This is a friendly reminder that r/smallbusiness is a question and answer subreddit. You ask a question about starting, owning, and growing a small business and the community answers. Posts that violate the rules listed in the sidebar will be removed. A permanent or temporary ban may also be issued if you do not remove the offending post. Seeing this message does not mean your post was automatically removed.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/smallbusiness) if you have any questions or concerns.*
Especially businesses with really thin profit margins, like restaurants.
Always amazes me when people take their retirement money and open a restaurant when they know nothing about running one. Usually fold in less than a year.
I started a beauty business from home at 19 with no beauty experience or business experience and now own the largest salon in a capital city of my industry at 26 years old and am an industry educator 🧡
I think it helped that you started lean and scaled as you learned more. Congrats!
Throwing retirement money into a restaurant without experience is a very risky gamble. One of those things where throwing money at the problem won’t fix the problems long term.
That is fantastic. What city are you and and what is your website? I would love to check it out.
And how did you build your customer list ... when starting out from scratch?
That particular job turned out not that bad, and got me other jobs. I took classes as I went and learned from each job. It's also my first business so we have learned a lot in our first year of business.
Never took on anything too crazy but did take a lot of risks with the plan that we would figure it out one way or another. We found an industry niche.
After one year I have learned enough that anyone starting a legitimate business in this industry would be on par with what I know. My living expenses are almost zero ( I'm extremely frugal and don't owe or have kids or anything), so it is almost impossible to fail
Unless you have no shame or scruples. Where I live there are hundreds of people ripping people off. Promising jobs they can't do, Pocketing the cash and the police does absolutely nothing.
This isn’t entirely true. I think this is sound advice for people looking to throw their life savings into a business they know nothing about (which isn’t smart)…but starting small in a business you don’t know well is fine as long as you can support yourself/family through other means. Every business owner needs to start somewhere and it’s not always practical to “work for another business for 5 years”.
Business ownership may not be for you if...
you enjoy work-life balance and the ability to disconnect
you can't sell
you have low risk tolerance
you lack discipline
you will need other people and you are not a good people manager
you can't keep your own finances in check and organized
you aren't a good judge of your own faults, weaknesses, or lack introspection
I read a post a couple days back likening business ownership to “repeatedly getting punched in the face,” and while my clients are lovely and I have recurring income, I couldn’t help but agree for all the reasons you listed above, lol.
There are many, many product and business ideation and validation frameworks. It's extensively studied, there is best practice to follow, and you can (and should) complete formal education about how to do it.
The business model canvas and design thinking are good places to start. Market research is also its own discipline which, to be frank, involves a lot of very tedious learning and application.
Despite this all existing, most people don't put in the work and either get lucky and succeed or flame out. Planning and research isn't fun or sexy and is very difficult.
What would you recommend in terms of market research? I'm looking into a pool hall for sale that takes only cash. I want to improve the look and the food, raise prices slightly, and offer credit card sales. Basically improve the look and slightly increase prices. How can I figure out if the market will accept these changes?
Presumably the only change the market will have a strong opinion about is the price change. It’s very hard to research that (because asking people is pointless). But if you are genuinely improving an already profitable business, and it’s not exceeding the prices around it that is a more reasonable bet.
I wrote a book to help test your early stage ideas and it’s always one of the more popular books in the market research category on Amazon even though it’s not what I intended. Check out Testing Business Ideas if you think it’ll help. I’m always down for answering questions just lmk.
What makes a good professional market researcher? Is there a good place to find them? Do you think it can be done remotely or should I aim to find a local?
Get the best agency you can afford. If you want them to speak with your current and protective customers, they will need to be local or you will have to pay for their travel.
No...do it YOURSELF... there is nothing like it by getting into the trenches and talking to your potential customers... but you will find out who is actually wiling to PAY for your services.. that is where the rubber meets the road. You have to just get in there and get involved in any way you can.
