I want to start a business...
 

And I'm an idiot. I hear stupid people make tons of money, so I figured it was time to dumb-down and make some cash. :D :p

Here's the skinny: I've got a friend going into franchise operation. They're willing to waive the franchise cost ($50k) so I would just need the startup capital for the location and other assets.

I know a little bit about running my side-work (as a sole proprietorship) but not nearly something as involved as a full-on retail storefront. Let's just say, I'm willing to do the work, get my hands dirty and take on the time-commitment, but I need to learn how to run it.

Where do I start? Take some classes? Seminars? I know there are many knowledgeable business people here and some valuable insight (or at least clear direction on a starting point) would be of monumental help.

I want to be able to get it going in 9 months to 1 year (I still have to work a day job right now).

find a someone who owns the type of biz that you're looking at buying. WORK for them for a while and see what they do right and what they do wrong. See if it's what you want and can do for a long time.

I agree, take any position available at another location in the franchise. If it's a Macdonald's, get a job as dishwasher for a month or 2. If it's a clothing store, work as a cashier.

If you don't love what you're going to be selling you're going to hate the whole process. Make sure you're in it for the right reason first-- not just because you think you can make money. If you own a retail shop it becomes your life.

Do you have a decent business plan, does the franchise come with marketing support, do you have a clearly defined area of sole operation, have you investigated all the regulations and government fee's that will add up running a retail store?
There are all kinds of hidden things that will kill your dream and destroy your investment of both time and money if you do not do serious due diligence before you commit.
In LA there use to be a group called SCORE. It was retired CEO's that where available to help start ups free of cost. Basically successful retired board business people who still missed "the game". Look around and see if Costa Mesa has something like that. They have no skin in the game and will give you honest advise.
Good luck, it can be fun and rewarding.
Steve

There's knowing the market beforehand, before investing a big chunk of debt.
-Is the area growing or declining? (i.e. high end jewelry in an emerging ghetto)

-Will there be a continuing need for your product or services? (i.e. harp repair in compton)

-Can local business laws easily affect the business? (i.e. porn shop in vegas/chitown)

-Can the product be sold interstate if local sales fall? (i.e. homemade ice cream)

-Can the business be easily duplicated by other companies? (i.e. coffee house)

Reputable franchises have their own training and marketing resources at your disposal, typically for zero cost.

Don't do it in California. Trust me, I tried to start up my own practice there and the start-up costs, fees, permits, licenses and taxes will absolutely shell you.

FYI McD's is EXTREMELY competitive for franchises. From my days when I had them as a client I learned (IIRC):

O-Os (Owner/Operators) have on average three restaurants already - individuals who are already O-O's are preferred.

At least $2M liquid assets (forget whether this was a requirement, but there was a pretty high liquid asset requirement even to be considered)

Prior restaurant experience

VERY comprehensive and detailed business plan

There's probably someone on here who's an O-O who can chime in. Also those guys have to pay a LOT to McD's corporate for the franchise and all kinds of other stuff as time goes along, but they do all right for the most part so long as they have decent oversight/management of their restaurants.

I don't own a business but I have two friends who do (or did)

One friend found a product he liked... threw a big pile of money at starting up (leased a place, bought a bunch of product, paid for a bunch of advertising)

he went bankrupt in about a year.

Other friend started working out of his house, built a clientele, now has an office and has been very well for over a decade (maybe two).

My dad also started out as a HVAC contractor working out of his house, he later bought a shop and then invested most of his profit into real estate back in the 70's, he is also doing very well.

I have been told you should have enough money to keep going for a year because you will not make any profit in that time.

YMMV

In CA the dept of corporations controls franchises. If the franchise seller does not properly train you in all aspects, you can sue them if you fail. Not saying it would be easy, just saying people selling franchises are highly regulated.

BTW, waiving the fee is the first sign of a scam or a weak franchise.

The closest SCORE office is in Burbank or thereabouts. They hold seminars in various locations. Get in touch thru their website.

