Lessons Learned From Running a Business?

[jclark5810]

Hi there folks,



I'm looking into starting my own business and am looking for advice on what NOT to do. Also, what have you found to work? I'm moving to East Tennessee to finish school and then trying to work in the industry for a couple years while we get started in home. My wife and I are basically wanting to start a business where we handle supply chain management for contractors and other small business who don't have or struggle with a purchasing department. Once we establish ourselves in the actual purchasing side we can move into consulting.



My wife has been in the industry for a few years and i'm going to be majoring in Supply Chain Management in College, really just to say i got the degree and to use the GI Bill I paid for. I'm under the impression that it will also help with securing finances to get started. The real business education comes from falling down and picking yourself back up. I was hoping to here some advice from those of you who used to, or still do, run your own business. How have things changed in the years you've been running? Are there things you'd never have done again or maybe wished you had? I appreciate any insight and value your opinions. Thanks in advance!

 

[KLauber]

A lot of university and colleges have business incubator programs which may have grant monies available for start-ups. Clemson and USC have programs running here in SC and I bet UT has something similar. That and have a lot of cash waiting in the wings to lean on until you get some sales volume. Also network your heinie till its raw... CHamber of Commerce, Rotary, bankers groups, industry groups, etc. Lots of people to lean on.

 

[jclark5810]

Thanks Ken! Yeah the key thing there is networking. That is probably the most important part for finding a job, promoting, starting a business, and gaining new customers. I'm going to try and get involved with a lot of local organizations as soon as I get there and start getting out and about. I know the school has a lot of clubs on campus that are directed toward the business environment. Also I plan on using my business model for some of my school projects so it will be good to get some feedback.

 

[JLEONARD]

I know many small business owners, mostly in the machining business. The one thing that takes them out or threatens to take them out is CASH FLOW.

The successful businesses chase their payments when necessary.

It can be done tactfully.

 

[jclark5810]

That's an interesting point about cash flow. I'm hoping that's where my business can come in and help small business. I know that certain suppliers offer business accounts, heck even the big chain home stores have similar programs. If we're able to purchase supplies for say "Tom's Machining", and allow them 30 or even 45 to 90 days same as cash for their supplies, that could really help them get through the thin times. We would obviously have to have special line of credit as well that would allow us to do that. But scenarios like that could happen and help small business.



With a business like what i want to start, i don't personally have any inventory. I'd simply use other vendors to supply the customers i do business with. My profits would be small but establishing numerous accounts is where i could be profitable. The good thing would be that it costs me nothing more than maybe two computers, phone/fax, and a spare bedroom to use as the "office". My cash flow would be minimal.

 

[BigPapa]

It would scare me to death to think I was extending credit to contractors in the current economy. I know there are suppliers around me that have gone out of business because contractors could not pay them, so then they couldn't pay their bills. One guy (He owned a lumber business for 20 years. Now he's working for his competition. ) called it "Trickle Down Bankruptcy".



Don't get me wrong, the contractors aren't doing this on purpose. All it takes is for construction on a project to stop because they ran out of money. They don't pay the contractor, he can't tear it apart and send the materials back but he can't pay for them, either, then he can't pay the lumber yard and the lumber yard can't pay their bills. It's even worse when everybody writes each other a check then they start bouncing down the chain.

 

[jclark5810]

Thank you Scott and I definitely understand where you're coming from there. Like all business it is very risky, and regardless of your political beliefs it's no secret that times are very tough right now. I'm looking at about 4 years out so hopefully some changes will be coming soon and we can start to turn things around and begin to rebuild our infrastructure and continue building all around. As far as the credit goes, there's just a fine line to try and not over extend yourself so far with lending i guess. Ideally you could look for contracts which pay complete cost or percentages of supplies up front. I suppose it's all in how it's written up?

 

[JFought]

I have a business degree with a minor in entrapnuership. (already had business running before i started school)
I did it for personal satisfaction, and accomplishment

With that said, i didn't learn too much more than i already knew.

Find fellow business, clubs in the industry, (even in other towns) for advice and tips.
This will help and advance you, and hopefully save you a year or two and a lot of money wasted.

Check out your local SBA, they are kinda helpful but by no means take their word as a rule or law.

Good luck!

 

[jclark5810]

Thank you JFought that is very good advice. It seems that most say the degree is merely beneficial for self gratification, which is just fine with me. It would mean a lot to my family and myself to complete my degree. I've wanted to run my own business ever since I was in middle school, it's been a dream.

 

[fox]

Never hire friends or family.

Bank out of town. Someone who knows you could watch your accounts.

Allow an accountant to audit your accounts. (my wife cashed checks after forging my name). It was tough to find it but I did.





Do not become good friends with employees.

Watch every dollar!!!

Try to become your own bank. Interest will eat you alive.

 

[BIGNASTY]

Quote

and allow them 30 or even 45 to 90 days same as cash for their supplies, that could really help them get through the thin times. We would obviously have to have special line of credit as well that would allow us to do that. But scenarios like that could happen and help small business.



Yes it would help them but what about your cash flow. When I was and O/O in the trucking industry. There were times that I would love to have same as cash but in truth it would kill your bank account to extend that to the customer and you have to take the brunt of the layout of money until 30 to 90 days rolls around. If the companies that you owe would allow you the same courtesy then fine but that might not happen.



Something to think about is FACTORING that is where you extend it for the same time frame but the sooner they pay you the cheaper it would be for them. Example the bill for the supplies is due in 30/45/90 days but if they pay you in 30 they get a 10% off the bill if they pay in 45 they get a 5% discount and so on. The idea is to keep the CASH FLOWING !!! Being a nice guy is fine but many nice guys have gone broke being nice.