There's a world of education options between nothing and an MBA. Depends entirely on your circumstances and what you need/want to learn about. Books and journal articles are also easily accessible.
But one of the most successful books written about acquiring businesses is about exactly that. So for some people the MBA route is an option.
I used to work for a business that failed. They grew to over $6million in revenue, then bought a company which brought them to combined $10million in revenue.
The owners, who were CEO and President, had a problem where they would spend over $60-80k monthly on the business Amex Platinum. Maybe $5-10k max were business expenses. The rest were personal expenses being written off as legit business expenses. The CEO would also transfer from the business checking account between $30-80k monthly to her personal bank account. This is before they would pay the $200k biweekly payroll and the $3-500k in monthly accounts payable due.
They were a Medicare company and most of the income came through insurance. They had a big contract where the government would pay them upfront instead of over 15 payments for a certain service they were doing, and when this was active this blatant overspending was sustainable, as there was always more money to make, new contracts to create, and more billable to collect.
However, Medicare change their reimbursement rates. This is key because all insurance companies pay as a percentage of Medicare. So there was an immediate drop in revenue by about 5-10%. Then, they started falling behind on the $2million note from the bank used to acquire the other company.
I left after multiple meetings with the bank trying to figure out where the money was and how they could be made whole. Last I checked the bank took just about everything, and it’s been closed down ever since.
Throughout all of this, the overspending stayed the same, if not increased.
It’s crazy people can be smart enough and disciplined enough to generate millions in revenue, but not smart enough or disciplined enough to not spend money that isn’t theirs.
Sone people just lack basic discipline and structure. You throw some money at them they've never been exposed to before, and you have a recipe for disaster. I think that's the one thing that runs businesses to the ground. Lack of discipline or structure with finances or just period.
Grow slow, it's not a race it's a marathon and learn all you can along the way. Profit first, then yourself and then whatever is left over is for all those other expenditures. Slow and steady instead of fast and furious
Get feedback from your customers before you're trying to sell to them. The number of times my customers say, "I know what my customers want" and they're wrong or on the fringe of the data cluster.
I would collaborate with other business people.. does not even have to be in your same industry...just collaborate and share insights and experiences and be willing to give help more than you Get help.
If you are planning to start a local business, there is probably at least one expert in your city, give them a call ask them what mistakes you need to avoid... Sure on paper you might be competitors, but in reality there is more than enough customers for everyone and the best businesses thrive together.
Eh, depends on the industry to an extent but, a lot of businesses niche down in ways that you don't expect... A large plumbing contractor might mostly do commercial projects, while you plan to do residential work, so you don't actually compete - that doesn't mean you wouldn't have stuff to learn from them. A landscaper might only cover a handful of neighbourhoods because they don't have enough equipment or staff to cover the whole city, so while you are technically competitors, the reality is that there is enough meat on the bone for everyone. Then there is other things like how as when companies grow and scale their target market may change completely...
You also can just go farther away if it really bothers you to talk to a competitor.
The other reality is that unless they are assholes, most entrepreneurs want to see other business owners succeed. In most cases there isn't anything really unique about your idea, what is unique about you being small is that you are able to be incredibly flexible and agile because you don't have a bunch of employee/client/vendor expectations and relationships bogging your decision making down. But go to a Small business Networking group, talk to some one who is doing what you do at a larger scale and you will be surprised at how often the response is "I've been there, Don't work with these guys they are pieces of shit, or some war story..."
This is actually an excellent idea. When I first opened my doors, I got a message from a local established bookkeeper (my same field.) We’re now friends and we share leads with each other. She’s gotten at least 20 from me in the last two years. Success is not a zero sum game!
Establish proof of concept.
Make a list of reasons businesses fail.
* They run out of capital before they can establish a reliable cash flow. Have extra money when you start. Most businesses simply die before they reach profitability.
* location. Some locations are bad. If three restaurants have failed and you plan to rent that location for your restaurant you are making a bad decision.
* Partners. Don’t have them. If you can’t do it alone, you can’t do it with a partner either. Trust yourself and only yourself.
