Business Owners, I have a few questions

**JHayesLS1** · 02-27-2011, 10:31 PM

I know I'm choosing a tough road, but I'll be graduating soon and want to go into business within a year. In school we have learned about the separation of functions for employees, FIFO and LIFO for inventory, obtaining credit as a business, marketing strategies, etc. What I don't get to learn is from a business owner himself. I've always worked in companies with management but never under the owner.
I'd like to know how you decided to choose a field to start business in?
Do you hire more based off experience, education, or a combination of both? Do you even consider declaring yourself a dividend in the first year of business if money is tight?
We're you paid within a reasonable amount of time while working to establish a repuation or should you be expected to be screwed over a few times?
If you had to choose dealing with the general public or strictly commercial which would you choose and why?

I know this is the only way to acquire real wealth and get out from under anyone else's control.

**Y2KPewterSS** · 02-27-2011, 10:53 PM

Originally Posted by JHayesLS1

I know I'm choosing a tough road, but I'll be graduating soon and want to go into business within a year. In school we have learned about the separation of functions for employees, FIFO and LIFO for inventory, obtaining credit as a business, marketing strategies, etc. What I don't get to learn is from a business owner himself. I've always worked in companies with management but never under the owner.
I'd like to know how you decided to choose a field to start business in?
Do you hire more based off experience, education, or a combination of both? Do you even consider declaring yourself a dividend in the first year of business if money is tight?
We're you paid within a reasonable amount of time while working to establish a repuation or should you be expected to be screwed over a few times?
If you had to choose dealing with the general public or strictly commercial which would you choose and why?

I know this is the only way to acquire real wealth and get out from under anyone else's control.

Don't own my own business, but have ran stores for 13-14 years now. I can answer some of your questions.

Dealing with the general public is no picnic. People are rude, greedy, inconsiderate, pull scams and generally, the bad ones outweigh the good ones. Commercial would probably be the route to go, if you have the choice.

When hiring employees, generally experience trumps education. Someone with experience in the field usually turns out to be a better long term employee. That isn't to say don't hire an educated person with no experience, but if you had 2 good candidates and one had experience and the other one was inexperienced but just out of school, I would choose the experienced person.

Often in a new business, making a profit is tough. Also expect to basically devote your full time life to a new business, for a while. You may not have the capital to hire a staff and will have to do a lot yourself, plus training the people you do hire. Its no bundle of joy up front. In the end, it will pay off though, if your business turns successful.

**Sarge** · 02-28-2011, 06:13 AM

Short answer is this.
You find a service or product that you can A) Build/do cheaper than others B) Has a need/market/demand for this product/service C) Nobody can duplicate or you can make it very difficult for others to duplicate.

Have three years of operating/living expenses in reserve to start out with. Never use your own money. If your business plan is worth a shit you can get investors easily. If you cannot get investors then your business model sucks. I always start a company as a "S" Corp and create 1,000,000 shares with no par value. Then I issue myself 610,000 shares. The other 390,000 shares are for start up capital for investors. This way you do not dilute your 61% ownership. Never have a Board of Directors and keep your total shareholders under 20. Run your company by shareholder votes versus a BoD bunch of bullshit. BoD are all about ego's anyway.

Commercial or Public sales? Diversify as one will gain and one will drop as the economy cycles. I like the Value Added Reseller scenario myself. I sell exclusive licenses for geographical or industry specific markets. Then they (The VAR's) have contractual minimums to maintain exclusivity in those market verticals. I have no cost of sales and usually I raise more than 3 years operating capital and do not have to sell any shares in my company(s) by selling VAR Licenses up front at start up.

You hire experience when the company is in a growth mode as you do not have the time nor cycles for training.
For long term growth you hire educated with no experience.

As for dividends. Make those around you rich first. Your VAR's and/or your investors. You own the majority of shares.....you'll get rich soon enough. Pay yourself a reasonable salary w/benefits. Your exit plan should be when you go public (IPO) or sell the business to a larger corporation. Then your filthy rich and repeat the entire process. Over and over.

When your rich as shit...you will not believe how many people come to you with these ideas. You follow the above start up business model and you can own the majority of their company and use none of your own personal money.

Keep doing this....over and over....then get a job as a mod on a car forum.

**JHayesLS1** · 02-28-2011, 08:54 AM

Originally Posted by Y2KPewterSS

Don't own my own business, but have ran stores for 13-14 years now. I can answer some of your questions.

Dealing with the general public is no picnic. People are rude, greedy, inconsiderate, pull scams and generally, the bad ones outweigh the good ones. Commercial would probably be the route to go, if you have the choice.

When hiring employees, generally experience trumps education. Someone with experience in the field usually turns out to be a better long term employee. That isn't to say don't hire an educated person with no experience, but if you had 2 good candidates and one had experience and the other one was inexperienced but just out of school, I would choose the experienced person.

Often in a new business, making a profit is tough. Also expect to basically devote your full time life to a new business, for a while. You may not have the capital to hire a staff and will have to do a lot yourself, plus training the people you do hire. Its no bundle of joy up front. In the end, it will pay off though, if your business turns successful.

Originally Posted by Sarge

Short answer is this.
You find a service or product that you can A) Build/do cheaper than others B) Has a need/market/demand for this product/service C) Nobody can duplicate or you can make it very difficult for others to duplicate.

