pros and cons of starting a business

[MinivanDriver]

Originally Posted by Lillie767

I don't think entrepreneurs start businesses based on a pro/con list. I believe they start businesses because of their passion for it.

If you have to think about it very hard, you're probably not a real entrepreneur.

This.

It's like having a Pro/Con list for having children.

I've been self-employed now for thirty years. If I were to break it down to a single reason, it's this: I have control over my own destiny.

When I started out in my late twenties, I had survived two awful jobs. Jobs with capricious management where I quickly realized I made better decisions than the people who employed me.

This wasn't arrogance or complaining on my part, this was objective truth. I would warn my bosses about a coming problem or alert them to a coming opportunity and would go unheeded. Meanwhile at both jobs I was working long hours for incredibly crappy pay. Looking back at both jobs, I'm amazed that I put up with both as long as I did.

So one day I inherited a small sum from my grandfather. We're not talking six figures. Instead, it was enough money to equal a year's salary. So I took my accrued three-week vacation days from working at that sweathshop, went to New Zealand, then came home and quit.

I started out with a computer, a telephone, and some business cards. Every morning, I got up at 7:00, showered, dressed, and sat down at my desk at 8 a.m.

Thirty years later, I've built two businesses and sold two businesses. For the past fifteen, I've worked from home. During all that time, I've known some seriously fat time and some seriously lean ones. You have to stare down the possibility of watching your earnings drop 70% in one year (I'm looking at you, 2008). You learn to live in a way where you are responsible for your paycheck every month. You learn to live with the sleepless nights.

On the other hand, if you're smart about how you do it, you enjoy the pride of building something and making it successful. You know that every dime you earn belongs to you--as long as you compensate your employees well--and that you've created something out of nothing. Most importantly, you get to know you did it your way.

You can fire clients you don't like. I've done it. And, gratifyingly enough, a couple of them have come back to me, apologizing for how they treated me and became my best clients ever. You can build the culture you like with the values you like. You can create whatever you like best in the way you want in the time you want. You never have to answer to some incompetent manager who couldn't do your job if his life depended on it. You aren't toiling around the clock to pay for your boss' lake house.

The point of all that self-aggrandizing nonsense on my part? If you prize security and making a lot of cash above all, then get yourself an MBA or go into something lucrative such as commercial real estate. If you value being your own person and hve a deep passion about something, then that will sustain you during those long, dark days when the cashflow is looking a little threadbare. Because, if you're like most small business owners, you won't make substantial income until Year Three. So you better feel good about it.

If, after all that, you still want to do it, here's my advice.

1) Save every dime you possibly can. Live frugally now. Eliminate every speck of personal debt. Live way beneath your means. In truth, that's practice for what you'll be going through when you put out your shingle.

2) If you are married, make sure your spouse/partner/significant other is completely and utterly on board with this. Don't downplay the risks, don't paint a rosy picture. Instead, point out the risks and how you plan to navigate those. Because your spouse should be the one person you trust in all this.

3) Everybody starts out with a pro-forma, with projections built out to three years after the ribbon cutting. Those are worse than useless. They are delusions that spur poor decisions. Yes, you need to have them for the bank or whoever, but for God's sake, don't live by them.

4) Avoid the following until you can't operate without them: Rent and employees.

5) On employees. People sign on with a startup for one reason and one reason only: They see its potential. Otherwise, they'd just take a job with the government or the local bank. So when the time comes to hire someone, appreciate the risk that person's shouldering to be part of your dream and make sure that person is rewarded for it over time. I brought on people, paid them well, helped them grow, and even made a couple of them into partners.

6) Marketing. For some weird reason, many budding entrepreneurs believe that all they have to do is put up an Open sign and the customers will come flooding in. This is absolutely daft. If anything, most of the customers you want to have will avoid a startup because they don't trust its staying power. So you have to invest more into marketing to get people to overcome their initial reticence. Go ahead and bite the bullet for a marketing professional to give you a good brand and positioning. Which leads to this, most of all.

7) Positioning. You need to answer to yourself the following questions: a) How is my company different? And don't say 'service' because that's a nebulous thing. Make sure that your selling proposition is unique; b) The purpose of marketing is to bring qualified leads to you. It is up to you to convert them into outright customers. So you need to be able to speak to what you offer in clear-cut benefits to them. In other words, talk about them, not you; c) Make sure your passion comes through in everything you do. People like underdogs, as long as you prove yourself good at your job.

Good grief, I've written a lot here. But it's important to realize that starting a business is an almost spiritual endeavor, one where you commit yourself body and soul. It's an enterprise where, if you think of things in strict dollars and sense, you'd never do it.

You have to absolutely love it the way you do your children. You have to give up huge parts of who you are to bring this baby into existence, and then you have to feed it and stay up with it through sleepless nights.