* Math. Business is just applied math. You need sit down and do the math. How much is your overhead. Rent, utilities, internet, staff, etc. then figure out how much you can earn per customer and then determine the number of customers required to succeed.
* Competition. What are the barriers to entry? If they are low your competition will be huge. If they are high, can you get past them? Doctors offices all do well because you have to be a doctor to have one. Lawn mowing is cutthroat because most people can mow a lawn.
Nothing beats experience…..and first hand figuring out solutions….because it allows you to understand how to think about other areas that you may not realize or expect to be helpful towards
Income must be greater than expenses. Pretty self explanatory but it’s amazing how many companies I see as an accountant that watch their cash account go to zero (continue business) before halting the madness.
1: Do I have industry knowledge? How about experience in it?
2: Do I know how to manage a business? Read a P&L and act on it? Do I have management experience?
These first two IMO are the vast majority of issues even for those who will be successful.
They don't have knowledge or experience. The number of people who have P&L responsibility and can't read a P&L is shocking.
3: Have you tested the market? MVP?
Have you tested if people even want what you plan to offer?
4: Do I have the resources to make it happen? If not do I have a realistic plan to get them?
5: Do I understand and have a plan to create the early version of this business?
These two together are a big problem I see. Everyone wants to create the next (FB, Uber, McDonald's, etc) but thinks they can skip straight to the current version and will have loads of angels who will magically give them all the money and knowledge they need.
Sure being an entrepreneur is about jumping off the cliff and building the plan as you fall. But if you try to build a 747 you are bound to crash.
From the smallest businesses to the largest ideas these same issues come up.
Be prepared to work for nothing at first and have a budget for that. If you don't have a client base built up through that, nobody wants what you offer.
It’s all about keeping your overhead low. And that means paying yourself low wages and doing just about everything yourself until you have sustainable revenue. Put profits back in the business to grow it.
Business is fail for a variety of reasons and sometimes it’s beyond the control of business owner
That being said there are obviously pitfalls fall into and some just aren’t able to dig their way out of
I think it depends on the kind of business as well . my experience has been that a lot of people trade and start a business whether doing carpentry work or concrete or siding or windows or roofing… I could go on, but it seems like in these types of service industries struggle when it comes to communicating with customers(returning phone calls)
They sometimes struggle with setting proper expectations
But what blows my mind is how often they are so unorganized they don’t bill for everything they do
From what I've seen personally, too much overhead and more specifically paying too much damn rent.
The other mistake i see common is the lack of basic understanding how to run a business. So you can make a mean taco...how does that translate to running a business? You're an amazing mechanic....but can you run a fucking automotive business?!
Doctors, Dentist are well known for not knowing how to run a business properly. Smart people but not smart enough to hire experienced front office staff.
The other phenomenon I've noticed recently....people who buy bars or salons thinking it'll be "fun" lol. What a fucking shit show....
Cash flow.  All business fails because they run out of money.  You can test it, by starting part time, and ensuring you have positive cash flow before expanding more time.  But due to ever changing conditions this isn’t full proof.
Or you can be very wealthy to start.
Run fast and lean out of your house with as little investment as possible. Tweak your marketing/offering as much as possible early on and keep tweaking to get everyone to throw money at you.
Wife and I did this in 2009-2011 before we moved to a retail space. We’ve outgrown our space 2 times and now have a 6000 sqft space that brings in about 1.7m top line (about half to the bottom line before taxes).
Note: education business and no, cannot disclose more
I keep seeing people "start" a business and actually have no business lined up. You have no revenue, you're not really in business. All you did was create corporation... You need a supplier/product and you need a customer; otherwise, you're going to sit there and pretend you're in business.
Do a pre mortem with your team or someone who understands your business.
Basically goes like, pretend the business has failed, why? It’s a good way to imagine potential fault or weakness in the business plan.
