(My column as it appeared in Upmarket magazine week of April 22nd)
Whether you have dreams of owning a small business or have grander plans for world market domination, the first thing you’ll say to yourself one day is “You know I should do it because …” ( And you’ll fill in the blank.)
Any of us whom made this jump went through it. It’s part of the process. However anyone who is still in business will attest that one thing you’ll learn quickly is what made perfect sense before you started can be anathema to continuing. Here are a few of the most common I’ve seen. There are many more than three, but for the sake of brevity these get right to the point.
1. I’m a good cook so I should open a restaurant.
If there is one line of thinking you should pay attention to, it’s this one. I have seen more than my share of businesses fail that opened or started based on this rationale. I contend that it is probably the top reason most fail so soon, and so fast after opening. Cooking is an occupation, running a restaurant is a business. Don’t confuse the two. Many of the world’s renowned chefs (Some are on television) saved their names, careers, and restaurants from extinction only after relinquishing the business side to someone else. You can always find a great cook, you can’t always find a great business manager.
2. All my friends, and family say they’ll buy from me.
Yes they’ll say that, but they won’t. Years back when I was first thinking about going it on my own I asked my friend’s father whose opinion I trusted. I vividly remember to this day when I asked him about when he started his business. I asked him if he depended on friends and family as customers when he first started. While working at his bench (His store sold and repaired high-end cameras) he looked up at me, raised his magnifying visor, and said, “If I depended on friends and family for business, I’d be out of business!” I never forgot it, and I personally witnessed it through my own career. Now more than 30 years later he’s still in business where others have come and gone. I still to this day seek his council when I’m in New England. He’s now well into his 80’s and still at his bench.
3. To double my business all I need to do is double my efforts.
Thoughts such as this usually come soon after the doors have first opened. Whether sales out of the gate begin skyrocketing, or original expectations were met quicker than originally hoped for showing no sign of slowing. The first inclination is to expand. Everyone from the banker whom didn’t return your phone calls, to the suppliers who wouldn’t give you pricing, all will now be more than happy to jump on your bandwagon. All I will say here is, “Beware what you ask for.”
This is where that term everyone says they know but they forget the implications. Overhead! “We need more room.” Double the floor space, double the lease. “We need more help.” Double the staff, double the payroll. “We need more credit.” Double the credit line, double the inventory. Everybody’s now happy in the wagon till a pot hole ruins a tire with no spare to replace it with because you spent it doubling everything. Forgetting there would be bumps in the road. Now the only sustained doubling comes from the bankers, suppliers, landlord, and alike that now seem to call twice as often looking for money and reasons why you’re having troubles paying. You need to be even more cautious and frugal when everyone thinks you have a Golden Goose if you want to continue enjoying the eggs. Without proper attention not only can the eggs get smelly, but the bird could get sick, or worse.
As in sports, as in business. The fields are littered with rookies that showed great promise. But it was learning and not repeating the rookie mistakes of others that allowed them a shot into Hall of Fame territory.
© 2012 Mark St.Cyr