Thanks everyone, some great insight. The waiving of the fee is because the owner is a close friend. Make no assumptions, I'll still have to acquire the equity necessary for the storefront end. They look to start offering franchise options at the same time I (hope) to be ready to take on a franchise as an Owner/Operator. They agreed to train and provide everything, basically hold my hands, through the initial process. I may have issues in the credit/assets department but in a year who knows - that could be turned around.

Also since it's an entirely new business structure to me, they also agreed to have me in on weekends to learn how to run things. Do that for about a year, save up the money, repair the credit and attend classes/seminars as needed, I believe I can do it and be successful. I know I'm being vague on the type of business but I can say that with things running smoothly it nets a good return monthly if you only do it 5-days a week. I'm not about to jump right into this, I have about a year to evaluate and prepare, which I intend to do.

I know I may be focusing in on the dollar signs... But I'm sure as hell tired working for someone else and just getting by. If that's the case, I'd rather work for myself and get by without the hassle of upper-corporate politic BS.

Just be careful, you might end up working for yourself and losing money. make sure you keep your eyes open and get someone to give you lots of un-bias advise. And don't kid yourself you will not be getting rid of political BS in a franchise just getting a different type.

Steve

Brandon, I like your enthusiasm, so clearly in your posts, but this is the wrong reason to start a business. You start a business because you have a passion for the product or service, not because working for The Man sucks.

Taking a year and learning the ropes is super smart. I hope in that time you can fall in love with the business you will be starting because it will make all the difference in your success.

Shaun gives some sage advice

this too, there is a reason they say California is the most anti-business state in the country

This sentence bothers me, makes it sound like a pyramid type setup.

yep. anyone I know who has succeeded in business has also nearly starved or worked themselves to death first.Even then, some have done EVERYTHING right, and still had the floor fall out from underneath them. We all know people like that, and there are some on this BBS.

The sacrifice and risk is significant, and the ones who drive through the hurdles and tough times are generally motivated by something greater than $$$ alone.

If you LOVE what you do, the sacrifices don't seem as severe because you are excited by the work. Find the type of work that excites you, learn everything you can about it, and then build a business around it. Make sure you pay attention to those who have failed, and learn from their experiences

come to florida and open a mr.hero or swensons........lol

In addition to everything else that's been said... learn as much accounting as you can.

You mention that you will take time to "repair the credit." I know life sometimes destroys credit, but more often than not it's lack of knowledge and/or bad choices. Either will be deadly to a new business.

People who run small businesses pay people like me to keep track of their business finances. Sometimes that's because they don't have time. Sometimes it's because they just don't understand the whole accounting process.

If you learn about accounting between now and when you start, you won't have to pay someone to do your books and more importantly, you'll have a better understanding of how the money is coming into and out of your business.

Some good advice above.

I'll add a couple tips as one who has started two business - though never a franchise.

Stop being vague. The type of business really matters, both in terms of your prospects and what you need to do to succeed.

A common mistake of first time Entrepreneurs is keeping the business plan a secret. A better plan is to tell everyone you can, you will be surprised where help will come from - advice, contacts, money, etc. Seek and accept help.

Sorry, not gonna happen. Successful Entrepreneurs work long, hard hours. You will work long days and likely 6 or 7 days every week.

You really need to set your expectations correctly on the amount of work and dedication it takes to make a business succeed. It's very hard and that's why most fail. And it's why you need to do something you enjoy, you'll spend a lot of time doing it.

The quest to earn money is fine, admirable even. But you need more than this before starting a business. You need a burning passion to make it succeed. People find that passion in different places; a love of the product, a need to prove you can do it, a desire to live by your own wits or die trying, a love of the process of building a business, etc. There are many good reasons, but money alone won't get it done.

Know that most businesses fail. Hardly a guaranteed path to riches, it is filled with financial risk and hard work. If you can navigate those challenges it will be very rewarding, and you may do very well financially. Or you may fail.

