The business blog, profitable, is up. Please visit my blog where I talk about starting a business, taxes and finances.
For some of my previous blog entries, here you go:
One of the biggest questions I get asked is, “Kim, what kind of business should I get into? What is the next ‘big thing’?”
If I could predict the next big thing I wouldn’t be consulting, doing taxes, writing, publishing, managing or coding. I would be doing the next ‘big thing’.
The cliche answer is unless you really have an innate ability for correctly guessing the fickle public’s taste, don’t bother trying to guess what the public wants next unless you have a lot of money to burn. The number one thing you should be looking at is whether or not you like the business you are wanting to get into. It is a lot easier to do something you love than something you hate. Millions of people around the world are doing jobs just to get by. Here is a chance to do the one thing that you love.
You like to design rooms? If you think you can make a living with it in the market you are in, go for it. Bear in mind that you will have to figure out a business plan before you can actually start your business but make sure it is something that you love doing.
You may be pleasantly surprised that your business may turn into the next “big thing” and you will be there waiting to take advantage of it. The number two thing you should consider is what is your realistic income potential.
You may like to design rooms but if everybody else in Trenton, New Jersey or Ankara, Turkey is also interested in designing rooms the chances are that you will have a lot of people offering to design rooms for free. You will have a hard time paying the bills. Keep in mind that jobs (full or part-time) that are glamorous, exciting or fun have a lot of people wanting to do them. Competition is fiercer and the market reflects the income you can potentially make accordingly.
If you are starting something brand new, or something yucky (cleaning out people’s sewer lines), you will have less people (depending on the market in your area) in competition so you can forecast a better income stream.
Whatever you decide to do, take the time to make a business plan. A business plan is a blueprint for what you are planning to do. It should serve as a written document you can show others, potential bankers or people with money to invest (if you go that route) that you know what you are doing and know the direction that you will be going towards.
I will get into other things you should consider about picking a business to go into in the next post.
Questions? Comments? Please let me know.
Continuing on from where we left off from our previous entry, let’s say that you’ve decided to do the job of your dreams. You really enjoy baking things at home. You think you would make a great baker. Maybe you love to fix things around the house. You’ve sat down and you have worked out that you think you could make a pretty good living doing this. The next question you need to ask yourself is, how easy is for me to get started in the business? This is called the ease of entry into the business or initial starting requirements.
You need to know or be able to research what the requirements are for doing business in the particular field that you want to work in. A good place to start is to strike up conversations with people who are doing what you are doing and don’t live near your geographical location. If you want to be a plumber, for example, you may want to talk to one that isn’t close to you so the person won’t feel threatened. In the case of being a plumber, he (or she) probably won’t feel threatened because there is a specific path of entry into being a plumber - you need to apprentice with an experienced plumber, take classes, etc.
This is the type of information you need to figure out before getting into your business. Do you have to have any specific licensing requirements for the city, county, state or national level in order to demonstrate competency for what you are planning on doing? You don’t want a doctor who has had one year of junior college making a diagnosis on you and it is to be expected that different careers or businesses have different requirements.
If you don’t have the requirements now, your mission is to determine what do you need to do to get the skills,how long will it take and will it be worth my while to go through the process to learn the skill or trade or get the street credentials that you might need.
That dovetails nicely into the next factor for consideration:
Is there a maket demand for what you want to do?
You very well may want to be a plumber but if there are already ten plumbers in your area and there aren’t a lot of people, there may not be a lot of work to go around. On the other hand in a large city like New York, Los Angeles, Chicago, Houston or Miami, you may not have to worry about finding work since there are enough people with broken sinks, toilets and water pipes to go around.
Here is where you take stock of your existing skill sets. If you have always been handy since you were a kid and have read up on how to change pipes, love working with pvc, and already have connections in the industry - you are on your way. The remaining aspect to this would be to demonstrate reliable work habits - are you on time for your jobs, are you honest, do you go the extra mile for your customers, things like that.
If on the other hand you hate working with your hands, hate getting dirty and have a fear of dirty water, maybe plumbing isn’t the career choice for you.
More to come!
You’ve found a great job you want to do, you have the knowledge that you can make a living at the job, there is demand for your skills.
But is your job recession proof?
Are you doing something that withstand the swings that we sometimes encounter (like now for argument’s sake) when people’s checkbooks close and money is tight. Is the job or product or service you are providing something that people will still pay money for no matter what the economy is?
Consider starting a restaurant. When times are good, people eat out all the time. They would rather pay for the convenience of somebody cooking for them because they are all too tired from working. Let’s face it, that is what microwave ovens are for as well. People are hungry and what instant gratification N-O-W.
