Starting your own business

[annadragon]

I''m a recent graduate from a masters program and true to the nature of such things I want to do something totally in a different direction than my studies.

I wouldn''t consider myself entrepreneurial in the sense that I''ve never started a business, never worked for a small, fledgling business and I don''t know the first thing about it. I know this makes me highly-qualified, right!

However, I think and some indications show that there is a market in my area for the type of business I''m considering. There are some models of this type of business in other areas of the U.S., but I frankly don''t know where to start. Being a recent grad - I''ve got debt, not capital. I don''t know how to make a business plan, find investors or get seed money, establish a location, how to price products, find the best location for a base, etc.

Is it considered wrong in the business world to ask another business to share insight with you? or Is that viewed as helping the competition?
Does the type of business I want to start determine who I should start looking at for investment money?
Do some areas have organizations that can help a small business person learn these things?

I''m truly in the nascent stages of this and just poking around for some footing and direction. A few insights would be helpful in determining if I''m suited for this or doomed to fail.

 

[Haven]

Hi annadragon! Congrats on your recent graduation!

My husband has his own business, and he comes from a family of entrepreneurs. I think everyone in his family works for himself, it must be in their nature or something. My mother is a full-time educator, but she also runs a very successful desktop publishing business out of her home. SO, I''m speaking as someone related to a bunch of entrepreneurs, not an entrepreneur myself.

SO . . .

Can you start small? I''m not sure which industry you''re in, but is there any way you could work full-time and then start your own business on the side? That''s what my mom did, and over the years it has really grown into something that she *could* do full-time if she wanted to.

DH also started small. As did his parents. His parents own furniture stores, but they started with a tiny reupholstering business and grew over time.

My mom and I want to start our own business, The Haven (which I''ve discussed at length here on PS) and we''re doing the same thing--starting small. We''re offering a few classes here and there to get a feel for what we''ll be doing before we jump in and invest big bucks into the business.

Good luck to you! I don''t know anything about business. All I know is that I''m surrounded with people who do what they love, and they''ve become quite successful following their hearts. Of course, it always isn''t that easy, but they started very small and worked very hard for a long time to get where they are today.

 

[NewEnglandLady]

About 6 years ago I very seriously considered opening up my own business (a doggy daycare) and spent hundreds of hours researching all of these things. This is my experience with all of your questions:

Is it considered wrong in the business world to ask another business to share insight with you? or Is that viewed as helping the competition?
Interviewing local businesses was one of the first things I did and I also expected they would not talk with me out of fear of future competition. I started with the services for which I was already a client (which is a unique position) and they were very open about all of the pros and cons as well as their costs, revenues, unexpected expenses, etc. I then reached out to other businesses who weren''t as forthright, but still helpful.

I focused on local businesses which were already "full" because they would see me as less of a threat. This was suggested to me by the first couple of businesses I interviewed. In the doggy daycare business, they have a unique network so that if one business can''t take on more clients, they recommend another local company (or person). For this reason, everybody pretty much stays on friendly terms and shares information with one another, which is obviously not true in most businesses.

Does the type of business I want to start determine who I should start looking at for investment money?
Unfortunatley I have no experience with this, though I would think this would be the case. The investing company needs to know the industry, they have a vested interest in your success, so I would assume your investors would need to know quite a bit about the industry in which you want to start a business.

My husband and I were going to back my business venture, so we didn''t need extra investment, but the costs and amount I would need up-front were obviously a big consideration for me.

Do some areas have organizations that can help a small business person learn these things?
Okay, so I''m not a good resource for this question, either My area didn''t have an organization devoted to small businesses, but it seems like something that would be available in some areas!

I wish you lots of luck!

 

[annadragon]

Haven and NEL, thank you so much for your responses!

And thanks Haven for the acknowledge of my graduation.

I think that, yes, I would need to start small.
The reason I think there is a market for what I''m considering is there is not currently any local business that offers this service. However, there was. It did not fail because it had a bad model but was wiped out by Hurricane Katrina. Lots and lots of businesses suffered the same thing.

I''m motivated by your account that some businesses were forthcoming and think I''ll ping some small companies outside my geographic region to find out what they''ve done to set-up and succeed so far.

Did either of your write up a business plan? Either formal or informal just to give yourselves a foundation?

 

[NewEnglandLady]

Annadragon, I didn''t write up a formal business plan. After going through the costs with a fine tooth comb I realized that my profit margin was very thin and even if I were to reach my maximum profit, it would have been lower than my salary. I tabled it as an option to consider after having kids since it was a good option for an at-home business allowing me to stay at home with the kiddies.

 

[Haven]

I did write a draft of a business plan, and an investor pitch, as well. I haven''t done anything with either, though, because I''ve since decided to start very small and get bigger with time. The business I want to start is kind of like a sleepover camp for adults, and we would ideally live on the site, so it means huge changes and I''m just not ready for all of that quite yet.

The process of researching and then writing up a business plan helped me to clarify my vision, if that makes sense. I did a lot of research into the "field" I''d like to be in, and that was hugely helpful.

If anything, I do think writing up a plan would not only give you a good foundation, but it will help you discover things about your business ideas that you hadn''t already articulated in your own mind, if that makes sense.

 

[Karl_K]

if you cant start it with your own funds forget it for a couple years and get some real world experience and pay down your debt.
No one but someone who loves you is going to invest.
The hardest and sometimes impossible thing to do running your own business is get health insurance.
No insurance and you get sick you can forget getting insurance until 2014 and maybe not even then.
Talking about insurance don''t forget the insurance you need for your business.
Error and omissions and 10-100 million general liability depending on the type of business.