But then you know the pleasure of watching the infant grow into an adult, gain a personalty of his own, have his own identity. And when that happens, you have the pride of being not an owner, but a creator. And there's nothing better than that.

So this is my incredibly long and discursive reply. The question of "Do I start a business" doesn't yield to the analysis of a Pro/Con list because the question you have to answer is much more straight forward: "Do I love what I do and can I do it better than anyone in my city?"

If the answer to that is "Yes," then it's just a matter of lining up the money and logistics to make it happen. If the answer is "No," then I would urge you to consider a different path in life.

[Dad01]

First of all thank you so much for the detailed reply, definitely helps

"Do I love what I do and can I do it better than anyone in my city?"

I think the answer in my case is clearly NO for both , esp the latter

But don't you think you are a minority passionate heavily committed business owner , there are lots of mediocre but moderately successful business owners too ?

Mediocrity is my mantra for most things in life, so far it has served me well. Not sure if it would be much different in this world

[MinivanDriver]

Originally Posted by Dad01

First of all thank you so much for the detailed reply, definitely helps



I think the answer in my case is clearly NO for both , esp the latter

But don't you think you are a minority passionate heavily committed business owner , there are lots of mediocre but moderately successful business owners too ?

Mediocrity is my mantra for most things in life, so far it has served me well. Not sure if it would be much different in this world

Then if you're not the best, you need to have a good hook. Or a unique identity. Being Brand X is the fast lane to the Going Out Of Business sale.



Let's take the example of coffee shops. I don't know where you live, but there are a zillion within a two-mile radius of where I live. You have Starbucks (Blech) and the other assorted places. While each sells coffee, lattes, and the occasional pastry, each has its own unique vibe to it. Heck, there's even one place that has several cats roaming the place that sit with the customers.


So while there are companies that deliver a wide array of services, there are also those that specialize, serving a unique niche. Consider that carefully so that when someone asks, "What do you do that's different than the rest," you have a one-sentence answer.

[KaraG]

MinivanDriver, that's a great post above. I, too, have been a business owner over 30 years and agree with what you've written.

I just can't emphasize enough that to own a business you have to be able to make decisions, sometimes on the spot, sometimes it's many all day long. And you have to be able to deal with the fallout of those decisions.

Like you, I spent time in my early jobs noticing what they could do better and naturally wanting to be the one in charge. I think that's an important trait if you want to start your own business.

[MinivanDriver]

Originally Posted by KaraG

MinivanDriver, that's a great post above. I, too, have been a business owner over 30 years and agree with what you've written.

I just can't emphasize enough that to own a business you have to be able to make decisions, sometimes on the spot, sometimes it's many all day long. And you have to be able to deal with the fallout of those decisions.

Like you, I spent time in my early jobs noticing what they could do better and naturally wanting to be the one in charge. I think that's an important trait if you want to start your own business.

Indeed. I think the analogy of children is a good one. It's one of those things you can intellectualize all day long, but cannot grasp on an emotional level until you actually go through it.

To succeed in business, you have to continually ask two basic questions: 1) What does my market want? and 2) How can I give it to them better than anyone else?

That requires a kind of restlessness, a constant process of refinement, a cycle of doing, learning, and doing better. If you lack that kind of initiative it's hard to succeed.

In other words, you don't have to be brilliant. You have to be motivated.

And that's true of even the most basic businesses. For example, there's a hot dog stand about a mile from where I am. The guy has been around for as long as I can remember. Same hot dogs, same drinks, same pine-paneled interior. The only thing that has changed over the years was the model of the television blasting in the corner and the prices on the menu board.

But damnation, he made some really good hot dogs. And he knew everybody's name who walked in the door. He remembered every football score since the dawn of time and could keep up a constant level of chitchat with a loyal bunch of customers.

On the surface, the guy's business violates every principle I've laid down on my posts. But, in truth, he wasn't in the hot dog business. He was in the business of welcoming people and giving them a break from their work days. He was in the business of conversation.

He passed away last week, and it was almost a day of mourning in my city. Because the man ran his business with such joy and loyalty to his customers. And his customers were loyal to him in return.

[City Guy997S]

Originally Posted by StcLurker

the illegally parked ones can be a pain, recovering cars from strange places is fun, working crashes can be fun at times. rolling a car back on to its wheels never gets old. there is much more to it than the BS tv shows would have you believe.

The link to the tv show was literally the worst example I could come up with (scripted reality tv! ) but the job isn't a passion for most. Its math: tow and trying get paid.......cover your costs and go home with a profit!

[COcheesehead]

Secrets to success in business:
Do they like you?
Do they need you?
Are you different enough ?

You need all three.

[Dad01]

In some states they have a small business advocates that help them in the initial stages, does anyone have any experience with them ?