3 years. That's how long it is likely for a new business to begin turning a profit. That means you work your arse off for three years, and you take nothing out. In fact, you pour money in trying to get it going. You need adequate capital to fund the business a personal expenses for that time period.

If you're not turning a profit in 3 years, you need to think about folding.

And the tip about learning accounting - gold.

Thank you everyone, for the info. Tons of helpful advice, indeed. The type of business is payday advances/loans, title loans, prepaid credit-cards and money-transfer services. I'm just starting to get my feet wet in the knowledge of how these types of businesses operate. You're all spot-on, that it will be a hard commitment for the first few years. I'm 100% fine with that.

To find out that this is something I really want to do I'll be working on weekends for my friend to learn how to run it. He's offered to be a knowledge-base if/when I decide to take on my own location, including but not limited to even picking the location. Most of my experience (for running a biz) has to do with prior auto shop experience and my own side-work for graphic/web design. Entirely different fields, yes, but some of that carries over.

I'll definitely see what is available in terms of accounting classes at the local JC, or even vocational programs offered.

@PoP/Jeff -> I'm pretty much staying here. I know how anti-business CA is with their regulations, taxes, fees, etc but I figure if I can make it work here, I'll have even better luck in the neighboring states (AZ is where I really want to move to).

@john70t -> all good points and things I need to learn. I worry especially about regulatory schemes (see PoP's anti-CA statement above).

@milt -> Funny, my dad mentioned the same thing, but he couldn't recall what it was named. Another valuable resource.

@notfarnow -> I certainly want to be able to keep putting food on the table and I'm willing to put in the hard/long hours necessary to keep a place afloat. Right now I'm working for a company (day job) and doing my own work at nights, so I understand the commitment aspect.

That's why I'm going for the Owner-Operator aspect, at least until I can turn the business profitable and move on to location #2, rinse, repeat. The franchiser is looking to make it basically "business-in-a-box" for franchisees.

#LeeH -> I hadn't even thought about the accounting aspect. Excellent point. As for the credit... A series of circumstances that I did not handle too well when I was much younger have left a few nasty marks on my credit. I'm rebuilding now by paying off my first auto loan (should be done by this time next year) and hopefully then going on to secured credit cards. Once my income is a bit higher it will be easier to do so.

and...

@Chuck -> Guess I shouldn't try to hide it, eh? See the details above. This type of biz (PayDay Loans, etc) is no secret. I must admit my drive isn't exclusively about the money, nor is it exclusively about not working for 'The Man'; but more so my desire to be in a position of having adequate income to provide the lifestyle and resources I never had available to myself growing up and for the soon-to-be-fiance-wife and potential-kids.

My parents picked cotton and worked at diners before having me and still live paycheck-to-paycheck today, putting my sister through private school. I'd like to be able to do more than that when the time comes (for kids). Looking at my possible future I am realizing that I won't be happy living hand-to-mouth. Not to mention my long-long-long term goal of being able to retire at 50/55 and just restore old cars at my leisure. At 27 I have come to the [sad] realization that I will not be able to do that following my current course. Something has to change and I don't want to miss an opportunity. BUT! I also don't want to jump into something I am not prepared for and have it fail, taking my savings and assets down the drain with it.

Thanks again everyone for your input. If there's more to say, please say it. Positive/negative advice -- let's hear it! After a whole day of pondering on it I'm still excited about the idea.

pm'd you
Jim

Super Capital Intensive. You will need a big pile of money to get that up and running.

Keep in mind that the CA State Legislature hates these businesses because they are viewed as exploitative by liberals. And Liberals control the CA Legislatures... They could put you out of business with one stroke of Jerry Brown's pen.

But it's a good business for the people who are good at it.

As far as the "making money" thing goes, I view this in two ways.

