Category Archives: small business owner

“I have Not Failed I’ve just found 10,000 ways that won’t work” – Thomas Edison

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My family and I lived near Fort Myers Florida for 11 years – Thomas Edison and Henry Ford had vacation homes right next to each other  in the  Fort Myers Florida.

Thomas Edison Business Mindset

Many stories and quotes are attributed to these successful men. The above quote – “I have not failed. Ive found 10,000 ways that wont work” – To me addresses the trials and tribulations of a small business owner or entrepreneur. Failure in start ups happens. It can happen again and again, and will happen. Failure doesn’t get dealt with as a defeat, rather is viewed as a setback. Many failures turn into policy and/or procedure to avoid similar future problems. If you buy a business you can have a pretty good feel on what to expect assuming you’ve performed adequate due diligence.

Thomas EdisonIve been part of many discussion revolving around starting up a company and how many years to either break even or make a profit. Some people say it is one year others say 2 years, others 3-5 years. For every business reaching this milestone of “break even” or “profit” is different. The measuring stick used and the timeline expected should be considered. Arbitrary goals and time frames should not be set. There are many unknowns in a start up. You can only do so much due diligence on something that has yet to happen – “You dont know what you dont know”- this quote may or may not be from Thomas Edison,- but applies.

I think that many people have a certain entrepreneur spirit within. Only a certain percentage act on that spirit. And the successful ones I believe are the ones that are successful at understanding failures will happen, and are resilient enough to accept the many failures that will come your way. Failing 100’s and or 1000’s of times and then coming up with the light bulb is a prophecy most any small business owner / entrepreneur would accept.


Free AK-47 with Purchase

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How to win new business

What would you do to get a new customer or some more business?   While vacationing with my family in South Carolina, I drove by this sign that stated “FREE AK-47 WITH PURCHASE”.

I kind of view it as an interesting marketing effort. It certainly can increase the visibility of this company among all the other similar businesses along this somewhat rural, lake area street. I am not sure of the details or what exactly this tractor and boat shop was offering. It made me consider the various methods and or limits we all go to, to gain business. I work with people that are interested in buying or selling a business, but recognize that all businesses need new business. I’ve hear it said “If you are not growing you are dying”, I’m not so sure it is that black and white but subscribe to the concept.

Today’s business climate encourages cost cutting measures. It is fairly easy to cut marketing/sales expenses, as these cost very often are not “fixed cost”, and can be readily modified or reduced if needed. Maintaining marketing sales effort now in preparation for a recovery is a sound approach. Ultimately gaining the attention of prospects or potential customers is one of the more critical parts of a marketing effort.

It`s All In The Marekting

This Tractor/Boat shop through no real additional cost certainly grabbed my attention. (And I am not in the market for a boat a tractor or an AK-47.) While I pulled off the road and into the parking lot to take a picture of this sign, I saw no customers coming out of this place of business with a tractor and AK-47 over their shoulder. But, I do believe the effort and uniqueness of this sign did and will help bring more potential customers into the store.

Marketing efforts can be fairly inexpensive, and sitting back, stopping marketing efforts and waiting for recovery can prove to be very expensive as well.

Today’s business climate encourages cost cutting measures. It is fairly easy to cut marketing/sales expenses, as these cost very often are not “fixed cost”, and can be readily modified or reduced if needed. Maintaining marketing sales effort now in preparation for a recovery is a sound approach. Ultimately gaining the attention of prospects or potential customers is one of the more critical parts of a marketing effort.

Starting a Business or Buying Business with Family or Friend – STOP

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What is the 1st step one must take when thinking about buying a business or going into business with family or friends? STOP – and allow yourself careful consideration.

Is Starting A Business With An Acquaintant A Good Idea?

I think the concept of going into business with a life long friend, or a good buddy from college, or your brother, dad, sister is a fairly common thought process. Family run businesses are prevalent throughout the business communities. There are many successful family businesses, so they must be a good idea – right?

My short answer is I’m not so sure.

Businesses that have the ability to sustain over long periods of time- 10 years, 20 years or more to me are classified as successful businesses. But do the businesses sustain at the expense of breaking apart family values, feelings, or structure? Are holidays at the dinner table among the “family business associates” enjoyed as a family or another business meal, or worse?

I think there are many success stories of family businesses or buddies that go in together to buy a business. But, I also think the number of family/”friend partnership” businesses that fail are large, and the number of businesses that are bought, started, or run by buddies or family members that adversely affect those important relationship may even be larger.Why is it so easy to come up with the idea of asking your buddy to go into xyz business with you? I think a big part is the feeling that you know your buddy or your brother/sister. But the missing link here may be that you know a certain part of that person real well, and the other part- the business part, – you may not get to know until it is too late.

Family Business

Photo (c) topnews.in

I can speak of this matter from experience as I have been in business with both family and friends. For me it has worked out. I certainly experienced some bumpy roads along the way, but overall I have been happy with the end result of those business/personal relationships.

But I have always felt that my experience may have been more the exception rather than the rule. Stories of friends that went into business together and it didn’t work out surround me. I currently am evaluating a new venture that involves this same subject matter.

Friend Offering A Good Business Opportunity?

So what do you do when a friend offers you a very interesting business opportunity? I say STOP, and move beyond the idea, and analyze the business deal.

I’ve heard someone say STOP and get an MRI on your brain, but I prefer the non-medical approach. There are steps that can be taken to mitigate some of the pitfalls of such an arrangement and these may vary with the type of venture whether buying a business with family of friends or starting a business with family or friends.

Below are a few step that can be taken and I will take when evaluating the opportunity of buying a business with a friend.