When I had my trucking business I had several companies that liked the way I did my end of the job. They asked if I had more trucks that could haul their product? I didn't but I knew a few trustworthy O/O's that would do as good or better job than I. So I would set up the loads for me as well as other drivers and take a 5% fee for doing it and that was better than the 10% that the other company that we ran for took so everyone made out on the deal. The company that had product got better than average service and the drivers that took the extra work made 5% more on the same load and I made more because I took a cut off of their loads for my time and then I got full pay for the loads that I hauled. The companies that we hauled the product did the same for us and our cash flow would be 30 or better than the usual 90 and we could always use the cash FLOWING



Think about a class in Accounting When I was rehabbing when I had a shaving accident in the Military I took Accounting classes and it help immensely in running my trucking business Just a thought



BIG

 

[jclark5810]

Fox, very good words to live by and thank you for your input. Definitely don't have any friends when it comes to business or money. I'll definitely have to be on my guard.

Something to think about is FACTORING that is where you extend it for the same time frame but the sooner they pay you the cheaper it would be for them. Example the bill for the supplies is due in 30/45/90 days but if they pay you in 30 they get a 10% off the bill if they pay in 45 they get a 5% discount and so on. The idea is to keep the CASH FLOWING !!! Being a nice guy is fine but many nice guys have gone broke being nice.

That's a very good idea Big, and one that my wife's current company uses. They get into trouble to sometimes however when they're waiting to get paid and still owe vendors money. It's something we're both trying to learn the most from as far as the best route to handling the cash flow.



I've taken some accounting classes, actually got an AA in business admin, and it's helped a lot but nothing will register i feel until it's YOUR money. I think if we keep the risk low early on we can learn quickly and hopefully not to painfully. We both plan on working while we get it started so we can pay our bills and for supplies we'll need.



Thank you very much for the insight. My dad has driven trucks for over 30 years and keeps wanting to buy his own and be an O/O, I think he missed his window.

 

[Deleted member 995608]

Never hire friends or family.

Bank out of town. Someone who knows you could watch your accounts.

Allow an accountant to audit your accounts. (my wife cashed checks after forging my name). It was tough to find it but I did.





Do not become good friends with employees.

Watch every dollar!!!

Try to become your own bank. Interest will eat you alive.

What he said.

 

[Deleted member 995608]

We both plan on working while we get it started so we can pay our bills and for supplies we'll need.

Good idea and I'll add that you keep your jobs untill you abosolutely cannot not handle both. It's going to be hard juggling all of it. Get that into your skull.



Advertisement: Be carefull what you spend and where you place it. It's very easy to rack up thousands of $'s that will delivery an extremely small return. Most of the time, business is done by "Word of Mouth",... . even with the internet. Just remember that! You might have the biggest advertisement but that dosen't mean you'll catch the biggest fish.

 

[BIGNASTY]

Quote



Thank you very much for the insight. My dad has driven trucks for over 30 years and keeps wanting to buy his own and be an O/O, I think he missed his window



I don't know about that I drove for me for about 10 years and it was a great experience in myself. It as you will find out that it makes you think about it 24/7 and there will be great times and there will be times that you will think what the Hell did I get into this for. It wasn't for the lack of work or money that I quit and got a go home every night driving job. I cant say that I always ate as well as the truck did ( your dad will understand that one) but I didn't starve to death and there are some truly nice people out there. But it was nice to have a Wife and 2 linoleum lickers to come home to and enjoy their lives. Besides she would have got 1/2 of the money when she left TRY TO FACTOR THAT ONE IN



BIG

 

[JFought]

yes word of mouth pays about 30 times over!!
I have not advertised in nearly 5 years. As a service business, i think thats pretty dang good!!
All ways go the extra mile, it makes the referrals appear. Refferals are not only cheap to free in terms of advertising, but have a very high closing ratio due to the known or perceived trust of you business.

 

[NIsaacs]

Don't freak out if you are showing good income, then try and spend it all to avoid paying income tax. If you are paying taxes, then you are making money, save it and pay the tax. Obviously spend what you need to up grade the business, but don't buy what you don't need, if it is tax worry driven.



Make yourself a list of prioritys for the day, I had three and lived by them.



1. Things you "had" to do/get done.



2. Things you "should" do.



3. Things you can let go.



Nick

 

[fox]

I will add this.



My first accountant taught me to live with sayings.



" You can spend money to make money, but you can't spend it to save it. "

( think about it)



"You can teach employees the work, but you cannot teach them TO work. "

( they have to learn this themselves)



" you can start early to beat time, but you can't by starting late. "

 

[jclark5810]

All very good advice guys and I thank you greatly. I think the one major thing that we will stress is customer service. Speaking just for where I live in the California bay area, customer service is dead. People can flat out be rude and act as if me the customer is bothering them with my business. It's not just the punk store clerks or waiters but even the owners. Customer service and taking somebody at their word is absolutely gone out here.



My biggest emphasis is going to be on excellant customer service and communication. That's the other biggie i've noticed out here, people don't talk to anybody. Everybody's got their head down like a bunch of clones. Probably too afraid to look somebody in the eye anymore out here. Anyway this is all very good advice and i'm taking notes. We're both very frugal with money and i had gotten a little carried away with the trucks but i'm back to reality now and ready beef up the savings. I'm not afraid of making money or having to pay taxes as long is i'm not paying to this state anymore.

 

[rscurtis]

Sounds like NY. When I had my business there, I was helping to support the district school super, who is knocking down just over 500K. She is highly regarded by the parents, though.