Tuesday, January 1, 2008

So you want to start a business?

A few years ago, I attended a presentation by the owner of a car dealership. He had some advice on starting a business. One of his first points was that the statistics showing large numbers of failed businesses are skewed, because smart people often go for the guaranteed money, working for someone else, so many that would be successful never start their own business.

The smart ones that do make it and build a successful business will run their business by the numbers, not by emotion (of course, this is all coming from an Accountant). The following principles will guide entrepreneurs to success:
  • Know your break even point every month or day
  • Staff according to your slowest month; you may be understaffed on occasion, but never overstaffed
  • YOU be the key employee
  • Put money into what will make you money (buy vs lease)
  • Personal overhead = business overhead
  • Don't spend money just to reduce taxes; pay taxes like you should
  • It is safest to invest money in your own business, where you have the control; don't play the stocks
  • Only grow the business if it will make your bottom line grow
  • Always outsource if costs are the same as doing something in-house
  • Reinvest in the customer
  • Offense is exciting, but defense wins the game; that is, sales are exciting, but low expenses make the money

4 comments:

Ted Stinson said...

Great advice. I've been thinking about starting my own business, but I recently got the idea that I should just buy one. Do you have any suggestions on how I would go about that?

robmba said...

I'd talk with a business broker, kind of like a real estate agent, but for businesses. Like with real estate, they take a cut of the sale price, but they'll help you find something that works for you. It helps to have an accountant on your side as well that can help you go through the numbers to ensure that the business is really as stable as they say it is.

Chloe said...

I second that. Definitely check out a business broker and get an accountant. If you could afford it, a lawyer too. I know some brokers post through online websites, like BizTrader.com, so it might help to start there as well. Good luck!

ted stinson said...

Thanks for the help guys. I found some business brokers I'm going to get in touch with soon, and I checked out biztrader.com. I saw some potential businesses. Great way to find a small business on the Internet. Thanks again!