What about when times are tough? The first thing that happens with most people is that they see what can they get rid of in terms of expenses. Where can they cut costs? For a lot of people that means shopping at the Dollar Tree stores and buying $1 meals. Cooking at home means they are saving money and the same goes for starting to bring a bag lunch to work instead of going out and spending anywhere from $7 to $15 for lunch like they use to.
If you are planning though on a business where you can sell inexpensive food, like a hot dog cart in a good location, you may have a recession proof business. Remember you still need to do your own due diligence and planning.
Questions or comments? Please let me know.
In your business plan, you need to have what your start up costs are and what your monthly overhead will be for running the business. This would be a good time to also take inventory of your monthly personal expenses because if you are planning eventually on quitting your dayjob (or making this new gig your new day job) you should know how much you need to live each month.
Whatever numbers you come up with figure anywhere between 10-35% extra padding should be added to account for emergencies, holiday expenditures and if all things go well, money for expansion of your business.
Let’s take the previously mentioned example of a hot dog cart. I have no idea if these numbers are realistic but they are here to serve as an illustration of start up costs:
hot dog cart $3000
hot dogs $200
business license $25
resale license $0
sodas and chips $540
Total Start Up Costs: $4140
and we will throw in 10% emergency cash of $414 to make our total start up costs a grand total of $4554.
Let’s say you need to replenish the hot dogs, buns, sodas and chips each month. I know I forgot to add napkins so I can take some of that money from the emergency cash I allocated up front.
Our monthly overhead might include gasoline to drive to a location, say the front of the County Courthouse at lunch time - $300 a month.
Figure $1015 a month for expenses.
That is your monthly forecast for what you will need in the worse scenario cases if you don’t even sell one hot dog. Are these acceptable costs for you and do you have the money to gut it out for 3-6 months till people see your cart and start realizing what a delicious hot dog really tastes like? What if the weather is lousy and you are stuck with rain for three months? How will you make expenses meet in the meantime since hot dogs won’t keep forever and you will have to rebuy new ones?
Again, please be sure to do your research in advance and make sure that the start up costs aren’t too high or that your expenses aren’t going to mushroom out of control and eat up all the profits that you will be making!
Questions? Comments? Please let me know! Thanks for reading!
Let’s say that you have all the other elements for your imaginary hot dog cart business planned out. The next thing you need to take into account that should be incorporated into your business plan as well is your competition.
What are you up against in your anticipated marketplace? If you are selling hot dogs outside the city courthouse are there already three other hot dog vendors out there? Are all of them swamped at lunch and it looks like that if they had a dozen hot dog carts that they all would still be swamped?
Just because there is a lot of competition that doesn’t mean that you should run away. On the contrary, that could mean that there is a huge demand for the product or service that you are trying to sell. You need to recognize though if the competition is seasonal or timely.
People won’t eat dogs (usually) at 7 am in the morning if they are going to work at the courthouse. They might eat though between 11 am and 2 pm throughout the day. Maybe between 4-6 pm you might get another bump in business.
In the toy business, your seasonal sales in the United States are usually from October through December. In India, you can sell gold for weddings generally before monsoon season.
Are you also different enough from the competition to draw business to you from your competitors? Maybe you sell Kosher hot dogs. Maybe you have a cute girl in a bikini serving the hot dogs. What is your edge that will differentiate you or your product from your competition?
By recognizing your competition and incorporating it in your business plan, you show potential investors that you know what you are doing or at least have researched your market enough so that they can see that you are taking yourself seriously and will be treating your job as a business!
Questions? Comments? Thanks for reading!
July 20th, 2008
Do you like to work long hours? Can you deal well with aggrevation and stress? If you are planning on starting your own business you need to be able to deal with working ten to twelve hour work days initially. It will be your business and it will grow or whither away depending on how much time and energy you put in.
If we go back to our hot dog cart example, you can figure that you will move your cart from place to place to try and maximize the amount of hot dogs you can sell in an 8-12 hour period of time.
Let’s say you need to open up your hot dog cart at the courthouse at 11 for the lunch hour rush. You are there for two hours so plan on getting an additional two hours of preparation each day to get to your first destination. From 2-4 you travel to some construction sites or to a stadium. From 4:30-6 pm you go back to the courthouse or stay at the stadium. Let us say that you move to an outdoor mall by the ocean to get the late night traffic. You end up staying there till 10 pm. You then take 1-2 hours to go home, clean up the cart and get ready for tomorrow’s day.
Ask most independent businessmen and you will find that they work up 10-15 hour days easily. Most of them enjoy what they are doing so initially it isn’t a problem.
But if you want to have a social life and get back to your family, girl friend, boy friend or relative of choice, you need for them to understand that initially they won’t be seeing much of you because you are trying to start your own business.
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