Mindset of a Business Owner

Is Starting a Business Right For You?

With layoffs running wild, wages stagnant or going down, bosses who, (perhaps because of a glut of available employees), making conditions at businesses less than “employee friendly”, a lot of people are dissatisfied. On TV and the internet you can see people basking in luxury, driving fancy cars, living in decorator designed homes and here you are, getting up at dawn and trudging off to a job you despise just to get that weekly pay check, just to have a way to pay the bills, afford to eat and basically, tread in place.

Quite naturally at this point it’s easy to decide starting your own business, being your own boss-that might be the golden egg you’ve been searching for. But you may forget the egg is a by-product… and what you need is the chicken.

Late Night TV Ideas Can Be Alluring

On TV at late night, con men are pushing their seductive ideas-real estate with no money down, home businesses producing thousands weekly (they don’t say how). They know you are most vulnerable in the middle of the night when you don’t see a way to get ahead. Check those “home businesses”. Most of them start out by saying “How much can you afford to invest?” They aren’t looking for your answer to be “Nothing.”

Can you get rich in real estate? Yes… many have. Can you start your own business and succeed? Yes, again… many have.

Getting rich in real estate is not free. You do need money for down payments or to assume loans, or you need a golden partnership with your favorite bank. You also need education about real estate and knowledgeable people like lawyers to prepare forms and supervise “closings”. And there’s also that great catch no one ever talks about in commercials. Overextending yourself. Getting into a mess where you have properties that need upkeep or renovation, payments coming in, and no sales going on, and shortly you can have a situation worse than a sub-prime mortgage holder.

If you are new to business the best thing is to pass on the real estate deal and go for something simpler and less expensive like an internet business.

Is
eBay
an Answer?

eBay is a great place to start but you need to study it first to see exactly how it works, and what you can’t do and can do. You can sell your own “stuff” piece by piece and often do very well, but you’ll probably run out of items and come to the point where you want your own store. And that’s where the complications begin.

To start a store you need to decide what kind of store. Most people today will think I want to sell electronics…I-pods, flat screen TVs. There’s a huge demand; there is also huge competition because a lot of people have the same idea. And then there’s the one you may want… a variety store. You can do that, for not much money-something like DOBA with 100,000 items. You can drop ship which basically means your customer orders something, and pays for it and someone else packs and ships it for you. Of course there is a fee for this. This cuts into your profit and you are always wondering are my orders being filled in a timely manner… if someone wants a refund or exchange will someone take care of that?

Experts say “pick a niche” and work it. Maybe you like cats-you offer anything you find about cats. Then you discover some big companies have the cat market pretty well locked up.

Or maybe fly fishing…you want to tie and sell your own flies. Great until suddenly you have more orders than you can fill, you have angry customers-nasty feedback if you’re on E-bay that can get you kicked off, and your stress level goes ballistic.

So what is the right way? Here’s a brief check list that could help.

What Are You Good At?

Think about what you know best. Your business should be based on something you know, something you’re interested in, something you’re good at. I have actually seen people wandering around looking for a business to buy-any business-maybe one they know nothing about. That’s what happens to a lot of franchise owners. It looks like the simple solution…a going business…built in customers… built in good will.

But there are usually huge fees to pay. You need solid gold credit. You need to accept that you’ll always be subject to someone else’s rules. If they decide to change the theme of their franchise, you could end up paying the bill for changes you don’t even want. Every day when you make money, a portion of it is not yours. Sometimes it’s a large portion.

Better avoid franchises unless you have money to burn.

Keep It Simple

Start as small as possible. There is less trauma if you fail or quit. Don’t mortgage your house for money; don’t max out your credit cards. Money in a business usually comes in slower than you think; expenses are more than you expect.

If you can use a room in your house, or your garage, don’t rent a building because they come with leases, monthly payments and back breaking utility bills, city permits, inspections and annoyances like people constantly hitting you up for donations.

A room is fine. You can do a lot in one room. One word of caution. If your home is covered by a subdivision covenant forbidding you to run a business there, you’ll have to find another location. Also if you live in a residential area, even if it’s not covered by restrictions, avoid excessive traffic, foot or vehicle, which will only alienate your neighbors.

