DisgruntledOrangatang said:
Everytime I read your replies I imagine you are like a professor.
I am more like a student that wants to help other people. The year it took to buy the first business was hell, and I figure I can help others cut corners.
DisgruntledOrangatang said:
Basically where I live I see two prospective businesses to open. One is a club, I live in a college town and there are only 2.5 clubs (one isn"t really a club just a large bar with room to dance) both which have fairly small dance floors and seem to "do it wrong" when comparing them to the clubs at the actual college I went to. The second one is a Red Mango or Pinkberry franchinse. My college campus has a huuuuuuuge amount of asians and a large amount of health conscience trendy yuppies. Being that one (or both?) of these franchises came from Asia, I think it would be pretty popular. Now I was told, but haven"t looked into this myself, that you can"t purchase those franchises like a normal fast food place, but the company chooses where to open up places so, if true I guess the only option with that path would be to make a local version of it (diff name same product basically).
It sounds as if you are able to see opportunities. That is a plus. The author of Rich Dad, Poor Dad talked about how if you wanted to be an entrepeneur, than you need to be able to see the world in a different light. He suggested that you go out, and take a drive, and look for at least one opportunity. Once you can train yourself to find one opportunity, than you can see opportunities for the rest of your life.
I have to be honest, when I was still in my MBA program, I had a hard time seeing entrepeneurial opportunities in the world. All I could think of was going to work for someone else. It probably took me about six months to change my point of view.
DisgruntledOrangatang said:
I"ve got a decent business education (though not formal persay) my major was half technology half business. So I am fairly good with marketing and management, PR, but not very knowledgable on accounting and economics. Now currently, I don"t have cash to put down. So the only option would be a loan or VC (in this market lol). I also have a full-time job (9-5) which I would like to keep. That being said, I have no problem putting the post work hours into this endeavor. I assume because of this I would need a manager (for the pinkberry) to run it while I run my job.
Honestly, it looks like its going to be tough to do what you are trying to do, given your cash situation. VC"s won"t touch this. In b-school, one of my classes was taught by a guy who ran a venture capital fund. He said that VC"s look for a potential return of at least 50% - its going to be near to impossible to generate returns like that in an old economy type business that you are looking at.
When I was 25ish, I looked at starting a nightclub. I called a friend who owned a bar, and we went over the type of equipment I needed, as well as money for rent, liquor, payroll for six months. I also did monthly projections for three years. They say it takes an average of three years for a start-up to make money, so until then, you are burning through cash faster than Bill Clinton at Booty Land. I had 20K to my name, and it wasn"t enough to secure a bank loan (I got turned down).
As far as having a manager run the business - do you have the cash to do that? Most business owners (at the beginning of the business) work crazy hours. How much would you have to pay for someone to work 80 hours a week? Its also pretty tough to be self-employed and own a business. Do you have a job where you can come and go as you please? If the manager gets sick, who would do his job? You"d either have to take off from work, shut down the business, or carry extra personnel (which requires more cash).
Don"t forget that landlords also have to approve your deal. Some of them use the same requirements that a bank uses. Depending on the market, they are going to want your business plan, projections, and they are going to want you to have alot of cash. We had this problem in Atlanta. On the first business we were going to buy (the restaurant), the landlord would not sign a lease with us unless we had $500K in cash AFTER we bought the business. Many landlords have net worth requirements for renters also. In Atlanta, many of them required that you could document that you had a net worth of $300K+.
Your cash on hand sounds too low (but you didn"t say how much you had) to do this. I am not saying its impossible or that I have all the answers. I have a friend that started his business on just $800 (which was every penny he had) and now makes $150K+ a year (and he still has no bank loan). I have another friend who started his business for less than $1K, and makes $50K a year as an absentee owner (with no debt). Anecdotal evidence aside, the odds are against you until you can get some more cash.
P.S.: Excuse my grammar and typos, but its the holidays and I am busy with family.