Business idea help

wcc · 08-29-2008, 04:23 PM

I'm kicking around a lot of business ideas lately. My current options as of now are....

1) Pick up a vacant commercial property with apartments above it. Rent out the apartments asap and maybe put in a sandwich shop or some other simple business in eventually. No problem financially.

2) Buy an existing business. Currently I've looked at two oil change shops that are for sale. I'm a little hesitant because of the alternate fuels to come out in the near future. So what is the future like for something like this? Besides the business paperwork how would I research the current and future market? This would cost significantly more and would have to have instant inflow of cash to help with bills. A lot more stress financially.

3) Get into a short term lease and open a scooter business. Sell electric and gas scooters. Is this something that would require an ASE certified mechanic for repairs? Would probably be ok financially for about 1yr and if it's not bringing in enough to make the bills would be closed.

The MAJOR problem for me is I can't quit my job until it starts making some money to replace my current salary or close to it. I figure a sandwich shop any high school kid can make them so I wouldn't have to be there most of the time. The oil change idea would already have a staff and a manager and that would cover most or all of my away time. The scooter place being a startup would require more of my time.

Any comments, suggestions, etc would be greatly appreciated. Do you think any one of these options would fit my situation best or do you have a different idea all together?

looneybin · 08-29-2008, 04:31 PM

1) if the property is vacant, it would probably take alot of $$$ to get up to rentable standards.
High school kids need alot of supervision.
2) Why would a profitable business be for sale?
3) Scooters are hot right now - don't know about the repair situation (vespa's are very cool)

Just my 6 cents

Chuck Moreland · 08-29-2008, 04:38 PM

Without commenting on these 3 specific options, I will share some general truisms.

- you sound underfunded. most any new business will lose money for the first 2-3 years. That means you take out nothing, and continue to put your cash into it, while working full time at the business. You need 3 years personal living expenses, plus the cash to fund the business for 3 years.

- being an absentee manager is general a plan for failure. Unless you are buying an established business that is already owned and operated profitably by an absentee manager, forget it.

- you need to decide if you are adequately commited and prepared to do this. to be succesfull at most businesses, you need to put in your full time effort. that means 7 days a week, and forget about 8 hour days. You cannot have a full time job on the side.

Shaun @ Tru6 · 08-29-2008, 04:46 PM

We've heard time again from lendaddy that MI has a dead economy. Are you in a more vibrant part of the state? What city?

I'm in the Boston area and I've seen two big increases lately: scooters and Zip Cars, but this is an area that lends itself to both.

I've also seen a few cafe's open. Hours are 7 to 3 typically serving good solid breakfasts and nice sandwiches, of course all the coffee's. Businesses seem to be thriving, but margins are low.

Chuck hits at a critical point, and I agree since my company is under-funded. All indicators point to success, but it's a struggle and the workload is, at times, overwhelming. do you have a family and/or a social life? Starting a business can take a heavy toll on both.

Rick Lee · Rick Lee's Garage

Food service is tough. If you open at 11:00am, that means you start working at 7:00 doing food prep and you always stay at least 2-3 hrs. after closing for cleaning and sidework. I've known a few folks who bought Subway shops and failed miserably, even when they worked the line themselves. Employees will rob you blind, no matter what you pay them (and you can't afford to pay them top dollar) unless you're always there.

jackobleep32 · 08-29-2008, 04:54 PM

You sound wishy-washy on the idea. More like "I need to quit my job" than "I want to start my own business." If you're not passionate about the idea, it will most likely fail.

lendaddy · 08-29-2008, 04:58 PM

Quote:

Originally Posted by Shaun 84 Targa

We've heard time again from lendaddy that MI has a dead economy. Are you in a more vibrant part of the state? What city?

There are always pockets of opportunity, not all aspects of Michigan are blown.

Now if you said you wanted to start anything automotive related.....well that I would advise against.

I also would not want to be in the commercial property business right now. Renters are paying less and paying slow. per sqft prices are down dramatically right now with lots of vacancy.

It's actually a great time to lock in a long term lease.

FWIW I'm in West Michigan and things are technically still pretty good over here by comparison.

Hugh R · 08-29-2008, 04:58 PM

I read today that Michigan has seen the largest drop in jobs, income, sales taxes, you name it of every state in the country.