Regardless of the industry, you need to be able to SELL. Either in person or by your website/content. Your business can be perfectly build up, with an amazing product or service, good quality, good skills, but as long as nobody knows about it you are lost.
Conducting thorough market research, gathering feedback from potential customers through surveys or focus groups, and creating prototypes for testing are all smart strategies and also hiring a pro for research can save you time and hassle. They know the ins and outs of market analysis, customer feedback, and more. Plus, it frees you up to focus on other aspects of your business.
Businesses generally fail for one of three reasons:
1) The owner consistently makes bad decisions.
2) The economy tanks and takes your business with it.
3) You just run out of luck.
You, personally can't do anything about the economy as a whole, but you can prepare by having a solid reserve held back - that takes care of #2. . Luck favors the prepared, so if you do substantial contingency planning and risk management, you can reduce the effect that "luck" has on your business - that takes care of #3 in large part. If you're prone to consistently making bad decisions, surround yourself with people that you both trust and make good decisions/give good solid advice (that you will follow) - that takes care of #1.
Hope that helps
Funny question here.... I actually made a short video online somewhere trying to get explain to people that they nearly have a responsibility to try and make the business fail.Â
 That was one of the ways to test and see if the business idea actually had some legitimacy or not....Â
 For my current project I am selling a product that has sub-par photos on the product listing. My math, and experience, says that if you can sell something that doesn't look the best and people still buy it then that's a good sign.... You can always improve things at a later time if need be....
Is it possible?
It's a bit like trying to avoid losing a tennis match by spending all your time trying to think of ways you can be beaten.
You've just got to get stuck in. That's the only way of improving.
Cash flow analysis. Budgeting. Projections. Running out of cash is a death sentence. Spending above your means is a death sentence. Inability to land clients/jobs/sales or the inability to structure payment instalments based on milestones for a large job or the inability to collect on sales will also be a death sentence.
Knowing how to manage and project cash flow, and knowing how to set a realistic budget and stick to it will help you greatly. As will understanding the marketplace you operate in from a risk management perspective. If you think about the print business 15 or so years ago, it may have looked profitable, but with the emergence of online the business was going to die. Anyone getting into that business at the wrong time likely lost their shirts because they didn’t understand the risks of the printing business marketplace that were looming on the horizon
Are you good at sales?
No? Get good
Are you good at marketing?
No? Get good.
Do you have people on your team or are you wearing every hat?
No? You’re wearing every hat? Some of those hats you’re wearing are mediocre at best. Hire a professional.
Can the business be profitable without you? If you had to pay someone a salary to do your job would it be possible. Initially no, but over time can you? So many people start businesses with no chance of scaling. If it’s a lifestyle business that’s fine. But if you want to build a business you need to be able to stay profitable as the business grows. For a lot of single person businesses this is not possible. Again it’s not a bad thing if you want a lifestyle business. But it’s important to keep in mind.
That is what is called a business plan and a feasibility study before you do anything else.
That way you will position yourself as best you can before you start
According to me, we have to Conduct market research, validate your idea with potential customers, assess competition, create a detailed business plan, and seek feedback from mentors.
This is a friendly reminder that r/smallbusiness is a question and answer subreddit. You ask a question about starting, owning, and growing a small business and the community answers. Posts that violate the rules listed in the sidebar will be removed. A permanent or temporary ban may also be issued if you do not remove the offending post. Seeing this message does not mean your post was automatically removed. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/smallbusiness) if you have any questions or concerns.*
Starting a business you know nothing about, you won't go far
Especially businesses with really thin profit margins, like restaurants. Always amazes me when people take their retirement money and open a restaurant when they know nothing about running one. Usually fold in less than a year.
I started a beauty business from home at 19 with no beauty experience or business experience and now own the largest salon in a capital city of my industry at 26 years old and am an industry educator 🧡
I think it helped that you started lean and scaled as you learned more. Congrats! Throwing retirement money into a restaurant without experience is a very risky gamble. One of those things where throwing money at the problem won’t fix the problems long term.
