Re: anyone here know about starng a small business
Andrew,
In asking for advice about starting your own business you&'ve caused me to do some soul searching and thinking on this rather intricate subject.
I'm replying under five different headings. The same rules apply whether you're in America, Australia, England, South Africa or any other country in the world!
1) DEDICATION & PASSION
2) THINK FOR YOURSELF
3) FINANCES & PARTNERSHIPS & GROWTH
4) SELF IMPROVEMENT & MOTIVATION
5) MARKETING & ADVERTISING
1) DEDICATION & PASSION
As has been already mentioned in this thread you have to love and be passionate about what you're doing it's the best formula for success.
If you're passionate about a subject, ie car building and motor sport, you automatically absorb all you hear, read and see and then you speak with authority on your beloved subject. Other people will spot the glint in your eye and you positive body language and will have faith in you. If circumstance forces you into a business or job you don't like other people will pick up your negative vibes.
Because of this passion there are so many people who've achieved amazing success. A good example is the late Ayrton Senna who had absolute tunnel vision about being the best Grand Prix driver in the world.
Another example is in my own family. When I was 10 and my first cousin, Francois, aged eight and half he told me he wanted to be an architect. He never wavered from that dream. In 1965 he qualified in architecture at the University of Cape Town and the following year he enrolled at the University of Pennsylvania where he studied for his Master's degree and one of his lecturers was his hero and role model, the famous Prof Louis Khan. Since then his partnership has designed among many buildings, a university in Johannesburg, the Johannesburg Stock Exchange building, Mercedes-Benz and Porsche dealerships and the Michaelangelo Hotel in Johannesburg, now recognised as one of the top 10 hotels in the world. He's also involved in major projects in Dubai, Germany and Nigeria. If I think of dedication and passion I think of my ol'cousin!
A recipe for potential disaster is the following. In recent years in South Africa people have been taking early retirement, ie after working for an oil company for 35 years and quitting at 55 instead of 60 or 65. These people feel they're still too young at 55 to hang about doing nothing. After many comfortable years with an oil company and an automatic salary cheque at the end of the month the prospect of going into the business can be scary. A typical case is buying into a fast food franchise when the person has no feeling or passion for the food business other than thinking it might work. Quick way to lose your pension pay out!
SUMMARY: Be dedicated, motivated and passionate about your business dream. Don't go into a business because someone else thinks it's a good idea.
` 2) THINK FOR YOURSELF
Our world is full of people who don't think for themselves and who are for ever asking other people what they should do. I know of many cases where a young person, like you, needs advice about his or her future or going into business and who do they ask - all the wrong - people, often their own parents, uncles, aunts, their school teachers, their vicars or priests. No disrespect to any of these people but they're generally conservative, see life through their own eyes and haven't got a clue about the big, mean and nasty old business world out there!
I would recommend the Ronald Reagan principle. I gather that he would ask for advice from many of his inner circle and at the end of the day make up his own mind.
Like my cousin many people make up their own minds at a young age about their futures and don't need the opinions of others. Some people are born with vision and some are naturally gifted. One of history's most gifted people must have been Wolfgang Amadeus Mozart who started composing his own music at age five! By the time of his death aged 35 he had composed over 600 works.
There are also many people who still think that unless you have a university degree you don't add up to a row of beans. Wrong. Someone told me that someone in the US has written a book about American self made multi-millionaires and billionaires (I wish I can hold of the book). Some 70% of these people come from so-called blue collar backgrounds often with little formal education and certainly no degrees from Harvard.
In the motor world two 'unqualified' men, who built up famous car companies, come to mind - Enzo Ferrari and Henry Ford.
Enzo Ferrari's father wanted him to attend a technical college but when his father died when he was 18 he drifted from one menial job to the other including a stint with the Modena Fire Department. During WW1 he shoed mules and eventually during the 1930s he set up his own racing team. On March 3, 1947, shortly before his 50th birthday he drove his first prototype Ferrari and the rest of course is history. He ran his company until age 90 not giving a damn about the norm of having to retire at 60/65. Another visionary self-made man.
