I get a lot of requests from entrepreneurs who want to use social media to launch their business.  For most, the promise of a cheap alternative to marketing is what lures them, but the brighter ones see it as a powerful motivational tool.

It's rare we take that kind of business - just to be blunt we're a cash first kind of company, and a lot of startups want you to work for equity (and they wildly overvalue what they have).  But I do love a good idea, and even if I don't work with someone, I wish them good luck, and hope for the best for them.

Watching Shark Tank on ABC has really whetted my appetite for that kind of business.  I'm amazed at the value people out on their business, and dismayed at how little they appreciate capital.  At the same time, I'm wary of the sharks.  They are in it for the deal, and they're not there to make someone's dreams come true.

 Maybe it's because we're on our fourth year, and we've suffered our share of the typical entrepreneurial setbacks and mistakes.  Or maybe it's just because we're looking forward to a future where we are those sharks - but some things I now know about running a business.

1) Hard work is better than lots of money, but it's not better than dumb luck.

2) You're going to have to sacrifice family time.  You don't get work/life balance.

3) Having an office space is helpful when you have children.

4) At least 30% of your time is/should/will be spent on administration.

5) No one is going to sell your product or service, unless you're paying them upfront to do so.

6) No phone call should last longer than five minutes without you having a clear view on why you're having that call.

7) Your credit score will suffer unless you're willing to overypay on taxes to prove you make money.

8) There are more licenses and fees than you can imagine, and no matter what you do, you're breaking some law, somewhere.

9) Be honest, be fair, but be hard.  Your business comes first, and if you can't put your business in front of someone you're helping (slow pays, loans, free work), you won't be around long.

10) The air will taste sweeter than you could possibly imagine.

I was struck by something today as I was paying down some debt on our company. 

Small business owners are unique in many cases because all of the profit for the company flows through payroll into the owner's balance sheet at the end of the year.  This is done because any profit left in the company at the end of the year pays a corporate tax, and then gets taxed again if it's pulled in the next year as income.

SBO's don't have that kind of cash flow, but they do make the opposite mistake.  Using personal lines of credit, owners sometimes go into debt to finance the company, but in doing so are making a classic consumer mistake.

Here's a test.  Borrow a $1000 on a personal credit card that carries a 20% rate, and wait 12 months.  At the end of that time, minus fees, you'll owe $1200.  If you pay it off in the next calendar year, it will take $1200 to pay off, correct? 

Wrong.  Depending on what you earn that year, the cost to pay off that $1200 is $1560- $1800.  To pay off $1200, you have to give yourself income that is also covers SS, Medicare, Unemployemnt, and Income tax. That's 30-50% of your income as a small business owner, and you don't get the tax benefit because you took it in the year you spent the money (unless you're depreciating an asset).  In other words, debt you carry over from year to year costs 30-50% more to pay off than the capital, in addition to interest costs.

So if you have a 20% rate on your credit card, you're paying 50-70% in the next year to pay that debt off in interest and taxes.  Now imagine you're a consumer, without the tax benefits of incorporation.  Maybe it's time you started looking at Personal Debt as a bigger drag on your finances than you just the interest rates.