Friday, June 12, 2009

Leaps of faith

I spend every day at work editing, assigning, vetting and too rarely writing about all the many ways being a small-business owner really bites it right now. The economy is belting the [redacted] out of almost everyone right now; being "your own boss" sounds peachy till you realise that then the one who's responsible for every single paycheck (and permit check and tax check and payroll check and expenses check and insurance check ...) is you. I'm a firm believer that the best way to "make a small fortune" is to take a larger fortune and use it to start a business.

And, as a moonlighting Muser on Personal Finance Matters, I'm aware that the #1 rule of investing is "don't invest what you aren't willing to lose."

So what's the first thing I did after David left his job earlier this year? Take a chunk of my scant available cash and sink it into investing in a small business. A restaurant. (BusinessWeek did a piece debunking the 'myth' of the high restaurant failure rate. Their cheery finding: It's not 90% of restaurants that fail! It's only 60%!)

I never intended to be a business "investor," and barring extraordinary circumstances, I doubt I will be again any time in the foreseeable. Some business journalists chafe against the professional stricture against buying stocks and making personal business investments; I always considered it something of a relief. Hooray, I have an excuse for never developing a "personal portfolio." I write a personal-finance blog because I'm philosophically fascinated by money, and the way how we get it and what we do with it cuts to the core of the individual choices each of us make. On a dollars-and-cents-and-actual-tangible-cash level, money bores me. Hence my laziness about allocating my IRA balance and my sanguine outlook on the giant suicide dive my 401k -- the only "savings" I have -- has taken in the past year. If I lost five figures in actual cash, I'd be a wreck. A five-figure loss in my 401k? Eh, it's supposed to be "long-term savings," right?, and so far, this whole "retirement savings" thing is just numbers on paper to me. I sock away the max my company matches every year, and have since I was 20 because it seems the sensible thing to do (free money? yes please!), but at no point has the "savings" in that account every felt tangible to me.

Which is a longwinded way of saying I can't see myself ever investing in a business because I've done a mathematical calculation and determined that doing so would work out in my financial favor. I invested in this one because the moment I heard it was being considered, I desperately wanted it to exist. I'm a pragmatist. I realise that most things require money to exist. So if I could move little financial bits around and help make this business real, in a tangible way? Hell yes.

Which is, I've realised after 18 months on the smallbiz beat, is the mentality entrepreneurs always have about their businesses. It's not a balance sheet. It's not a disembodied economic entity, or a way to generate cash. It's a service or a shop or a creation they passionately want to see made real.

As an editor, I genuinely admire the entrepreneurs who can take a step back and face bottom-line realities. As an employee, those are the business owners I want to work for. But as a writer, I'm more of a dreamer. I want to see amazing visions made real.

So when Chef Chris, who created one of the best meals I've ever had (and I'm a food lover; I've dragged David to recommended restaurants in 47 states so far) in a city I love, posted on his blog that he'd found a great space for a new restaurant and needed a few investors, I dove in. I'm a tiny, tiny stakeholder in this venture; financially, I'm a gnat among giraffes, and in terms of time invested, Chef Chris and Chef Paul and their crew are living this venture daily. I have every confidence they'll make it a success, and I'll get my money back with a profit, but I honestly don't care. Which is why I felt comfortable making the investment in the first place.

As a financial writer, the first piece of advice everyone (including me!) gives is "don't risk money you'll regret losing." I know the odds. I know investing in a new business right now seems bonkers. Running a small business in the best of times is murderously hard, and in a recession? Aiee.

But I also know I could lose every penny I've invested in this and wouldn't regret it, because I think this needs to exist, and the only thing I'd regret is if I'd not done everything I could to make that happen. Which is what the true-believer entrepreneurs I talk with for articles always say: They never really had a choice. They had to do this, had to start that business, because they needed to try. Some succeed, most fail, but everyone had to make the attempt and see the thing they'd envisioned made real.

So if you're in New Orleans, I recommend dropping by the Green Goddess. As a good journalist, I have to note that I have a financial conflict of interest in recommending it, but as this whole post was written to explain, I'm a fervent believer that you'll have a pretty amazing meal there.