Dec

8

OpenI spent the last year and a half opening up a business in Florida and I sold it this week to an individual who happened to be looking for the exact same venture. Thankfully, a savior, as the business was foundering and he was a bright star in an otherwise cloudy night.

I learned a great deal from my undertaking as it has been an extremely difficult and arduous journey. Anyone who has opened a business can appreciate the trials and travails. Unfortunately, there is no book entitled Opening and Running a Business for Dummies. I can honestly say that it is very similar to the old saw about owning a boat.

The happiest moment in a man's life is buying a boat and the second happiest moment is selling it.

I will list some points that are critical in understanding opening and then running a business.

Understand completely the business you are going to run. Do your homework not once, not twice, but continuously. Learn everything you possibly can about the business and do not rely exclusively on advice from outsiders. In short, be a complete expert in the critical aspects of the business. Do not expect transfer of knowledge to take place. Don't ever expect those on the outside to help you. They have their own problems.

Love the business you are opening. If you are not prepared to be 100% in love with it, it will not love you back. If you cannot laugh and enjoy the journey, it will soon consume and destroy you.

Understand the business as it relates to the economy and the target market you are looking to attract. For example, if it is in retail or entertainment be prepared for the changing tastes of the public. What will you be left with if the public leaves you? Or what will you have if not enough of the public embraces your business? Don't assume that just because you ate in a restaurant, you know how to own and run one. Underestimate, don't overestimate, your particular skills. You are not as smart as you think you are.

Do not overestimate how the public will view the business. In 99% of cases, you need the buying public far more than they need you.

Realize that competition will be fierce for the dollars you are seeking to maintain your business. If the model makes sense then accept the fact that someone else is either doing it or planning to do it. And they will do it in your backyard sooner or later. You will feel at times that a pack of wolves has descended upon you and are tearing at you from every conceivable angle.

Have an inner circle of advisers you can rely on.

I recommend an attorney and an accountant as business partners and someone with experience in banking and finance. Have a team in place and make sure that they are all committed to the success of the business. There is nothing more valuable than an attorney as a business partner. It is much less expensive to have an attorney as a partner than on retainer. Plus he will do the work for the business ahead of other work that he has to do. For this, there is no adequate substitute.

I remember a stockbroker who invested in opening a bank. His business partners were an attorney, a banker, a doctor, a builder/contractor, a real estate mogul, a politician, an accountant and some other well heeled investors.

There may be 50 ways to mess up a business. If you anticipate a tenth of them you are a genius.

Try to lay the foundation before, not after, you open your doors.

Be prepared to be married to the business for the complete tenure. Be very careful as to whom you marry, and remember, it is much easier to get married than it is to get divorced. And a lot less expensive.

You will be on call 24/7. If someone decides to get sick, not show up for work, or quit on you on Monday morning, guess what, you just assumed his/her workload. If the toilet backs up then you will suddenly become a plumber. Be ready to give up your hobbies.

You can never be too rich or too well capitalized. You can never have too much money burning a hole in your pocket.

You will underestimate how much money you will need to get started by a lot. And you will underestimate how much working capital you will need. In short, you will soon find that you have underestimated a lot. Be prepared for this brutal lesson. Cash — there is no substitute.

It will probably take much longer for a start-up to get up and running than you anticipated. Be prepared for this sad fact.

Be prepared to lose a lot of friends due to time constraints. As a corollary to this, be sure that you have a solid home foundation and an understanding family. You won't be able to attend all of your children's functions. You have only so much energy and all of it will be needed for the survival of the business. Plus you will need a place to go to de-stress. If you cannot go home then you will be forced to go somewhere else.

Watch your health. You might find yourself neglectful with respect to eating habits and exercise.

Murphy's Law will apply. And it will apply when you least need it to apply. Don't ever ask what else can go wrong because there is always something else.

Respect a business for what it is. Don't expect it to be all fun and games, if it were it would be called vacation and not work!


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  1. Start Ups For Others « Variable Interest on March 24, 2008 7:45 pm

    […] I like this short write-up on the realities of starting a business. I cannot tell what type of business he’s speaking of, but I can tell that it would be much the same no matter. I like the idea of being so caught up in the business - the practical desperation of having your livelihood so dependent on it’s performance, is really attractive to me. It’s my lack of professional qualifications, not particular drive, that’s letting me know not yet. […]

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