As someone that has started several small businesses I’m a firm believer that your own business is the only way to make real money. My Dad, a self-made millionaire, always said, “You will never make real money working for someone else.” I’ve worked for other people and I’ve worked for myself. While the former is normally more secure, the latter is more rewarding. There are many reasons people go into business for themselves: laid off, tired of the grind, trying to make real money, taking over a family business. In this post I’m going to try and give you a very short treatise on a few problems with starting your own business.
Making Money
Many people will tell you that they started their own business because they want to be their own boss. It’s normally about happiness, freedom, more time, etc. Those are all fine but at the end of the day your business has to make money to survive. As a side note, if you want freedom and more time, don’t quit your day job. Many people put their time and money into businesses that are losers; they think they have to do a particular thing because they liked a hobby or because they like the thought of doing a particular job. They forge ahead and forget the basics, a business must be profitable. There has to be a market demand. If you open the best sandwich shop in a place that hates sandwiches you won’t succeed.
No matter if you are buying an existing business or starting from scratch ask yourself, “How is this business going to make money?” Followed by, “How much money will it make?” How do you find the answers to these questions? Ask a lot of people! If you are buying into a franchise not only ask the franchiser a lot of questions but also talk to as many franchise operators as possible. If you are buying a fashion jewelry business that only sells online, learn a lot about jewelry and a lot about internet commerce. Get the picture?
Getting off on the right financial foot:
Do your market research.
You should not start a business if there are not enough people willing and able to buy your products or services in your service area.
Create a business plan.
Get help if you need it but make sure your crest a thorough plan. Work it from a pessimistic point of view thinking it’s hard to make money. Look at all the reasons you won’t make it. Of all the advice I can give it’s that you need to go into this venture by throwing away the rose colored glasses! Figure out all the ways your business can fail. When you’re done with this exercise and plan you should know whether or not your proposed business idea can be turned into a profitable small business.
Buy into a profitable franchise.
It’s hard to start a business from scratch. It’s very rewarding but it is hard. Profitable franchises already have a plan in place and they have worked through the problems and should be making money. If you can afford to buy into a profitable franchise and are the kind of person that would make a good franchisee, this can work for you. Do your homework and talk to a lot of people about the venture. So many franchises sound great in the brochure or the sales reps pitch.
This post has gotten long so I’ll write more about this later.