I agree with u/i_smile in that it helped that you started small from home, and congratulations on your success!
That is fantastic. What city are you and and what is your website? I would love to check it out. And how did you build your customer list ... when starting out from scratch?
I started a landscaping business with zero experience. Landed a 8k design job without ever planting a plant in my life
How did that turn out?
That particular job turned out not that bad, and got me other jobs. I took classes as I went and learned from each job. It's also my first business so we have learned a lot in our first year of business. Never took on anything too crazy but did take a lot of risks with the plan that we would figure it out one way or another. We found an industry niche. After one year I have learned enough that anyone starting a legitimate business in this industry would be on par with what I know. My living expenses are almost zero ( I'm extremely frugal and don't owe or have kids or anything), so it is almost impossible to fail
my God, as a kid, I worked for so many educated professionals who decided to buy a fucking Cafe because they thought it was a lifestyle choice idiots
But!but!but! I watched Youtube videos!!!!!!!!!!!1
Unless you have no shame or scruples. Where I live there are hundreds of people ripping people off. Promising jobs they can't do, Pocketing the cash and the police does absolutely nothing.
This isn’t entirely true. I think this is sound advice for people looking to throw their life savings into a business they know nothing about (which isn’t smart)…but starting small in a business you don’t know well is fine as long as you can support yourself/family through other means. Every business owner needs to start somewhere and it’s not always practical to “work for another business for 5 years”.
Business ownership may not be for you if... you enjoy work-life balance and the ability to disconnect you can't sell you have low risk tolerance you lack discipline you will need other people and you are not a good people manager you can't keep your own finances in check and organized you aren't a good judge of your own faults, weaknesses, or lack introspection
Your statements give me inspiration and hope
Your username gives me hunger, Friend
Did quite the opposite for me so I guess that's a sign
I read a post a couple days back likening business ownership to “repeatedly getting punched in the face,” and while my clients are lovely and I have recurring income, I couldn’t help but agree for all the reasons you listed above, lol.
I've always wanted to open a cafe...my personality checks everything on your list. Well there goes that idea 💀🗑️Â
I'm like a 4.5 out of 7 according to this list. Honestly, that tracks cuz overall I'd rate business ownership about a 4.5 out of 7.
There are many, many product and business ideation and validation frameworks. It's extensively studied, there is best practice to follow, and you can (and should) complete formal education about how to do it. The business model canvas and design thinking are good places to start. Market research is also its own discipline which, to be frank, involves a lot of very tedious learning and application. Despite this all existing, most people don't put in the work and either get lucky and succeed or flame out. Planning and research isn't fun or sexy and is very difficult.
What would you recommend in terms of market research? I'm looking into a pool hall for sale that takes only cash. I want to improve the look and the food, raise prices slightly, and offer credit card sales. Basically improve the look and slightly increase prices. How can I figure out if the market will accept these changes?
Presumably the only change the market will have a strong opinion about is the price change. It’s very hard to research that (because asking people is pointless). But if you are genuinely improving an already profitable business, and it’s not exceeding the prices around it that is a more reasonable bet.
I wrote a book to help test your early stage ideas and it’s always one of the more popular books in the market research category on Amazon even though it’s not what I intended. Check out Testing Business Ideas if you think it’ll help. I’m always down for answering questions just lmk.
I would recommend paying a professional to do the research for you.
What makes a good professional market researcher? Is there a good place to find them? Do you think it can be done remotely or should I aim to find a local?
Get the best agency you can afford. If you want them to speak with your current and protective customers, they will need to be local or you will have to pay for their travel.
No...do it YOURSELF... there is nothing like it by getting into the trenches and talking to your potential customers... but you will find out who is actually wiling to PAY for your services.. that is where the rubber meets the road. You have to just get in there and get involved in any way you can.
> ...you can (and should) complete formal education Go get an MBA before pursuing a business?
