I have the money, I don't know what to do with it

[MK2002]

Hello,

I registered here to take advice on starting my own business. On the opposite of many people, I have a different issue. I do actually have the money to start a business but I do not know what to do with it, I can come up with about $100-130k (I hope this is enough)

I would like to start a business and see my money grow, but unfortunately I am not an expert on any one thing to venture into that business. I thought about starting a small fast food like restaurant, but I am not a chef, and I do not know how to handle food or where to buy food supplies (from grocery stores (waltmart?) or by contacting food suppliers directly?) . I thought about opening a car shop, but I am not a mechanic. I thought about opening a car wash, but to not fool the customer, I never washed a car before.

How should I tackle this issue? I know of many business owners who are not knowledgable in their shops/business but their businesses are doing well (Restaurants, bakeries, plumbers, electronic repairs..etc) . I know they do it by hiring other employees who are more knowledgable in the business, but, since I am not an expert in the first place I can't assess any one. Plus, since this is a small business I will be very dependant on 1 or 2 employees if they decide to leave my business will shut down.

If I go on to learn something it will take me a good 6-month-to a year to be knowledgable enough, and then I am not so sure I will be at the level where I can service customers, and let us not forget the business could fail and then I lost so much time. I can hire employees but I can't assess them. Should I offer some one who has years of experience in any business a partnership offer? but then that is giving away too much too soon and I risk the arguments in a partnership.

Note: I plan on doing the managing part but not the actual service.

Please advice, and sorry for the long post but I need to explain myself to be clear.

MK

[Patrysha]

If you really want to see your money grow, it might be better to put that money into stocks or other traditional investments rather than a business. In my experience when the focus is on the money rather than the joy of the business it can be hard to keep the enthusiasm and effort going - at least that has been the case with those who don't come in with a lot of business experience (serial entrepreneurs tend to be much better at owning businesses that they don't have experience in, but not so much first time entrepreneurs) -

Do you have any general business management experience or education? You can be a good manager/business owner in any industry if you're willing to buckle down and learn...find conferences, find mentors and learn a business from the ground up - but it has to start with a solid foundation.

Do you have any hobbies or interests that have a marketability that you could turn into a business (or buy an existing business in that field)?

[kimoonyx]

I disagree that investing your money in the financial system is better than trying your hand at owning your own business. Business that is successful grows your money at a much higher rate. The money you have is more than enough to start a successful retail shop of almost any kind. I like retail because if you do it right, your looking at money daily.

The problem with this decision, and (I have been in your shoes) is that for most people. When they get that 100k or whatever capital they have to take a shot with, It is their lifes savings or was garnered by a once in a lifetime event so its usually their only chance to get it right. In that sense the decision on what to do with it is very important and should not be taken lightly, and for some... Its very hard to let that money sit while they do adequate research to make an appropriate decision. Here are some things that I know about how to research business opportunities and franchises based on my unique experience. Your research should be extensive.

Because of your question about owner knowledge I would recommend you taking a look at getting into either a business op or a franchise, at your level of capital you could afford either, although I think on the franchise front your options would be limited where as on the quality business op front you could maybe get a larger initial purchase for your money as QUALITY business op's tend to overcompensate for their opportunities... much like the way you see QUALITY mom and pops restaurants do.. i.e. bigger portions...less money! and for many of the same reasons!

If you are looking at low cost franchise setups, take a long hard look at the federal disclosure document. The federal government breaks down how to look at each section in the following article in section V Buying a Franchise: A Consumer Guide | BCP Business Center (http://www.business.ftc.gov/documents/inv05-buying-franchise-consumer-guide)

Now this is important. The federal government regulates that franchises provide the information that is listed on the disclosure document for your protection. This document seems like it makes franchising a no brainier, but I have seen franchises that promise the world in terms of support that do way less than some business opportunities. Many times when you call around and speak to franchise owners they are afraid to tell the truth because they are under enormous pressure from the franchiser. This document can really be the tell all, and if you are hearing something from some franchise marketer that is in contrast with what you are reading on the document, well... run!

