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Originally Posted by popsandfriends
Hey all,
me and a trusted friend have been thinking about starting a small business in a small town called Brunswick, ME. We figured out that the younger part of the community like high schoolers would be a popular crowd to attract to a downtown cafe. We could provide a wide selection of drinks and snack foods, standard tables, a couple window booths. A jukebox with modern music, a modern interrior look to the place. Internet and a few computer terminals (wirelss access as well) and then a HDTV you can play games and movies on. Of course we have no idea HOW to get this ball rolling, or how grants work but we beleive that we can do this and make it work. We're determined and pretty professional about most things in life, why stop now 
Any help or guidance is appreciated! Thanks!
Hunter |
Hunter,
Point 1: Make a decision. Ok...to move forward, you first need to make a distinction between
lifestyle and
high-potential business. Lifestyle businesses are those with projected revenues of under $100 million in 5 years, or total market share of under 20%. High potential businesses are those with projected revenues of over $100 million in 5 years or, projected market share of over 20% (of the total global market).
Because certain people specialise in financing high-potential businesses, lifestyle ventures (what you have) are harder to finance. For all practical reasons, if you just put the money you borrowed for your cafe into an index fund - you'd get a better return than running your corner shop. That's why it's a lifestyle business (i.e. you're doing it for lifestyle reasons) which is often an unattractive investment.
So you need to decide whether you're gonna be starting lifestyle or high-potential ventures.
Point 2: Risk - Return Equation: To cut the analysis short, the conclusion is this: to make your life easier and get better results quicker, forget about doing a greenfields operation (starting from scratch). Open a franchise business.
You currently do not have the skills to make your lifestyle business successful. To protect your self from bankruptcy and your marriage from unnecessary stress - contact your favourite franchisor and enquire about how you can open a shop in your community.
Hunter, on a personal level I need to tell you this. Virtually every single married couple I've known who've started a business, ended up in divorce. Franchising is just one way to avoid getting into severe arguments with your spouse, but ideally - you should have a serious talk with someone about how your business will impact on your relationship.
The nightmare scenario is this: either the husband or the wife have invested a lot of energy in the company, but it's just not working (which is the normal thing - success is very rare). The other partner has had enough and drops out. The husband or the wife now has to work even harder and invest even more energy. Then, the other partner ask for the business to be wound up - but the first partner can't bring them selves to close shop because that would mean they've wasted up to 5 years of their life on a black hole. The resulting tension leads to a break up because the first partner can't stand being disrespected, and the second partner can't stand being further down on the 1st partner's list of priorities.
And there are other equally bad situations.
Finally - have a think about this stuff. Running a small lifestyle business is not fun, and it's definitely not financially rewarding. I'm guessing that you're the person who is keen on making this startup happen and you may want to realise that what you're suggesting is not rosy. It's gonna be years of pain and tension. Do consider if the rewards are sufficient enough to justify the sacrifices.
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