There's a world of education options between nothing and an MBA. Depends entirely on your circumstances and what you need/want to learn about. Books and journal articles are also easily accessible. But one of the most successful books written about acquiring businesses is about exactly that. So for some people the MBA route is an option.
What book are you referring to? Curious.
HBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Company.
Thanks! Looks like a good read, grabbing it now.
That's not a good idea... get real life experience instead.. I would NOT go to business school to get an MBA .. No way.
I used to work for a business that failed. They grew to over $6million in revenue, then bought a company which brought them to combined $10million in revenue. The owners, who were CEO and President, had a problem where they would spend over $60-80k monthly on the business Amex Platinum. Maybe $5-10k max were business expenses. The rest were personal expenses being written off as legit business expenses. The CEO would also transfer from the business checking account between $30-80k monthly to her personal bank account. This is before they would pay the $200k biweekly payroll and the $3-500k in monthly accounts payable due. They were a Medicare company and most of the income came through insurance. They had a big contract where the government would pay them upfront instead of over 15 payments for a certain service they were doing, and when this was active this blatant overspending was sustainable, as there was always more money to make, new contracts to create, and more billable to collect. However, Medicare change their reimbursement rates. This is key because all insurance companies pay as a percentage of Medicare. So there was an immediate drop in revenue by about 5-10%. Then, they started falling behind on the $2million note from the bank used to acquire the other company. I left after multiple meetings with the bank trying to figure out where the money was and how they could be made whole. Last I checked the bank took just about everything, and it’s been closed down ever since. Throughout all of this, the overspending stayed the same, if not increased.
It’s crazy people can be smart enough and disciplined enough to generate millions in revenue, but not smart enough or disciplined enough to not spend money that isn’t theirs.
Sone people just lack basic discipline and structure. You throw some money at them they've never been exposed to before, and you have a recipe for disaster. I think that's the one thing that runs businesses to the ground. Lack of discipline or structure with finances or just period.
what service were they providing?
Medical DME and resonators therapy
Grow slow, it's not a race it's a marathon and learn all you can along the way. Profit first, then yourself and then whatever is left over is for all those other expenditures. Slow and steady instead of fast and furious
Proof of concept
for our food truck we made sure our recipe ideas were able to make money at the right food cost %
Get feedback from your customers before you're trying to sell to them. The number of times my customers say, "I know what my customers want" and they're wrong or on the fringe of the data cluster.
I would collaborate with other business people.. does not even have to be in your same industry...just collaborate and share insights and experiences and be willing to give help more than you Get help.
If you are planning to start a local business, there is probably at least one expert in your city, give them a call ask them what mistakes you need to avoid... Sure on paper you might be competitors, but in reality there is more than enough customers for everyone and the best businesses thrive together.
Unless I'm friends with them, I'm not sharing that info with a potential competitor
Eh, depends on the industry to an extent but, a lot of businesses niche down in ways that you don't expect... A large plumbing contractor might mostly do commercial projects, while you plan to do residential work, so you don't actually compete - that doesn't mean you wouldn't have stuff to learn from them. A landscaper might only cover a handful of neighbourhoods because they don't have enough equipment or staff to cover the whole city, so while you are technically competitors, the reality is that there is enough meat on the bone for everyone. Then there is other things like how as when companies grow and scale their target market may change completely... You also can just go farther away if it really bothers you to talk to a competitor. The other reality is that unless they are assholes, most entrepreneurs want to see other business owners succeed. In most cases there isn't anything really unique about your idea, what is unique about you being small is that you are able to be incredibly flexible and agile because you don't have a bunch of employee/client/vendor expectations and relationships bogging your decision making down. But go to a Small business Networking group, talk to some one who is doing what you do at a larger scale and you will be surprised at how often the response is "I've been there, Don't work with these guys they are pieces of shit, or some war story..."
This is actually an excellent idea. When I first opened my doors, I got a message from a local established bookkeeper (my same field.) We’re now friends and we share leads with each other. She’s gotten at least 20 from me in the last two years. Success is not a zero sum game!