Business opportunities are not regulated by the government in terms of a federally mandated disclosure, but if they are worth their salt will have a long list of stores, or clients depending on their model that you can check with to vet what you are hearing as they make their offer to you. The biggest difference in a quality business opportunity and a franchise operationally, is the royalty payments. Franchises usually charge you royalties, and many are on sales...not profits...sales, where as most business opportunities do not. Franchises also have heavy restrictions such as ordering from their vendors only, where as with most business opportunities, you are initially connected with vendors but if a better deal comes along, you can tweek your cost of goods sold by trying out better suppliers.

I am a fan of course of business opportunities but really the decision comes down to what you are comfortable with... I agree with one point Patrysha has made there, first time business owners tend to not do as well as people that have been there, done that, failed, learned and tried again. This is why you benefit from purchasing something that has the support of some organization (franchise) or someone (business opportunity) who fits the "been there done that" description.

I am excited for you, It is an exciting time to start your own business, as there are FINALLY trends towards business ownership and the markets are now realizing they can get better service from small business. I personally believe that small business is the only way to resurrect our stagnating economy and I wish you the best... USE THAT MONEY FOR BUSINESS! For Christ sake don't turn it over to the bankers! :)

[MK2002]

I have bachelors in business management. I also have been reading and following business trends for a very long time (!0+ years) but I never had a first hand experience.

I thought about franchising, but franchising is expensive last I heard. For example, a single McDonalds franchise costs $1m . I do not think that covers price of land, building, or employees payroll. Even worse, I heard many franchisors require you to have an experience in the field before giving a license, ex.. a restaurant franchise might ask that you at least had 1 or more restaurants that you operated for more than 5 years.

@kimoonyx ,

I do not understand what you mean exactly when you say a business opportunity is different from a franchise.

[Patrysha]

McDonalds is the big dog of franchises though-there are plenty of other franchises that have a much lower buy-in rate, but of course with any of them you have to practice due diligence. And franchises are not just limited to fast food...there are franchises in just about every service & retail industry...from motels to mall kiosk sunglass huts to the men who wash windows in kilts.

[Harold Mansfield]

$100k-$150k is not a lot of money when you are talking about opening a brick and mortar location of anything. Especially perishable items like food. Even if you franchise and the franchise investment is say $50k, you still need to pay rent, bills, payroll, supplies, and do some kind of advertising to get people in the door. That left over $70k will go quick.

I don't know if anyone will be able to give you any specific advice on what kind of business to open. You say that you aren't experienced in anything, so think of it from a different direction. If you have no experience or knowledge in anything, that means you are going to have to learn something. What do you want to learn? What interests you?

[Fulcrum]

MK2002,
You've done a good job outlining where you feel you are coming short on knowledge/experience, now look at yourself from the other side. Aside from having a reasonable amount of money to start, what areas are you strong in? There are many business owners who are good at business in general and are not specialists - maybe you should look at buying something that doesn't require your specific skills on the floor every day.

On the other hand, I've always got my hand out and wouldn't say no to free money.:D

[Brian Altenhofel]

MK2002,
You've done a good job outlining where you feel you are coming short on knowledge/experience, now look at yourself from the other side. Aside from having a reasonable amount of money to start, what areas are you strong in? There are many business owners who are good at business in general and are not specialists - maybe you should look at buying something that doesn't require your specific skills on the floor every day.

On the other hand, I've always got my hand out and wouldn't say no to free money.:D

This is essentially what I was going to say.

I know some business owners who don't really know how to perform the service their business offers but have excellent business skills. Instead of learning a new skill, they found a friend who had the skills to perform the service and could work independently, but not the skills to run the business, and partnered up.

As for investing in the stock market versus going into business, the stock market is the more conservative option.

[billbenson]

The businesses you mentioned require a lot of up front money. That includes franchises. I'd make a short list of businesses you would enjoy managing. Then go and work for one. You don't need to be in a management position to learn from working there. During that time, study the business, the competition, the ROI for starting that business. Know it inside and out.

If you see early on that the risk / reward isn't that good, bail out of that one and try the same strategy in another industry. There are a lot of closet industries that are very profitable, but nobody has ever heard of them. Find a small profitable niche.

Don't throw unnecessary money at a business. And know the business inside and out before you jump.