 

[Lula]

Date: 5/24/2010 7:16:41 PM
Author: Karl_K

The hardest and sometimes impossible thing to do running your own business is get health insurance.

No insurance and you get sick you can forget getting insurance until 2014 and maybe not even then.

Talking about insurance don''t forget the insurance you need for your business.

Error and omissions and 10-100 million general liability depending on the type of business.

Ditto this. If you are covered under someone else''s insurance -- e.g., spouse''s -- this may not be a problem for you.

But you will need to carry some sort of liability insurance for the business, and you will no doubt need to hire a lawyer and an accountant for at least an initial consultation to make sure you are in compliance with any local laws and statutes, and have your books organized so you don''t run amuck with the IRS (if you''re in the U.S.). There may also be advertising and internet costs (i.e., setting up a website) that you will incur before you earn any money from the business.

Start-up costs can be high, and most businesses don''t turn a profit for several years.

I don''t want to discourage you, but from my experience as a small business owner (before I went back to school for a graduate degree) it''s best to err on the cautious side as far as what things will cost.

Many people dream of what they will gain by starting your own business (creativity, passion for work, control of your time) but forget to factor in what you may need to give up (weekends, health insurance, the security of a regular paycheck).

 

[monarch64]

I come from a long line of successful small business owners myself. Every one of them started off SMALL. Absolutely you can do this, but you have to be very careful and start off on a small enough scale that you can get your product down to an exact science and build from there. Keep your day job. Don''t get overwhelmed with huge dreams--it''s fine to think big and keep the big picture in mind but for the first two years consider it a passion but not a breadwinner.

What you''re doing right now by posting here is called an informational interview, only you''re reaching a larger audience. You can do it when you''re starting to job-hunt, in the form of requesting a few minutes of someone''s time who works for a company you are targeting for employment or you can do something like this, only you can request to spend a bit of time (maybe a lunch) with someone whose business model might be similar to what you''d like to do. Is it seen as competition? Perhaps. If I were you I might try to schedule some time with someone whose business is very established who is either preparing to pass on the torch or whom you already know. There are lots of people out there, business owners or not, who like nothing more than to share wisdom and (yes, we all have an ego) talk about their success.

Business plans/models--google it, you can probably find a template that might be close to your needs. Otherwise, sit down and just brainstorm. Think about your product, your market, the needs of the business to start up and go from there. Things will start to come together, and you''ll have a rough draft to bring with you to informational interviews.

Network with the local Chamber of Commerce. Nearly every city or town has one and they have events frequently. Use FB. Go out for after-work drinks where small business owners go. You don''t have to state your objective necessarily, you can just soak up the atmosphere and keep your ears open to helpful insight.

Investors come much, much later. You need to have a solid plan and product. Get those things out of the way first, and then you''ll have a leg to stand on when you solicit funds.

Best of luck!

 

[perry]

Anadragon:

Congratulations on taking a real step towards your own future (and not a piece of someone else''s)

There are many different businesses out there - and completely different answers to your questions depending on which business you are looking at.

Here is my general recommendations:

First: Get at lest the following Robert Kiyosaki books - starting with Rich Dad - Poor Dad. Rich Dad - Poor Dad; Cash Flow Quadrant, The Business School, and Before you Quit your job are the basic start. I''d avoid his books on investing and real-estate for now. You need to learn cash flow and business basics.

Get his game "Cashflow" - and learn how to play it to quickly win. That can be ordered from the Rich Dad web site. www.richdad.com

Now this information is not perfect - but it provides a remarkable amount of needed information quickly and in an easy to digest form. You will probably be drawn to some of the other books. Note that in recent years Robert has put on a series of seminars on Real Estate - and there is some real controversy about those; as it doesn''t always work well (unlike his earlier stuff with is just good information).

Second: Be able to rough out what your first year cost are - and be conservative on 1st year earning estimates.

Third: All local communities have groups of retired business people who offer advice on business plans and other things for you to consider. This is a good place to learn a lot - and to take your idea once you have roughed something out.

An option: Some people cringe on this subject: Multilevel marketing is a valid business if done correctly. There are three basic things you have to sort out,

1) Is the business long term stable and legal? Probably 90% of all new multi-levels are scams. Historically, about 9.9% of the rest cannot be long term stable (be very cautious if they are only selling one product - or a narrow product line - what happens if that product gets beat out by the competition). In this case - sticking with a long term established company (at least a decade) is an indication that you are looking at a real opportunity - and not just the latest flash in the pan or scam.

2) What kind of person is your sponsor and their up-line sponsor. If they are dishonest - or are trying to sponsor you to help themselves.... find another (there will be better people associated with whatever company you are looking at).

3) All the good multilevel''s have various mentoring organizations - who will help you develop your personal and business skills. Check out the mentoring organization - what are they really teaching, what are they asking you to do. Find one that matches your needs.

A final note on multilevel marketing: These can only long term work for you if you are essentially honest. If your view is that most people are dishonest and to be taken advantage of you will not have long term success (I''d like to think that is true in other businesses - but, I know better). The glue that long term holds multi-levles together is honesty and respect. Someone may fool people for a short time - but their true beliefs always come out over the long term.

Finally, in the end - your business will be as good - or as bad - as you are (and/or your partners). Take a good look in the mirror - and also ask yourself who you wish to become... Be cautious of who you become involved with.

I wish you the best,

Perry

 

[annadragon]

Thank you all for a realistic and insightful perspective on breaking into the small business world.
I have some people I''m going to sit down with soon and bounce ideas off them since they are successful small-business people.
I''m also going to spend some quality time googling and gleaning ideas about business plans, pricing, business/liability insurance, etc.

I''ll be sure to report back when I''ve made my first million