I read a recent article where it stated that over 50% of business close before their fifth anniversary. I think that is way off. It is more like 80%.
To start a business with a retail location in an urban area of the United States you need at least $250,000 in cash. No bank is going to give you business loan. You can take a home equity line on your house. But of course that is risky stuff.
A lot of new small business owners quit their day job so there is no income coming in and they are going to have to pay for health insurance out of pocket (if they haven’t been already).
Most small business will tell you that they have not started paying themselves for at least a year or two out (that is if they make it).
I seen fairly conservative people quit good jobs, mortgage their house, run up their credit cards to open a retail location driven business. Their risk aversion goes from mild mannered middle class to Donald Trump. But they don’t have a billion to fall back on.
If you walk into a Vegas Casino you can place a bet on red or black on the roulette wheel. You have about a 50/50 shot. For many small business owners they had a better chance betting on black then opening a store. Plus you don’t have to go through the emotional pain, long hours and torture of watching your life savings burn away.
If you are considering opening a small business you better get some things right out of the gate. As I mentioned in many posts you better know what you are selling and who are your customers. You will not be able to afford advertising or public relations. But you are in luck. Social media can fill most of those cracks.
You can become a “trusted resource” in your industry. Build a tribe of followers. You can maximize your contact with customers. You can look like a big player while you keep your costs down. There is little need to start out with a retail location. You can build your business while you keep your day job and not pay rent. Build your business first and if need be you can find space.
But do your homework. There is a lot you can do without diving into the deep end of the pool and putting your entire financial future on a less then 50/50 chance.
People like myself (and there are others around) will be more then happy to sit down (no cost for free evaluation) and talk to you about your plans (I have been working with small business for 25 years). If you have launched a new business we can help you use social media more efficiently. Reach out we are happy to help.
So before you cash out your 401K, take that second mortgage on the house, quit your day job there is a whole list of things you can do right now.
Or if you want to take the plunge you can always walk into a Casino and put is all on black. At least that way you will you know right away if you made it.