Be Absolutely Legal

Essential things you’ll need: a business permit from your city or county, a Federal I.D. (for tax purposes and so you can buy wholesale). Never, never neglect to pay your taxes. If you aren’t sure about that, you need to read tax books or consult a lawyer. You need a separate bank account for your business. Pick a name for your business. You’ll need to file a notice that you-John Jones-will be doing business as Jones and Associates (that might be your wife and kids).

You can run it in your local newspaper. You may be required to say how much money is being invested. You can get away with saying $1000. Failing to do these things can lead to future problems. If you sell on E-bay you’ll have to pay taxes on the money you make. Some people foolishly claim a small income and huge expenses in hopes of a tax break. IRS is onto all those games. They might decide to rule your “business” is actually only a hobby.

Plan Not to Give Up

Be prepared for the long haul. Try to form a five year plan and stick with it.

Any money you make in the business that isn’t needed desperately for food or shelter or utilities shouldn’t be “spending money” or “treat” money. Don’t go out and buy a new car yet or a fifty inch 3-D TV.

Any money made in the beginning should be plowed back into the business… more stock to sell, more equipment. It helps enormously if you can keep your regular job while establishing your business. Then you have a safety net against hard times. You know it’s time to go full time for the business when you are making more at it, on a consistent basis, than your salary is producing. The key here is “consistent basis”, not just one month, but a number of months. People who recklessly quit their jobs to start a business often live to regret it bitterly. Remember almost nothing is as easy as professionals make it look. There is a learning period.

Keep Track of Details

Is it easy to start a business? Yes.

Is it hard to make it successful? Quick success sometimes comes and it looks easy and fun, but that can be followed by a tough, dry period. Suddenly your customers find someone else cheaper, more efficient, or your item just becomes “stale” and they are looking elsewhere.

That’s when you work your first item…say a widget… as far as it will go but meanwhile be developing something new to introduce.

Always be polite to your customers. They are your life’s blood. Say thank you for sales, give exchanges without rancor or reluctance, be available if they have a problem, solicit more business from them.

Don’t change too much too soon. Don’t become arrogant because you own a business.

Don’t take in partners you don’t know very well. Don’t allow relatives to run your business. They often don’t think the same way you do.

Make your office a sanctuary. You can’t answer a customer’s question if a five year old is tugging on your arm wanting to go to the park or the dog is asking to be walked. Everyone needs to understand when you’re in your office you are busy making money and you’re not available for non emergencies.

Keep track of every dime you spend and every dime coming in.

Take a break from work now and then to recharge your mind and body. It might be a kid’s ballgame on Friday night, or dinner out on Sunday. Then get back to work with renewed vigor.

Most important… don’t give up when times get tough. Find inexpensive solutions. You don’t need file cabinets if you can buy cardboard file boxes. You don’t need the new carpet until you have expectations of having customers come into your “store”. If you run an internet business you may never see your customers and don’t need all the fancy things. You will need a good computer-one that will actually do the work you need done. You’ll need a decent printer/scanner. Over time a copy machine can pay off big time. But you can skip (for now) things like the coffee service, imported drapes, the soothing stereo, the leather reclining office chair, the polished wood desk or gadget loaded phone system.

Be Very Careful With Credit

Try to pay cash for everything you buy. People who say “build your credit” aren’t the people who have to face the monthly credit card bills. We know of huge companies that still operate on a pay as you go basis, with no debts. They are respected and adored by banks and equipment sales people and they can sleep at night.

Brown bag your lunch. Coffee breaks, lunch breaks and social get togethers are the death of a business day. Don’t drink to excess after work or spend the time complaining to your friends. Instead, do something with your family. If you don’t have a family, then it’s time to go out with friends, but know when to say when.

Becoming one of those who stays up late partying and then can’t seem to drag yourself out of bed next day or start to concentrate on what you need to do pretty much means the end of your business.

You will probably shortly decide this is entirely too much trouble and look for a job that pays a salary and let’s someone else do the worrying.

If that’s how you are and you know it, then that’s fine, but if you really want a business simply decide whatever happens, you will find a way and not give up…if you refuse to give up you can’t be beaten and the end result can be a comfortable, respectable, even luxurious life.

It’s all up to you.