starting a small business?

JB, your posts confuse me.

On the one hand, I want to credit you with being creative and getting started without capital ("wood bucks and a toaster oven"). On the other hand, I'm trying to figure out just what you are making in this creative manner, when you say you haven't made any final products. I also can't figure out why you need to have a huge process in place before you get the patents (unless the patent IS the process, which it doesn't sound like). You seem to be a hodge podge mess of creativity and limited thinking.

Then, I remember the last time I saw one of your Challenge cars, and it all becomes clear again.

SVreX wrote:

Type Q wrote: There is lots of good specific advice here. If you are serious about being an entrepreneur, understand the odds are stacked against you. 9 out of 10 new businesses fail. Some people look at that statistic and think, "Starting my own business it too risky." Others look at it and say, "I'll expect to start 10 businesses, if needed."

I don't believe this. It depends entirely on what your measure of failure is. To a true entrepeneur, failure would be measured as failure to try. I know a lot of whiners who say they started a business and failed. Their expectations were wrong before they started. I also know a lot of entrepeneurs who have started dozens of businesses and never failed. It's all in how you look at it.

To get very specific about my meaning, failure in this context is the business entity not getting to the point of being self-sustaining, profitable and, if leverage is used, earning more than the cost of capital.

I don't consider anything that I have done so far a personal failure. I wish I could remember where I read it, but someone put it this way. "If you lose money, don't lose the lessons." I invested money and time in things that didn't work out as planned and desired. But I learned a tremendous amount in process and would not trade the experience.

I still have a lot to learn. But here are a few things I have picked up:

1. The single biggest factor in the success of your enterprise is your personal determination to make it happen.

2. You must have a clear and compelling reason WHY you are doing what you are doing. Your motivation (the why) is more important to your success than what your business actually is. You will be called upon all the time to do things that are really difficult and exhausting. You need to be moving toward something that is absolutely compelling for you in order to keep going.

3. You must learn to sell. You have to be able to get lots of other people to buy into your dream including customers, suppliers, family, and/or bankers.

4. You can't do it alone. You must build a team of advisers, mentors and allies as quickly as possible. There is too much to do while building a business to master everything you stay on top of. You may smart enough to learn the applicable tax code or law as well as a CPA or attorney, but it going to take far too much energy away from your core business. (Assuming you're business isn't tax prep or a law firm. (:) )

Others please feel free to add to this list.

Hope I'm not moving this thread in a thousand different directions, but another critical, critical, CRITICAL, thing is figuring out what your "nut" is; how much you need to gross EVERY_DAY just to pay the bills. Things like rent (assuming you're renting a space,) electric, gas, COG, etc., are easy. Taxes get a little more complex. When you get down to pennies (office supplies, etc.,) and those pesky unforseen things (fixing/replacing tools, etc.,) it gets even more difficult.

I digress; anyway, having that number in your head is great motivation to keep the business streaming in. If it's Wednesday, you (just for a round number) know you need to gross $500 JUST to 'keep the lights on,' and you've only made $600 this week, you know you need to make some moves to catch up.

Also, I guess there are varying schools of thought on this, but in my very recent experience, marketing is critical ESPECIALLY in a slow economy. If you've got competition, your goal is to be the guy with the biggest market share at the end of the mess. It's easy to get trapped into thinking "nobody's spending money, so there's no point in wasting money on marketing." WRONG!!! You want to make sure any dollar anyone is spending on your type of product/service is spending it with you!

We've killed 3 competing shops in our area in as many years. Sounds harsh. I don't get joy in their failure. It'd kill me to have to close our doors. But "this town ain't big enough for the two of us." I think a constant, positive marketing presence has kept us alive the last couple years while the others failed, and we now have a 100% market share in our area.

In reply to maroon92:

get used to ramen noodles. i lived off of them for the first 4 years and occasionally have to go back to them when work is a little slow. luckily by now - year 9 coming up here - we stay busy.

Good points, Poopy.

As a marketing educator teaching a class to marketing specialists once told us, "When times are tough, make sure you tell the boss to keep his darned mitts off the marketing budget." Good stuff.

One note, Poopy. I doubt your "100% market share" comment. There's no such thing. You are forgetting the customers who are willing to drive to the next town, buy online, etc. But I get your point.

SVreX wrote: Good points, Poopy. As a marketing educator teaching a class to marketing specialists once told us, "When times are tough, make sure you tell the boss to keep his darned mitts off the marketing budget." Good stuff. One note, Poopy. I doubt your "100% market share" comment. There's no such thing. You are forgetting the customers who are willing to drive to the next town, buy online, etc. But I get your point.

Closest shop north: 30 minutes. Run by numbtards. Business has been for sale for the last 18 months.

Closest shop south: 25 minutes. So small, sad, horrible product, bad attitude, dude doesn't have any posted hours; shows up whenever he feels like it. Was forced out of the space he was renting and now works out of a 6' X 8' spot in some other dude's shop. His presence is so weak that 30% or so of my business comes from his area because no one even knows he's there.

East: Over an hour.

West: Over an hour.

1nt4rw3bz: Not applicable.

But I do get your point. In almost 7 years of business, there have been 2 people who I've told...maybe in not so many words "I'm sorry, I don't think we can make you happy. I suggest you have your work done somewhere else." I'm guessing those folks have their stuff done somewhere else.

And then I'm sure there's those ones who are unhappy but never say anything. I'd like to think those folks don't exist.

maroon92 wrote:

digdug18 said: I mean its stressful when you do finally sell something on ebay or wherever and goto ship it only to realize that your not 100% sure where it is.

This is mostly what makes me believe "I can do it better". My organizational skills, combined with my learned education on marketing, and a crash course in sales should be quite helpful. Short term, I plan to be a small supplier to a niche of guys working on cars. Long term, I would like to go international, and work out of a small 1-2 bay garage with a little storage. right now I don't have enough sales to warrant a building, but that is where I am aiming.

Too bad your not still up here, I could use someone like you :)

Also its entirely possible to do this with little or no credit / loans. I did, a little at a time. I've now got a 10K sq-ft shop with multiple revenue streams with the potential to go really big (thats the next step). I sold my old dyno when I left the old shop and found a Mustang Dyno with 20 hours on it sitting outside of a test lab. A little negotiation later & its running in my shop :)

I wound up unloading all my fab equipment as we didnt have a fab job in 8 months. As a result I've found a lot of really hungry skilled TIG welders / machine shops / etc that are happy to do my work for cheap.

I didnt turn my heat on until January, and when I did I installed a waste oil furnace so its fairly cheap to heat (just gotta keep the oil on hand)

Just think smart. Whats the minimum risk ($$) you can take to make money?

Kendall