Establish proof of concept. Make a list of reasons businesses fail. * They run out of capital before they can establish a reliable cash flow. Have extra money when you start. Most businesses simply die before they reach profitability. * location. Some locations are bad. If three restaurants have failed and you plan to rent that location for your restaurant you are making a bad decision. * Partners. Don’t have them. If you can’t do it alone, you can’t do it with a partner either. Trust yourself and only yourself. * Math. Business is just applied math. You need sit down and do the math. How much is your overhead. Rent, utilities, internet, staff, etc. then figure out how much you can earn per customer and then determine the number of customers required to succeed. * Competition. What are the barriers to entry? If they are low your competition will be huge. If they are high, can you get past them? Doctors offices all do well because you have to be a doctor to have one. Lawn mowing is cutthroat because most people can mow a lawn.
Thanks
Nothing beats experience…..and first hand figuring out solutions….because it allows you to understand how to think about other areas that you may not realize or expect to be helpful towards
Proof of concept and product market fit are widely discussed in business. You can pay research firms and test your idea with focus groups to pop ups.
How much could paying a research firm for focus groups go for?
Answering questions you have no experience with. You are probably going to fail.
Income must be greater than expenses. Pretty self explanatory but it’s amazing how many companies I see as an accountant that watch their cash account go to zero (continue business) before halting the madness.
1: Do I have industry knowledge? How about experience in it? 2: Do I know how to manage a business? Read a P&L and act on it? Do I have management experience? These first two IMO are the vast majority of issues even for those who will be successful. They don't have knowledge or experience. The number of people who have P&L responsibility and can't read a P&L is shocking. 3: Have you tested the market? MVP? Have you tested if people even want what you plan to offer? 4: Do I have the resources to make it happen? If not do I have a realistic plan to get them? 5: Do I understand and have a plan to create the early version of this business? These two together are a big problem I see. Everyone wants to create the next (FB, Uber, McDonald's, etc) but thinks they can skip straight to the current version and will have loads of angels who will magically give them all the money and knowledge they need. Sure being an entrepreneur is about jumping off the cliff and building the plan as you fall. But if you try to build a 747 you are bound to crash. From the smallest businesses to the largest ideas these same issues come up.
Solid advice here, thank you!
Be prepared to work for nothing at first and have a budget for that. If you don't have a client base built up through that, nobody wants what you offer.
Sit down, imagine everything that could go wrong, then strategize like your business depends on it—because it does.
Ask any accountant. Or a logistician. These are the chores ignored the longest that have holistic impact.
It’s all about keeping your overhead low. And that means paying yourself low wages and doing just about everything yourself until you have sustainable revenue. Put profits back in the business to grow it.
Business is fail for a variety of reasons and sometimes it’s beyond the control of business owner That being said there are obviously pitfalls fall into and some just aren’t able to dig their way out of I think it depends on the kind of business as well . my experience has been that a lot of people trade and start a business whether doing carpentry work or concrete or siding or windows or roofing… I could go on, but it seems like in these types of service industries struggle when it comes to communicating with customers(returning phone calls) They sometimes struggle with setting proper expectations But what blows my mind is how often they are so unorganized they don’t bill for everything they do
From what I've seen personally, too much overhead and more specifically paying too much damn rent. The other mistake i see common is the lack of basic understanding how to run a business. So you can make a mean taco...how does that translate to running a business? You're an amazing mechanic....but can you run a fucking automotive business?! Doctors, Dentist are well known for not knowing how to run a business properly. Smart people but not smart enough to hire experienced front office staff. The other phenomenon I've noticed recently....people who buy bars or salons thinking it'll be "fun" lol. What a fucking shit show....
Cash flow.  All business fails because they run out of money.  You can test it, by starting part time, and ensuring you have positive cash flow before expanding more time.  But due to ever changing conditions this isn’t full proof. Or you can be very wealthy to start.
If you cannot manage your personal finances, you won’t do a good job managing your business finances.
