This is perhaps the toughest area to talk about in terms of your financial life. Let’s consider a few ways an individual could start a small business and hopefully be successful at it, still looking at the problems involved. And, after reading this discussion, there’s an article on Yahoo! ( https://smallbusiness.yahoo.com/ ) you might also find interesting. Of course, GoDaddy and Google and many other organizations offer similar services.
One way you might call the “lifestyle” business. For some thoughts on this you might go to Amazon, get the details on the Marc Eisenson etc. book and check it out from your local library or buy it cheaply ( https://www.amazon.com/Invest-Your-SELF-Secrets-Rich-Life-ebook/dp/B000WCV956 ) from Amazon.com.
The idea of the “lifestyle” business is that it is based on some unique talent or ability or desire you possess. If you are an artist, will your paintings sell? If you happen to take a cruise to St. Maarten, stop in and see “the Yoda Guy” ( http://www.yodaguy.com/ ). But if you talk to Nick Maley, ask him how much time he spends on his art, and how much on his business. In northwest Iowa, Mark Bogenrief is building a clientele for his stained glass studio—but desire to make a living in the business does have to be accompanied by ability and the willingness to work hard. I know another fellow who became excited about working with clocks and watches, spent a good deal of time becoming an expert in their workings, and now makes a living at it. I think an individual such as these would say his life was interesting and rewarding, but I doubt they would be driving down Rodeo Drive in Hollywood in a limousine; I think most of them would say, “Who cares”?
There is also what might be termed “general purpose” small businesses. These would be the community restaurant (very high failure rate), the bakery, perhaps the specialty meat market or ethnic store. Certainly all of these face intense competition from the mass marketing chains, where the local grocery store now includes sections for many different types of ethnic foods, and probably a full service meat counter. Nevertheless, many different kinds of “deli” or specialty shops have built a following—Cold Stone Ice Cream, Panera Bread, many others. You might be interested in seeing how Panera Bread has grown from a very small business. Also look at their web site to see how the Cold Stone Creamery developed and how it is franchised . Or maybe you’d be interested in a pizza franchise such as Pizza Ranch. In any event, note that most franchises have substantial requirements in liquid capital and net worth for the prospective franchisee.
Another form of small business start-up is the “franchise”. Both the Cold Stone Creamery and Panera Bread companies mentioned above have grown from their beginnings by sharing their business model, trademarks, and processes with other small businessmen and women. If you examine their web sites, you will see that they have quite different franchising requirements. In each case, financial requirements for starting are substantial, some more so than others, so you are essentially becoming a partner with the franchisor. Of course, as you look at the franchise process, there are some that obviously are not relevant. I would think a hardware store franchise would be very tough going indeed, with Lowe’s, Home Depot, Menard’s seemingly on every corner, and much hardware even available at Wal-Mart. Each franchise, though, is going to involve two of your most important resource: your time, and your money.
Another type of business might be called the “expert” business. Usually a very skilled University researcher in what for most of us would be an esoteric area, builds on research contacts and venture capital, and starts a company. This would be the case if you are a real expert (I know a Ph.D. sounds good, but it doesn’t necessarily make you an expert. I have a Ph.D. and it doesn’t make me an expert in financial matters—though I hope I’m not totally ignorant either), and can put together a team and a business plan to extend your research beyond the University campus. People in biotechnology, especially genomics, and materials sciences may well be good candidates for starting business in this manner.
When you think you have an idea for starting a small business, do a web search for “small businesses most likely to fail”. Take to heart the admonitions that effort and perseverance are first and foremost requirements, and the ability to work well and lead with other people (as partner or as employer) and maybe a lot of capital.