Here's the link. http://money.cnn.com/2008/08/29/news/economy/census_data_by_state/index.htm?postversion=2008082915

lendaddy · 08-29-2008, 05:01 PM

If I were to start a business right now I would get into a service that feeds the medical or insurance industries. I have a couple ideas but they require certifications (easy enough to get)

wcc · 08-29-2008, 05:08 PM

The economy here is not good either as lendaddy has said. I'm in Lansing, MI but I'm not talking about manufacturing or machine shop type business. His is a VERY rough business right now for sure. But being that the economy is down/steady it seems like a good time to buy some commercial realestate because the property is affordable. Also, we have MSU which would help out with the scooter business.

I want, I should say NEED, to do this. I have a secure job but it's in a cubicle and I can't go through this anymore. I put myself on a 5yr plan to get out of there. I always wanted to own my own business but have never been able to leap. I have to figure out a way.

3yrs worth of living expenses and business expenses would blow the budget. If this is the case then what, give up? Never! I'll find a way somehow. Even if I have to start something small and it takes me longer to get out of the red.

With the amount of baby boomers retiring I can't believe there isn't a business worth picking up. Both the oil change places were because the owners were retiring. Again I haven't seen any paperwork. But there has to some good businesses worth buying. Isn't there?

Yes, I have a social life and a family life. The wife is supportive. My kids are 3 and 5 and trust me they won't be neglected but may become a part of it.

Hugh R · 08-29-2008, 05:15 PM

In bad times, one of the first thing people do is cut their spending. Things like not eating out, and deferring maintenance of vehicles are two of the biggies. The sale of vehicle tires is down a lot in the US for precisely this reason. Sorry, no business ideas, just pointing out what I see/read. Opening a liquor store in bad times can be profitable.

Rick Lee · Rick Lee's Garage

I'm sure there are plenty of turn-key businesses out there for you to look at. The issue is whether it will be a business that interests you, you know something about and can convince a bank to loan you money to buy. I would like to start some Internet/affiliate marketing business from home and am dabbling in it, since my real job is work from home. Even if you take over a turn-key business, I think money will be tight for a while. Do you have a ton of equity in your house to borrow against? Sometimes you have to really paint yourself into a corner to succeed.

peppy · 08-29-2008, 05:38 PM

Starting a business at least 60 hrs a week. Starting a restaurant about 100 hrs a week. The family will be neglected. Just my .02.

Christien · Christien's Garage

There's some strong tough love in this thread, but maybe not tough enough. Remember that 3/4 of new businesses fail within a year. I agree that it sounds like you're looking for something as an alternative to what you do now, rather than something you're passionate about. That said, that's not necessarily a recipe for disaster. But your family and social WILL get neglected.

I'm a small business owner, kind of by accident - it's a company my father started as a side project to his law firm. He and the accountant at the firm ran it for a few years with no real profits, more of a tax haven. I took it over when I finished school, made it my own and made it profitable. But I had two HUGE things going for me that most small business owners don't have: 1. an already-successful business model and 2. financial backing. I didn't have to convince the bank to loan me seed money, nor did I have to mortgage my house (didn't even own a house when I took it over).

I work from home and manage to maintain more or less regular hours, though evenings in the office are far from rare. But I also maintain some semblance of a social life, and spend a lot of time with my family. I love the flexibility of making my own hours, and luckily the company makes enough that my wife can afford to only work part-time (she's a teacher) so we get to do a lot of kid-stuff together (I'm usually the only dad around) and I wouldn't trade that for double my salary. Maybe triple, but even then I'm not sure.

Oh, and as for the sandwich shop with apartments upstairs, forget that one. I looked into that a few years ago when I wanted to get commercial property to move the business out of my house. The idea was that the rent would cover the mortgage on the building. After looking into it, I was completely scared off by the commitments of being a landlord. Even with a hired handyman to fix the 3am broken pipes and whatnot, I had no desire to be dealing with all the bs of tenants, garbage, deadbeats, chasing rent, cleaning up when they move, legal issues etc. If you have to do it, get luxury units so you're not dealing with lowlifes.