1. Work is work. That's why they call it work. It sucks. Some work sucks more than other work. But work is good, even bad work, because it gets you money to buy what you need to buy. Or allows you to buy/invest, to enable you to get different work that sucks less than the original work. So the more you work, if you plan and "stratergize" properly, eventually you can get a type of work that sucks much less than the work before.

2. Work that is not work, sometimes yields a profit, even though you would do the work even if it didn't yield a profit. The profit is almost a by-product of doing the work that doesn't seem like work. And because the work doesn't seem like work, you do more of the work, which yields even more profit.

I settled on a combination of the two. I work at work. It sucks. but it pays good and the benefits are very very good. So I will keep working at this work until I'm 50. Then I won't work at this work, but it will continue to pay me, just like I was working (90%). So I keep working at it, knowing that at some point, I won't have to work at it.

I also work at work that is not work. I found out that I like buying, rehabbing and landlording. It has seldom seemed like work to me, so I didn't care that there was no profit. But then, suddenly, there was a profit. And I used the profit from the work that was not work, to buy more work. Which brought more profit. Which I used to buy more work, that to me, does not seem like work.

Moral of the story? The harder you work, the luckier you get.

No experience but with Title loans sounds like you will be hiring a repo man, and consigning vehicles to auto auctions. I think th CA legislature has bills every year to regulate the payday loan interest rates. One my get through one day.

I hope this is not one of the mobile check cashing trucks. I had a relative fall for that deal and he ended up suing the franchisor before he turned a wheel. And he won his money back. All this happened 20 years ago in the OC where you are.

Plus, I'd rather raise the bar than to charge outrages fees to those that can least afford them. I don't intend to offend, but this is a bottom feeder type of business.

if you want to be in AZ, you should start your business there

Explain :confused:

Shaun, the california legislature is very involved in all businesses here, and is particularly interested in any that can be used/abused for political gain. I can't imagine that you did not get that our legislature is quite meddlesome, but perhaps this clarifies some.


Milt is referring to the usurious rates the short term loan industry almost invariably charges. There are those who would say these businesses prey on the economically disadvantaged.

Thanks. MA has a lot of regulations too, they aren't, in my experience, a deterrent to business. I find that states with a lot of regulation also have a lot of opportunity. Some folks see states taking advantage of business. I see it the other way around, and am happy for it, and so is my business. MA, NY, and CA are the only states I would consider.

Did some research. I see what you mean on usury rates. Nothing compared to some angel and VC rates, but that's a little different I guess. :)

More on business: the best way to learn a lot about business is to start a new business and fail.

You will spend more time after the fact thinking about how it was supposed to work than any college student ever put into studies or a mock business model. Those that have not been in business for themselves have no idea about the commitment. Until you lose your equity, you just don't know how deep you have to dig.

I don't have any respect for those that start a business on borrowed money and fail. The people who loaned the money are the ones that learn on that deal.

O-rly?

Hasbro to move 70 jobs from Mass. to R.I., lay off 75

I get the "do what you love" concept, but it can be easy to waste a lot of time trying to figure out what industry you love and/or how to make a living in that industry. Personally, what I figured out is that it didn't really matter what industry I was in, as long as I could work for myself.

After two companies I worked for failed, I decided to buy a business. I knew I wanted a business that was already up and running. I spent about a year looking for the business that was just right. None met my preconceived notion of what my business should be. One day my wife suggested I find "a business" instead of "THE business." Within a couple of months I was a business owner.

No one has mentioned the "luck" factor. I think pure circumstance can be the difference between success and failure in many cases. Once I was business shopping with a clearer head, I looked at a huge variety of businesses in many industries. The one that made sense from a financial/price/terms/location aspect just happened to be in the building industry. And in the mid 90s, there just happened to be the beginnings of a building boom going on in Atlanta when I made the purchase.

Reader's Digest version is that the company I bought with four employees and around $450K in sales was soon 25 employees and almost $2 million in sales. I'd love to take full credit for that huge amount of growth in the 3 years I owned it, but reality is that there was a fair amount of luck involved with the success of that business.