Henry Ford was a farm boy who was described as a 'tinkerer'. He and his investors had two bankruptcies in quick succession before he founded the Ford Motor Company in 1903. Ford's vision of automobile mass production came from within and not from a university degree. Please don't think I'm belittling university degrees. There's
no doubt that one cannot practice architecture, law, medicine or many other professions without a university degree. It's that it's not a prerequisite for success in the business world.
Another self driven person who has done well for himself is my friend Ron Hickman who has only a matric pass from Greytown High School in the Natal Province of South Africa. In 1955 he moved to England to eventually become production director of Lotus and the designer of the Lotus Elan. He then went on to design and patent the Black
& Decker Workmate of which some 65 million units have been sold to date. Today Ron lives in Jersey and is one of England's wealthier people. He was also awarded an OBE for innovation to industry.
Another success story is South Africa's Jewish community. About 100 years ago most of them arrived here with nothing from Latvia and Lithuania and have since then built up some of South Africa's largest and most successful businesses, chain groups, etc, through sheer determination, guts and hard work. I've a 75 year Jewish partner in a small import/export agency, who built up a successful motor group, farms and properties in a small town and I listen to his advice on business.
I would also like to quote a personal experience. 1n 1965 when I was working for Stirling Moss in London his racing team, SMART, was run by three South Africans, two of whom were brothers who had done many crazy things. I decided to interview them and posted the story back home to a magazine. Not long after I received a copy with the story in the mail together with a cheque. This launched my 'career'as a freelance journalist and for the past 38 years I've written many stories, including for some well-known British publications. I'm a member of the South African Guild of Motoring Journalists and this self chosen hobby has paid me well over the years.
In this regard I've been asked several times by young people about getting into journalism. They ask if they shouldn't first do a degree in journalism. I reply that if English is their home language and they can express themselves well verbally why not start writing. Why wait for others to shape you.
My wife is editorial director of a publishing company specialising in professional trade journals. She started off as a secretary with the Rootes Group in London in the early 1960s and made it to the top in South African publishing through common sense and dedication.
SUMMARY: Think for yourself. Make up your own mind. Go for it.
2) FINANCES, PARTERSHIPS & GROWTH
First of all crawl, walk and run and when you start running keep looking behind your back.
Finance is always the problem. Most of the time the person with the passion, the idea, the design or invention doesn't have the money. He has two options, to borrow money from a bank providing his own collateral or by persuading others to invest in his idea.
Borrowing money from a bank can work preferably by starting small and growing slowly. This could in fact be the ideal way for you would be captain of your own ship and all decisions right or wrong would
be yours. On the other hand if it goes belly up your house and your granny's jewellery would be snatched by the liquidators.
It's often said that partnerships are more difficult than marriage. I've experience of both - elieve me it's true!
The main problem with partnerships is the business being viewed from entirely different angles by the ideas man and by the investors. The ideas man simply wants his business to get rolling so that he can earn an income and hopefully make a few million bucks down the line. The investor and investors have often made their money in other fields of activity and simply want a quick return. Hard earned experience tells me that if you're in the car building business, for example, your investor must understand the industry and once again I mention passion. Your investor must also share the knowledge and the passion.
I quote a recent example. A friend, who is one of the best car builders I know asked a wealthy man, who made his money in the security business, to invest with him. Within three months the partnership blew up. My friend had to make a pattern for a rear upright and have it cast in aluminium. The investor thought the whole job should take a week and when my friend explained that it would take a little longer the investor blew his top and end of partnership!
A word of warning about partners/investors. The ideal partnership is between two people - the ideas man and a wealthy investor who work well together, respect and understand each other.
Be careful of two or more investors or even an investments company. It'll invariably be the ideas man on one side and the others on the other side. To have all parties singing out of the same hymn book, as the saying goes, would be a miracle!
Another route could be to buy into a franchise. This could be expensive initially but could be a recipe for success particularly if it's a well-known and well-established international or national group. The newcomer would have the benefit of an established image, training, advertising and marketing. But as has been mentioned in this thread franchise operators also fail and then take the whole network out.