  1. Does the concept make sense? It must be a well thought out concept, and numbers must support the concept.
  2. The business plan needs to spell out everything, and then it must be followed. Moving forward without a plan is a bad plan.
  3. Draft the terms of the agreement between the parties involved. Expectations, Roles, compensations, exit strategy, are among the items to lay out in such an agreement.
  4. The agreement has to be a win/win for those involved . The more situations that can be addressed going in can only help to mitigate problems that may occur later on.
  5. Plan on X% more time and X% more money than you planned to open the doors.
  6. Have a long term plan. Success can be surprising sometimes, and possible success and benefits to those involved may be best addressed upfront

Part of me says Ive had a fair amount of good long term business relationships which are valuable, but I value the long term friendships I have more. Good friends seem farther and fewer between than good business partners.

What do you do when your buddy approaches you with this idea to buy this great business?

Buying an Existing Business vs. Starting my Own Business

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You are an entrepreneur or small business owner or aspiring small business owner and you want a new venture. Do you buy an existing business? Do you start your own business?

Buying an existing business can be safer than starting your own business from start-up. Business startups unfortunately have a fairly high failure rate * Many figures on failure are passed around and it depends on what numbers to believe, but the rate is fairly high (*Statistics I’ve seen from the Small Business Administration (SBA) show that 56% fail within 4 years.)

If you buy an existing business, you’ll have dramatically improved your chances of success. Again, failure/success rates are up for interpretation but your odds are greatly increased. Many businesses for sale have passed the crucial 5 year mark. The owners have run their business successfully for many years. Why would someone want to sell a successful business? There are many real reasons for people wanting to sell a successful business – Retirement, illness, relocation, burnout, etc. There are a lot of good businesses available for sale www.sellabusinessflorida.com that have real value and I have had personal first hand experience with this fact.

Below list reasons and benefits in buying an existing business vs. starting your own business.

Business Startups versus Existing Business Acquisitions

  1. Actual results rather than pro-forma – Sure, business plans and income projections look great on paper…. With an existing business, you already KNOW the ACTUAL performance of the business – you can look at the tax returns, P&L, etc.
  2. Immediate cash flow – You may step into a business that’s already returning a nice cash flow to the owner every month immediately. Start-ups could take years to positive cash flow.
  3. Trained employees in place – Most of our businesses for sale come with well-trained employees already in place. Many have been doing this for years and are experts at what they do. As a new owner, this commodity is invaluable, especially if you don’t know much about the business yet.
  4. Established suppliers and credit – Instead of having to prove yourself and your ability to others in order to get accounts set up, you already have them.
  5. Established customers and referral business – The acquisition will have an established customer base, an asset that can take years to build.
  6. Existing licenses and permits – Licenses can be difficult to obtain. And it may be difficult to learn all that you do need. Existing businesses have learned and instilled what is required . And it turns into a matter of transferring those into your name.
  7. Training by the seller – Very often the seller will help you in the learning process. You benefit from their previous trial and error efforts. Owner can show you the ropes of the business, introduce you to everybody, and make sure its a smooth transition (especially if they are financing your purchase!)
  8. The Owner may provide owner financing – They can kind of become your bank. It is difficult to find a bank to loan money to a startup. Banks have little or no security available in a startup. The reality is that owner financing creates “an interested almost partner type relationship” that has a vested interest in your success. You are on your own- but not really. In startup businesses you are on your own and with all due respect to bankers, I have never been able to view a banker as a partner that would have hands-on assistance in my efforts.

DON’T buy or start a business if your immediate goal is to “be able to spend more time with my family” – long hard hours are usually needed, or “I want to be my own boss and don’t want to have to report to anyone” – even bosses do have to report to IRS, Inspectors, Insurance Co, employees, etc, and “I want my own business because I know it will be easier than my job” – probably wont be.

But if you are seeking a new business venture buying an existing business vs starting a business can greatly increase your chance of success.

Small Business Owners (Most All) Affected by Real Estate Downturn

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The Real Estate Downturn Is Affecting Most All Business Owners.

The real estate downturn is far reaching. Very often we hear about the impact on Realtors, construction trades, mortgage companies etc… But what about the small business owner that is a Printer, a Restaurateur, or growing Web-Based company. Most all businesses are affected by the overall slow down of goods and services, but the real estate downturn has affected business owners in possibly a more significant way.

Many small business owners own real estate. They own the businesses building, they own their private residence, or they own real estate investment property. These business will have financial needs, loans, line of credits, etc.. The bank regularly needs/requires personal guaranty and a personal financial statement from the small business owner. A significant part of that small business owners financial wealth is tied to those real estate holdings and the bank determines this small business to not qualify for a loan or L.O.C., because of depressed value of his/hers real estate holdings.

Real Estate Downturn

Photo (c) estacoes-elevatorias.com

So often in the business world it is said that “it doesn’t matter what an employee or a business does when he/she is on personal time or outside the business”. I find this approach to be flawed. What happens to an employee or small business owner outside the business does matter. The small business owner will find it more difficult to convince the banker of adequate security.

It used to be that you knew you had a lot of money if you lived in a nice neighborhood and had a nicer house/car than your neighbors, now you know you have a lot of money if the bank is willing to loan you money. What happens to a small business owners money outside of his business DOES affect his business.

As of today, September 18, 2009, it is hard, but certainly not impossible for a small business owner to get money from a bank. But you better look good and have “layers” of security for the bank. In the past, I have experienced bank loans for business acquisitions that the bank appeared to have the value of the deal as security, but ultimately tied up the valuable real estate that was associated with the business. The sooner the real estate market turns around, the sooner small business owners will realize the benefits of that turn-around, and use those benefits to help/grow and or sustain their business.