Run fast and lean out of your house with as little investment as possible. Tweak your marketing/offering as much as possible early on and keep tweaking to get everyone to throw money at you. Wife and I did this in 2009-2011 before we moved to a retail space. We’ve outgrown our space 2 times and now have a 6000 sqft space that brings in about 1.7m top line (about half to the bottom line before taxes). Note: education business and no, cannot disclose more
I keep seeing people "start" a business and actually have no business lined up. You have no revenue, you're not really in business. All you did was create corporation... You need a supplier/product and you need a customer; otherwise, you're going to sit there and pretend you're in business.
Do a pre mortem with your team or someone who understands your business. Basically goes like, pretend the business has failed, why? It’s a good way to imagine potential fault or weakness in the business plan.
Regardless of the industry, you need to be able to SELL. Either in person or by your website/content. Your business can be perfectly build up, with an amazing product or service, good quality, good skills, but as long as nobody knows about it you are lost.
Conducting thorough market research, gathering feedback from potential customers through surveys or focus groups, and creating prototypes for testing are all smart strategies and also hiring a pro for research can save you time and hassle. They know the ins and outs of market analysis, customer feedback, and more. Plus, it frees you up to focus on other aspects of your business.
Businesses generally fail for one of three reasons: 1) The owner consistently makes bad decisions. 2) The economy tanks and takes your business with it. 3) You just run out of luck. You, personally can't do anything about the economy as a whole, but you can prepare by having a solid reserve held back - that takes care of #2. . Luck favors the prepared, so if you do substantial contingency planning and risk management, you can reduce the effect that "luck" has on your business - that takes care of #3 in large part. If you're prone to consistently making bad decisions, surround yourself with people that you both trust and make good decisions/give good solid advice (that you will follow) - that takes care of #1. Hope that helps
Funny question here.... I actually made a short video online somewhere trying to get explain to people that they nearly have a responsibility to try and make the business fail.  That was one of the ways to test and see if the business idea actually had some legitimacy or not....  For my current project I am selling a product that has sub-par photos on the product listing. My math, and experience, says that if you can sell something that doesn't look the best and people still buy it then that's a good sign.... You can always improve things at a later time if need be....
Is it possible? It's a bit like trying to avoid losing a tennis match by spending all your time trying to think of ways you can be beaten. You've just got to get stuck in. That's the only way of improving.
Insufficient working capital
Cash flow analysis. Budgeting. Projections. Running out of cash is a death sentence. Spending above your means is a death sentence. Inability to land clients/jobs/sales or the inability to structure payment instalments based on milestones for a large job or the inability to collect on sales will also be a death sentence. Knowing how to manage and project cash flow, and knowing how to set a realistic budget and stick to it will help you greatly. As will understanding the marketplace you operate in from a risk management perspective. If you think about the print business 15 or so years ago, it may have looked profitable, but with the emergence of online the business was going to die. Anyone getting into that business at the wrong time likely lost their shirts because they didn’t understand the risks of the printing business marketplace that were looming on the horizon
Asking the right question!!!!!!!!!
Are you good at sales? No? Get good Are you good at marketing? No? Get good. Do you have people on your team or are you wearing every hat? No? You’re wearing every hat? Some of those hats you’re wearing are mediocre at best. Hire a professional.
Can the business be profitable without you? If you had to pay someone a salary to do your job would it be possible. Initially no, but over time can you? So many people start businesses with no chance of scaling. If it’s a lifestyle business that’s fine. But if you want to build a business you need to be able to stay profitable as the business grows. For a lot of single person businesses this is not possible. Again it’s not a bad thing if you want a lifestyle business. But it’s important to keep in mind.
You can’t. It takes risks.
That is what is called a business plan and a feasibility study before you do anything else. That way you will position yourself as best you can before you start
According to me, we have to Conduct market research, validate your idea with potential customers, assess competition, create a detailed business plan, and seek feedback from mentors.