One of the biggest mistakes I've often seen is getting smart arse too quickly. An example is two partners setting up a new business together and to their surprise the business takes off better than expected. Before you know where you are the partners are flashing about in new BMWs each with a trailer and a Yamaha Waverunner at the back. Yes, leases are easier than paying cash up front but those monthly installments can also be a drain on the company's resources. Rather drive a rusty pick-up for a while longer and one day when your accountant tells you that you cannot afford not to have the new BMW go and get it. Then legally deduct the installments and give the IRS
less! I don't know if this applied to the US, it does here.
To make a success of a business you must understand financial control and management. Don't leave it to the accountants and auditors, be hands on yourself.
About 30 years ago I had a bitter business experience when I trusted a partner with the company's finances. I won't go into the details but after that I quickly learnt all about basic book keeping and financial control having come from a marketing and sales background and believing that money matters should be left to the bean counters.
Financial control requires no more than common sense. It's not rocket science.
In the early days companies had sets of books and in recent years I've run four companies with a hand written cash books with analaysis columns and a journal. Sure, now it's all on computer.
Quite simple! On the left hand side of the cash book your deposits are paid in. On the right side you record cheques paid and bank charges. These days, thanks to computerised transaction coding you print out your month's financial performance within minutes. An example of a journal entry is when you've invoiced a transaction and been paid cash for that transaction and that cash is used for petty cash. The payment has to be recorded and the use thereof by crediting sales and debiting a petty cash in the journal. Thereafter the businessman must have a record of his debtors and creditors. In fact, he must carry those figures with him every day, either in his head or on paper otherwise he'll lose control. This certainly applies to the smaller businessman as it would be impossible for the President of a large corporation to carry these figure about with him.
Also remember; crawl, walk and run. There ain't nothing instant. All the well-known car companies had humble beginnings often from small, tatty workshops and small factories - AC Cars, Ferrari, Lotus, Porsche and many others. Even the mighty Boeing Aircraft Corp started small.
The last guy to try instant was one John De Lorean - he ain't around no more!
3) SELF IMPROVEMENT & MOTIVATION
I believe that to be a successful businessman you have to be well informed about everything both internationally, nationally and in your own backyard. The more you know about the world around you the better you will run your business as wars, financial ups and downs, changing trends and fashions could affect your business. It's a case of fore warned is fore armed.
It's also important to go out there and meet people from other countries, cultures, traditions and religions. Amazing what you can learn. Also the more you expand you mind and knowledge the more interesting you'll become as a person and the better you'll do in the business world.
There are many books on business, marketing and self improvement. Read them. Two good books are 'The power of positive thinking' by Norman Vincent Peale and 'The official guide to success' by Tom Hopkins.
My wife and I belonged to Toastmasters for 18 years until recently. It's a wonderful organisation and apart from helping people overcome their fear of speaking in public it rounds one off in other areas of communication. All speeches are evaluated and the speakers are told in a constructive manner about their shortcomings,ie speaking too softly, poor eye contact, fiddling with one's tie or scratching one's nose all because of nerves. The best thing about Toastmasters is that you get evaluated to your face and not behind your back! I would highly recommend this organisation to anyone who wants to make a success of the business world. If you can't communicate how do you sell yourself or your ideas?
5) MARKETING AND ADVERTISING
In this day and age of information overload people ask how do they make their businesses stand out.
Paying for advertising is one thing and the accepted norm. The one tip I can give, based on my freelance journalism, is to go and make friends with your local newspaper or nearby car magazine if you're in the car business. It's easier than you think to get write ups on your business. Bear in mind that newspaper and magazine editors can only write about people (other than animals) and what they do. If you have a newsworthy story, don't be scared, go and knock on the editor's door and give it to him. If you were to spend $5000 on an advert it won't carry half as much weight as a story with photographs. Believe me, it works, I've done it many times in London, Johannesburg and Cape Town. Go for it. Don't be shy there could be a friendly editor waiting for you!
Andrew, this has taken quite a while to write but I've enjoyed it. If you can take just one tip from this and put it to good use I'll be pleased!
Take care,
Andre 40