Oh Haha · 08-29-2008, 07:20 PM

Bill,

Food isn't a great business to be in right now. You know what I do for a living. Our industry(vending) is horrible. Takeout and comfort food(except beer) are the first "extras" to go when the ecomony starts to suck.

I have 2 reasons why I would not suggest getting into food:

1. Health department regulations are very stringent.
2. The Michigan economy regarding food as I stated above.

That said, you are one motivated son of a gun and it sure seems like you hate the work environment you are currently in so I know you will put your all into whatever you do.

I have contacts in the Lansing/Clinton county area if you need anything regarding opening a food joint.

As always, just contact me with what you need and I'll help with whatever I can.

Christien · Christien's Garage

I just reread my post and I think I came across as overly negative. I don't at all mean to be discouraging - quite the opposite, really. You just need to know what you're getting into.

wcc · 08:23 PM

jackobleep32 - You are right. The reason is because I'm not sure what to do. Hence the thread. I HATE THE CUBE and NEED to do something to get out of it. Any thoughts to help with that? I will do something right or wrong and just try it.

Hugh - spending IS cut. I've cut and cut also I've watched the family spending to make sure that it's not out of control. I agree that alcohol is a great investment when times are rough. Who wouldn't want to escape reality. I like cheetos, but when I get pissed I work harder and drink less.

Christen - NO OFFENSE, but it doesn't seem like you've had to really sacrifice to make it. I appreciate your post and it's helpful, but, not to re-live the past, but when I turned 18 I was basically told have a nice life. I took off into the world with basically nothing. I joined the military and got used to saying f-u and buck the system to get to where I'm at today (BSCE) with the GI bill. Of course the wife has a nice job and that helps! It's nice your dad and his partner started something you could take over. I wish I had that because I wouldn't be in the predicament I'm in today. Not trying to be mean, I just wish I had that opportunity. Thanks for your input...

Oh Haha - Thanks for the offer. Actually, I ran across coin car wash and was going to see if you were interested in investing with me. But the numbers weren't so great so I passed. I also told Sandy that there's a 3 bay building you may be interested in working with us. Something WILL happen soon. Mark my words. The day in the cube are limited........

Lendaddy - My wife is a pharmacist (PharmD) and we've talked lots about a home infusion business. She's into it but when I do the business plan the numbers are crazy and I only planned on one year instead of 2-3yrs of no income the risk is scary. But ultimately think this is our ship that is pulling up to the dock..

Rick Lee · Rick Lee's Garage

I knew a guy in the Potomac PCA who got crazy rich from owning a car wash. He told me sometimes he could get 1000 cars through it in one day. Not bad at $12-$14 a pop. That would cover a lot of the bad weather days.

jackobleep32 · 08-29-2008, 08:52 PM

Quote:

Originally Posted by wcc

jackobleep32 - You are right. The reason is because I'm not sure what to do. Hence the thread. I HATE THE CUBE and NEED to do something to get out of it. Any thoughts to help with that? I will do something right or wrong and just try it.

I wouldn't limit yourself to starting a business. It could be that you just want a better job. I think that most people who want to start their own business, but haven't done it after thinking about it for a long time, maybe wouldn't be too successful at it. After all, it takes a bit of balls to quit your job and then try it out, that type of risk taking is necessary in daily business decisions. Not trying to be a **** but some people are better suited for it and some are not. It's not that any one person is better than another, it's just the way it is. You don't sound like you have a passion you wish to pursue. You have to have a passion and drive for when things get sucky.

I was once a cube-***** and I decided that was not the way to go. Good luck on whatever you do - sounds like you should at least plan to quit in the near future.

LeeH · 08-29-2008, 09:18 PM

Some thoughts on small businesses:

I think that businesses that are easy to run and make a lot of money do exist, but rarely get sold. I've spent a lot of time going through businesses that are listed for sale. Most have serious issues. The trick is knowing enough to spot them before you sign on the bottom line. The broker and the seller are on one team and you on the other.

The last business I seriously considered buying was advertised for $250K with a net of $90K/year. After digging, the owner decided that the net was more like $30K/year, but wouldn't come off the price due to his perceived value of the assets.

Beware of small businesses that exist solely because of the owners' knowledge, skill, education, personality, contacts, etc. Buyers of these types of businesses are in for a rude awakening when they become the new owner.