Posted on May 10, 2020
Is entrepreneurship out of reach for most transitioning Veterans because of money?
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Is marketing your biggest issue or a clear blueprint on what to do, when to do it and how to do it.
Entrepreneurship
Small Business
Business
Money
Transition
Posted >1 y ago
Responses: 6
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LTC (Join to see)
A primary problem for failures of small businesses is a lack of capital.
A more important factor in my eyes is a lack of a fully developed business plan that addresses utilization of available capital and secondary resources.
A “DICKIES” franchise I once ate at revealed another cause of failure. The ‘new owners’ observed problems with the staff’s ability to fill orders and did not engage the problem.
My conclusion was that, “they were owners” and too important or more aptly - simply were not competent of engaging with others.
A primary problem for failures of small businesses is a lack of capital.
A more important factor in my eyes is a lack of a fully developed business plan that addresses utilization of available capital and secondary resources.
A “DICKIES” franchise I once ate at revealed another cause of failure. The ‘new owners’ observed problems with the staff’s ability to fill orders and did not engage the problem.
My conclusion was that, “they were owners” and too important or more aptly - simply were not competent of engaging with others.
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SPC Erich Guenther
Yeah so I was on that with my restaurant. You are correct though if you do not control portion sizes in oz per serving of each item served via a scale or other way to measure you will have untrained employees pushing costs way up by serving far more food than the customer paid for over time and that is a big hit financially. Root cause is bad training but I made sure my employees were trained in correct portion sizes. Even still I had abuses every once in a while. One time after switching to a higher grade of thick cut bacon I came into the place and saw an employee making all bacon sandwiches for some clients......tapped him on the shoulder and asked what he was charging for something so expensive it was not on the menu......straightened him out. I was owner and Manager. Easy to engage with kids and teenagers in my opinion if you do not cop an elitist attitude. Example, I emptied the trash, scrubbed the tables and floors just like the rest of them. Earned their respect that way and by earning their respect they confided in me the people they spotted breaking the rules, smoking pot, about to quit, etc, etc. Helps a lot when you have the respect of your employees.
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I started several businesses in my life using OPM (Other People's Money), never my own. I sold a project and used the down payment to establish my business. Thereafter, I always required a down payment on every project equal to my costs. If my client wanted "terms", I sent them to their bank explaining that I wasn't a bank. Thus, the only risk I took was with payment for my time and my profit. I'm not sure how to respond to your survey. There is no question and the three responses do not seem to relate to a question that I can infer. However, I can respond to each as an independent issue. 1. I marketed continuously to get new customers and provided incentives for existing customers to market my business for me. 2. Yes, I had real results, mostly with existing customers providing qualified leads. 3. I tried if both ways, solo and with partners. If I were still actively employed (77 and retired now), I would never again have a partner. Every partnership ended up like a bad marriage. Indeed, my failed partnership stories sound identical to my failed marriage story. I knew very few who succeeded at partnerships. Most people launch partnerships because they lack the confidence to go it alone. If you lack confidence, you should not be an entrepreneur...
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LTC (Join to see)
Yes, the question platform was a bit wonky trying it for the first time. OPM is the best. I may take it down and redo the survey portion. Your responses are highly appreciated. Just curious about what kind of incentives you used with existing customers to find leads. Thanks for your responses.
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Wayne Soares
A good practice brother Jack. I funded a tv pilot with my own $’s about 10 years ago and almost lost my shirt. Wish you were around for advice back in the day!
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Acquiring capital and generating operating capital makes franchises and start ups hard to pull off.
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LTC (Join to see)
I agree about the capital. For smaller entrepreneurs like myself, I never took any loans and have kept my company going with small growth over three years but it has not been easy. It does make it hard for those transitioning to find capital. Agreed.
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LTC Jason Mackay
LTC (Join to see) - most small business take five years to turn a profit. That is a long time to be pumping savings, time, and effort into it. Many entrepreneurs can't pay themselves.
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LTC (Join to see)
Do you think that doing everything by yourself is detrimental? Marketing, ads, lead generation, accounting, events, publications, travel, and above all keeping the mindset in the right place so you do not give up prematurely. Most cannot afford a team so you have to outsource. I love doing what I do and each win grows to the next. Writing books, creating summits, and getting coached on marketing until finally your ready for multiple revenue streams. Entrepreneurship is no easy road.
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SPC Erich Guenther
You can borrow from your own IRA or 401k to invest in your small business. I would recommend against it unless you have a surplus in one or the other though. If your interested see Guidiant Financial online. Completely legal but they also have some restrictions in that you have to invest the funds in the business and they cannot be used to benefit you, you need a seperate savings to support yourself until your business is profitable and you can draw from the profits to pay yourself......that is the big downside for using that source of financing.
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This poll is a fail. The choices are not answers to the original question but additional questions that are not mutually exclusive.