Have three years of operating/living expenses in reserve to start out with. Never use your own money. If your business plan is worth a shit you can get investors easily. If you cannot get investors then your business model sucks. I always start a company as a "S" Corp and create 1,000,000 shares with no par value. Then I issue myself 610,000 shares. The other 390,000 shares are for start up capital for investors. This way you do not dilute your 61% ownership. Never have a Board of Directors and keep your total shareholders under 20. Run your company by shareholder votes versus a BoD bunch of bullshit. BoD are all about ego's anyway.

Commercial or Public sales? Diversify as one will gain and one will drop as the economy cycles. I like the Value Added Reseller scenario myself. I sell exclusive licenses for geographical or industry specific markets. Then they (The VAR's) have contractual minimums to maintain exclusivity in those market verticals. I have no cost of sales and usually I raise more than 3 years operating capital and do not have to sell any shares in my company(s) by selling VAR Licenses up front at start up.

You hire experience when the company is in a growth mode as you do not have the time nor cycles for training.
For long term growth you hire educated with no experience.

As for dividends. Make those around you rich first. Your VAR's and/or your investors. You own the majority of shares.....you'll get rich soon enough. Pay yourself a reasonable salary w/benefits. Your exit plan should be when you go public (IPO) or sell the business to a larger corporation. Then your filthy rich and repeat the entire process. Over and over.

When your rich as shit...you will not believe how many people come to you with these ideas. You follow the above start up business model and you can own the majority of their company and use none of your own personal money.

Keep doing this....over and over....then get a job as a mod on a car forum.

Awesome, thank you for the advice. At first I was trying to test the waters on doing web design and other advertising methods (Business cards, flyers, etc.) but the more I thought about it the more I realized what a stupid idea it was. Everyone does that, and vista print can't be touched with their prices. I'll come up with something, getting started seems to be the intimidating part for me.

**tnthub** · 02-28-2011, 09:32 AM

When I switched from construction to the computer industry I identified a need in my area for service (not sales) and there were no other companies offering "service" which at that time was focused on the expansion of personal computers into a business environment dominated by IBM.

I learned several hard lessons.

My first three clients I established payment plans so their monthly revenue would support my rent and utilities (over a two year time frame). This worked fine for about three mionths and then one client filed for BK, another skipped the state, and the third decided that he was on the five year plan instead of two years, so I got royally screwed by my own choice to finance my first three accounts.

The second difficulty was at that time in the computer industry, a pre-requisite for service was sales authorizations from the major manufacturers (IBM, Digital, Compaq, AST)... Therefore warranty services were not able to be performed.

So I needed to sell, and I did sell, and I formed partnering relationships with specialty software vendors who did not want to deal with hardware, networking, backup and recovery.

Those relationships saved my butt, especially when I got to know the local dealers for software products who had no interest in hardware and networking.

That said, it was over a year before I got my first paycheck...

My advise is to understand the markets that appeal to you before entering into them (unlike what I did). I also had to beat the big names on price and sevice availability. A business cannot always aford to wait for warranty service because lost productivity usually costs more than the warranty savings.

**35th-ANV-SS** · 02-28-2011, 11:06 AM

Be prepared to not sleep much...
Be prepared to not succeed as most people who start up their own business don't...

There is a lot more to running a business than most people think. Not only do you need to hire people with experience, but you also need to hire people that you can trust and that have good work ethics.

I don't run a business now, but I did recently graduate with my MBA and have managed businesses in my past.

I think Sarge hit it on the head with your business models. Competition in any industry is extremely tough. To be successful you have to offer something no one else does. Whether it is a product or a service it does not matter. You cannot compete on price with large corporations.

You should also have a passion for what you do. It will make putting in 100+ hrs a week that much more easier

**JHayesLS1** · 02-28-2011, 08:44 PM

Originally Posted by 35th-ANV-SS

Be prepared to not sleep much...
Be prepared to not succeed as most people who start up their own business don't...

There is a lot more to running a business than most people think. Not only do you need to hire people with experience, but you also need to hire people that you can trust and that have good work ethics.

I don't run a business now, but I did recently graduate with my MBA and have managed businesses in my past.

I think Sarge hit it on the head with your business models. Competition in any industry is extremely tough. To be successful you have to offer something no one else does. Whether it is a product or a service it does not matter. You cannot compete on price with large corporations.

You should also have a passion for what you do. It will make putting in 100+ hrs a week that much more easier

I've tried running my own lawn business and mobile detailing and both failed. I'm not afraid to fail, I just hope eachtime I learn from my mistake. Like said I above I gave some people a month worth of lawn care on account and never was paid. That was a mistake. Now that I've learned the revenue recognition keys I wont do that again. I've also learned that people love thinking they are getting discounts. The 3/10 or net 30 offer is just a way for a business to make a rediculous interest profit for not paying within 10 days. At the moment I'm testing the waters by buying TV's that are broken or just that damn cheap and reselling with a DVD player, HDMI cable, even blu ray for the HD stuff, and I've made a few sales so far and made a profit. I figure I'll take an initial loss on the TV but I can buy the add on's cheap enough and with mark up I still come out on top. Not something I want to do for a living because TV's are so cheap now, just trying to learn how to operate for the day that I dedicate my life to something.