knowledge before owning a business
I have in mind a brick and motor business, although advice might apply to both. What do you think is important knowledge to have before owning your own business?
Im sure you dont need a business degree (or some knowlage of business law), at the same time there are things you might learn that would be helpful.
What advice would you give to someone looking to own a business in a few years about what they should learn or be good at. To be sucessful from the planning stages, owning, and possibly selling.
Re: knowledge before owning a business
^^^ saving up a whole bunch of cash in order to purchase the brick and mortar business property outright ...
... because under new gov't regulations on lenders plus new lender policies it is becoming next to impossible for a 'small business' to obtain credit at an affordable interest rate. This is especially true for a NEW small business, to be operated by a person who does not have a successful track record re prior business operation. And to make matters worse, Commercial Real Estate loan defaults have been skyrocketing lately as previously written variable interest rate loans come up for reset. Also, market values of Commercial Properties continue to decline, making potential lenders even more edgy about the potential loss of 'recoverable collateral' on any new loans they may write.
Re: knowledge before owning a business
It really depends on what type of business you're planning on running. One of the beautiful things about your occupation is that you can build up a ton of liquid capital to start your business. What are you thinking of making/doing/selling?
A business degree is definitely not required. Many of the dancers I work with already have a keen eye for business. If you are comfortable involving other professionals, the parts where expertise is required (taxes, accounting, etc) can be handled by a CPA, financial planner, and other business professionals. That allows you to concentrate on building your business initially. Once you're stable, you can learn how to do many of those things yourself. Alternatively, the web has many, many resources on running small businesses, as does your local library. Many libraries and other community centers will also have small business resources, as might your Chamber of Commerce.
One resource I would definitely recommend is the Small Business Administration's website (). They have resources for every stage of the planning, building, and selling process.
I hope this helps a bit!
Re: knowledge before owning a business
^ Helpful post. I'm a business student, and while I haven't learned much overall it has definitely helped my perspective on things. As an example, I have a supply chain and operations management class right now. It's interesting and has given me much more insight into how to run a successful business, how to organize, and how to calculate how much inventory is best for me. I can also write a solid business plan and have learned different marketing aspects that I didn't consider previously. Overall, a degree definitely is not necessary...I always thought it was a mistake to get it, but I'm kind of glad I worked through it anyway and will be graduating next year.
Re: knowledge before owning a business
^^^ true that a degree is going to provide some beneficial knowledge and understanding that the 'school of hard knocks' probably would not. However, having a business management degree and zero cash is not likely to get you a shot at actually starting a successful business in today's commercial lending environment ... whereas not having a degree, but having practiced busineses skills PLUS $50k in cash to invest in a new business WILL get you a shot !
Re: knowledge before owning a business
As someone who owns two active businesses, both started from scratch, IMO the few things that are most important are the following:
1. Make sure that you have something that others actually want to buy!
The vast majority of small businesses fail in the first year. In most cases, this is because the owners did not accurately gauge how saleable their goods and services were in a given marketplace or geography. Just because you are good at something doesn't mean that other people want to buy it from you.
If you are planning on opening a brick and mortar business, then your success will be driven largely by the local population. Do you have something of value to offer them? How much might they be willing to pay for it? Who is your local competition? These are all questions you will need to answer before you press forward.
2. Make sure that you have enough money!
Most small businesses go a while before they are profitable, so there is more money going out ther door than coming in. You need to have enough capital to stock inventory, pay help and pay all of your other business and living expenses for at least several months. It takes time for a business to gain acceptance and generate buzz.
Most first time business owners usually underestimate how much it will cost them to stay open in the early months. Do a realistic budget and do some research on the costs of supplies before you complete that budget! IMHO the second most common reason why businesses fail in the first year is that they are undercapitalized.
3. Have a plan to market your business!
You can sell the best darn pastries in the universe, but nobody is going to buy them if they don't know that you exist. Have a plan to let people in the area know that you are there! Make sure that they understand how good your product or service is!
A good location with lots of traffic helps a lot, but those locations are also much more expensive. And even with a good location, don't assume that just because a lot of people can see your store front that they know who you are.
Important: when you are budgeting for your fist several months, you will need to factor in the cost of flyers, newspaper ads and other marketing costs.
Once you have the first three down and get things up and running, most of the rest will take care of itself.
Just as a final thought, Many store front businesses also require local permits or licensing, but a visit to your town or city hall will help you figure out what the requirements are for your intended location. Keep in mind that some businesses, such as food services or those where one must dispose of toxic materials, often require special zoning or permits, so more research and time should be built in to deal with those.
Good luck!
Re: knowledge before owning a business
Get experience by helping to run another small business, close to a start-up, FIRST. Too many startup small businesses fail because the owner has not had experience in being as flexible and innovative as will be needed many times during its first years.
Re: knowledge before owning a business
Quote:
Originally Posted by
threlayer
Get experience by helping to run another small business, close to a start-up, FIRST. Too many startup small businesses fail because the owner has not had experience in being as flexible and innovative as will be needed many times during its first years.
I think that's solid advice. It helps when you know what you're doing.
As for individual skills, sales would probably be the most important. Whatever product or service you have, you want to sell a lot of it. If you want you can outsource the back office stuff to a CPA, accountant, etc. but the sales push from you would be invaluable.
And in your message you mentioned possibly selling the business. I once attended a seminar on selling businesses and one of the presenters (who sold many businesses) said you should start thinking about selling the day you open your business. That encompasses a lot of things that I won't go into here but suffice it to say that you'll want to set it up from the beginning with selling it in mind.
Re: knowledge before owning a business
1. Know your customers wants, needs and ability to buy your product.
2. Calculate your start up costs, then double it. Starting a new business is always more expensive than you think it will be.
3. Be ready for drama. Lots of drama from employees, bankers, business partners, the city, state, IRS etc. In other words have a good relationship with a lawyer.
4. Know your competition. Like really know them, get in their faces and get as much info on your competition as you can. Do business with them as a customer, interview their employees taking it to the extreme of even befriending their employees, buying them drinks and pumping them for info. Heck you may even want to poach their talent (or not, as the case may be). If you can, get hired yourself with your competition. This will be the quickest way to gain intelligence on how they are finding customers, and what customer needs aren't being met.
In a nutshell, know your industry as well as possible. You won't need an MBA if you know your industry and market.