That's how I'd approach it anyway.

[huggytree]

most businesses fail...odds are you will too

if your going into business just to be in business i would guess your odds of failure are much higher than average.......i recommend paying someone $100k to kick you in the testicles and save you some time/effort.

part of being in business is doing something better than someone else......how can you be better if you dont know what you want to do?....ive seen this type of post before and it blows my mind.....i am not sure if its real or fake.

pick a business, get a job, learn the business, figure out how to do it better, then quit and start your own thing......learn as much as you can...try to work your way up to management to learn some of the company secrets......in 10 years come back to this idea

[Freelancier]

A franchise like McD's is good from the standpoint that they'll teach you everything you need to know and have you work in one for a while before you get to own one... but you need about double what you have in cash to get started (and the rest of the money you'll need will require you to take on loans from McD's). Some franchises do a good job getting new stores owners up to speed, some are terrible at it. If you've never done one, don't go with the franchise systems that suck. (Some searching around will help you figure out which is which.)

$100K will get you into being a landlord pretty easily, but you have to have the right location and take on some of the efforts to make sure you turn a profit (or not lose to much each year while your tenants pay off your mortgage for you).

But in the meantime, I'd also recommend putting the money into good corporate bonds that are yielding 6-8% until you can figure out what you want to do.

[MK2002]

If I got the money, but I don't have the skills, shall I partner or hire some one with skills? I always feel like employees will not be loyal to a startup even if you pay them well. I noticed they do have an attitude problem, but it was a big business they stick to the rules and regulations.

@Patrysha

I always felt like any good franchise out there, already has an operation near by. Would you know of any franchises that got a good ROI if done well? I am not looking to multiply my money by 500% each quarter. It would be great if I can profit anything from $1-$3k monthly, I don't even need a salary as an employee/manager.

If I can just prove that I can put money in, and make more money out I can leverage a lot more money than $100k.




part of being in business is doing something better than someone else......how can you be better if you dont know what you want to do?....ive seen this type of post before and it blows my mind.....i am not sure if its real or fake.

in 10 years come back to this idea

I don't have 10 years, I am not 17. I will let you know there are many business owners out there who do know the specific skills for their businesses . I am pretty sure the owner of KFC around here doesn't know how to fry chicken.


MK2002,
maybe you should look at buying something that doesn't require your specific skills on the floor every day.


I never thought of buying a business, but I don't think $100k is enough to buy a successful business.

[Fulcrum]

I never thought of buying a business, but I don't think $100k is enough to buy a successful business.

I wouldn't say that. I bought my business with $20K cash and a $35K owner financed loan. At the same time, I really didn't know exactly what I was getting into - let alone how to do all the work. I learned on the job with a sink or swim attitude.

Again, I'm going to say again that you need to take stock of what you do well and what your specific skill set is (tell me what you can do, not what you can't). If you're being honest with yourself, this will take some time. Once that's done, look around and see if there is a hole in the market that your abilities can fill. If not, is there a business that your abilities can complement that you can take over through a buyout?

[MK2002]

I will give it some more thinking

[Paul]

Don't throw unnecessary money at a business. And know the business inside and out before you jump.

.

Absolutely. This may be the most important advice. Guard your money like a pit bull!

Be VERY careful with buying a business especially a new franchise. This has already been said but i have to restate it. Franchise salespeople have ONLY one goal..."get the money". Not all are bad but some of the lesser known can be very devious.

The money you have can be burned through very quickly. You may want to look at a very small business that does not require all your capital. You can keep enough to not worry about income until you've built a business a little bit. You'll gain a lot of experience without risking it all.

Everybody gave great advice. I just wanted to add be careful with your cash...it can disapear fast!

[samfisher]

Even if you do not opt for a franchise and decide to open your own brick and mortar store, you can't expect to achieve a break-even withing a single month.
From personal experience I came into realization that a business in its initial stage is more about sustainability than any other dimension. Most of businesses fail to survive just because they were not able to sustain themselves during the phase before a business becomes profitable. The duration may last upto an year or more depending on the nature of your business so the more capital u have, the better it becomes for you.
Best of luck.