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Actually, I bought a distressed franchise of Charleys Grilled Steaks in the Dallas area and ran it for four months and I can give you some quick pointers. I had to first give a presentation to the Executive Board of Charley's Corp HQ in Columbus, OH. They did aggressively challenge me with questions so the meeting wasn't necessarily a formality. I did well but was later told, by a lower level employee anyone that meets capital requirements does well (ha-ha). I am sure that is true of most franchises. But given the Franchise experience I would tell you to avoid that completely. My next business will be my own to run without having to deal with Franchise HQ. Charleys was OK but I had conflicts with what they thought was important and what I saw moved the bottom line more......example Charleys wanted nothing to do with Catering but my first Assistant Manager was an expert in Catering and demonstrated to me that one Catering engagement could match the entire days sales for the location. Was impressed with the AM demo and not with the firm line that carry-out was against their philosophy and they wanted clients to eat in the location. Then the SIMON Mall location I was at started fighting me against catering. You can't back a catering truck up to the service door, could not park a catering truck in the mall parking lot.......ridiculous. The other problem was capital burn rate. I had set a limit on how much I would spend prior to profitability before I would exit the business and liquidate. I did a forecast about three months into owning the business and saw that I was burning too much capital and would need a substantial loan to stay afloat for another year. I could cut the capital burn rate to break even if I fired the Assitant Manager and cut the employees from 15 to 4. Then I would need to work in the restaurant for 70-75 hours as a Manager myself and would not be able to handle surges in business very easily.........so that was not an option for me personally.
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SPC Erich Guenther
Oh some items that I encountered that were surprises:
1. Level of employee theft. I had a health care program, paid $8 an hour to start, provided uniforms and a 401k with 7% match (kids just ignored that completely so setting that up was a total waste). I had a pregnant employee that liked the health care program better than Obamacare.....which to this day I find humorous. Regardless of the benefits, about 30-40% of the employees would rip me off to an extent. In most cases it was small potatoes as far as a financial hit so it was cheaper to keep them on then fire and retrain a replacement. I just added what they ripped off to their hourly rate before giving them a raise. Two of the employees I had to fire for attempting to steel hundreds of dollars a week instead of a 10 or 20 once or twice a week.
2. Marketing to build the business consisted of me visiting local hotels in the area and dropping off coupons for guests and offering the hotel staff a comped meal so they could taste test the food. Then sending out mailers to church groups, business associations and chamber of commerce, etc. Best marketing with best results. Taking a sample platter of sample size portions of sandwiches out into the Mall for free giveaways to customers walking buy. That had the greatest financial return as the customer if they said it was really good almost felt an obligation to buy more and it pulled in about 40% of the taste testers as new clients. Building the business up from current levels of patronage was much harder than I anticipated but was doable with lots of time. I think a lot of entreprenuers underestimate how long that upward curve is to building new business and they think like I did that it can be done in weeks vs months or years.
3. Capital, most people do not know this but you can legally borrow from your 401k or IRA to start a new business. That is what I did because at the time I had a surplus there and I would be running the business debt free........what could be better? The problem I had was running the business with no other source of income other than what I borrowed from my 401k or could borrow. Big mistake as I saw personal saving I set aside to support me dwindle quickly. I will never do that again. Either need a pension or Social Security income to support me while I attempt a new business so I decided my next attempt will be after retirement. Unless I get a super great idea before then. Good news is my 401k already recovered from the first attempt and the money lost so I can start fresh anytime I want. However, my next attempt will be smaller at first and baby steps to grow vs buying a franchise location that grosses 300k, that was a little too much for me............with all it's various issues.
1. Level of employee theft. I had a health care program, paid $8 an hour to start, provided uniforms and a 401k with 7% match (kids just ignored that completely so setting that up was a total waste). I had a pregnant employee that liked the health care program better than Obamacare.....which to this day I find humorous. Regardless of the benefits, about 30-40% of the employees would rip me off to an extent. In most cases it was small potatoes as far as a financial hit so it was cheaper to keep them on then fire and retrain a replacement. I just added what they ripped off to their hourly rate before giving them a raise. Two of the employees I had to fire for attempting to steel hundreds of dollars a week instead of a 10 or 20 once or twice a week.
2. Marketing to build the business consisted of me visiting local hotels in the area and dropping off coupons for guests and offering the hotel staff a comped meal so they could taste test the food. Then sending out mailers to church groups, business associations and chamber of commerce, etc. Best marketing with best results. Taking a sample platter of sample size portions of sandwiches out into the Mall for free giveaways to customers walking buy. That had the greatest financial return as the customer if they said it was really good almost felt an obligation to buy more and it pulled in about 40% of the taste testers as new clients. Building the business up from current levels of patronage was much harder than I anticipated but was doable with lots of time. I think a lot of entreprenuers underestimate how long that upward curve is to building new business and they think like I did that it can be done in weeks vs months or years.
3. Capital, most people do not know this but you can legally borrow from your 401k or IRA to start a new business. That is what I did because at the time I had a surplus there and I would be running the business debt free........what could be better? The problem I had was running the business with no other source of income other than what I borrowed from my 401k or could borrow. Big mistake as I saw personal saving I set aside to support me dwindle quickly. I will never do that again. Either need a pension or Social Security income to support me while I attempt a new business so I decided my next attempt will be after retirement. Unless I get a super great idea before then. Good news is my 401k already recovered from the first attempt and the money lost so I can start fresh anytime I want. However, my next attempt will be smaller at first and baby steps to grow vs buying a franchise location that grosses 300k, that was a little too much for me............with all it's various issues.
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