me to help him out, I would have screamed at my younger self for being such an idiot and would have had him revamp his entire business from the ground up.  

But hey, I was still learning. Business success doesn’t mean you gross a higher income. It means you make a decent amount of money in a low-stress way while not working too hard and managing your money very well. I only had the making money part down (somewhat), but I had no idea how to do the rest of it. I just focused on increasing the income. 

Finally, all of this financial mismanagement imploded. At some time around 2001 (I’m not sure which year it was) my car was repossessed. I was embarrassed and extremely angry with myself. I realized that I couldn’t keep up all this financial chaos. If things kept going this way, my family and I would be in serious trouble. 

With a heavy heart, I told my wife at the time that I simply could not afford the house payment and lifestyle expenses anymore while servicing all of the debts and back taxes. We sold the house, I used the profits from the sale (of which there was a lot, since it was in the middle of a real estate boom) to pay off a bunch of debt, then the four of us moved into a small but nice apartment. I told the wife that we would have to tough it out in an apartment for about a year, after which we could buy another house, but a shitty house, fix it up, then flip it after living there for a year to take further advantage of the real estate boom. 

That year in the apartment was very painful for me. My kids didn’t mind and even my wife didn’t mind very much, but I did. My income even dipped below the $100,000 level for the first time. I felt like a failure.

I resolved to clean up my financial act once and for all. 

To be continued… 

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