ShareWare OnLine 2/ShareWare OnLine Volume 2 (CMS Software)(1993).iso/finance/money401.zip/INTRO

Text File | 1993-01-04 | 11KB | 216 lines

                    MONEY - Version 4.01

         Freeware by Jeff Napier & ANOTHER COMPANY
                       copyright 1993

Feel free to copy and share this disk as long as  all  files
remain intact and unchanged.

     George's boss in the camping goods store  was  starting
to  make it difficult for customers who paid rental deposits
to get their money back. In fact,  George  caught  the  boss
puncturing  one  of  his own rafts so it would look like the
customer returned it with a hole in it.  George knew his job
as manager of the store was coming to an end.  So he started
his own whitewater adventure business.  His first  customers
came  from  his  ex-boss's  store.   They all knew and liked
George.

     Erin's boss simply didn't have enough work.  Sure,  the
boss  was  a  true artist, but she simply didn't have a head
for business.  At least not enough  business  sense  to  get
work for herself and all the employees she liked to hire. So
Erin  asked  the  boss if she could rent one of the knitting
machines and use it to start her  own  hand-knitted  sweater
business.   The  boss  was glad for the extra rental income.
Erin soon founded a very strong business of her own, and the
ex-boss now makes a lot of money renting industrial knitting
machines to Erin's company.

     Frank simply  couldn't  install  a  new  radio  in  the
motorhome  when  he knew the problem was simply in the wires
leading to the radio.  Once again, the sales department  had
twisted his finding to bring themselves more commission.  He
refused  to  install  the  radio and quit.  Feeling that his
only expertise and  interest  was  in  recreational  vehicle
repair, and having quit the only repair shop in town, he had
no choice but to start his own RV repair business.  Since he
had  no  money, he merely put his tools in his van, and made
some home-made signs for  its  sides.   He  also  made  some
hand-drawn  flyers  and  hung them on the bulletin boards at
the local RV parks.  His wife  stayed  home  to  answer  the
phone, and he called in between repairs to find out where to
go  next.  When parts were necessary, he ordered them one at
a time from the local wholesaler.  The customers didn't know
that his "house-calls for motorhomes" was set up due to  his
low  budget.   They  thought it was a very convenient way to
get their motorhomes serviced, and business was  brisk  from
the very first day.

    Can  it  be that easy?  Yes... and no!  Statistics prove
that one out  of  every  four  women  who  start  their  own
business  fail.   WAIT!  Statistics also prove that four out
of every five men fail!  Let's analyze some details to  make
sure that your business will be one of the successful ones.

     First,  consider  one  rule  which  is  the  most-often
violated by the people who fail:  You  must  bring  in  more
money  than  you  spend!  I knew a guy who was an expert ski
mechanic.  He bought some waxes, some plastic, an iron, some
files, all the things he would need, and rented  some  bench
space  in a store. He put up a sign in the store window, and
sure enough, skis started coming in.   At  the  end  of  the
first  day, he had made $80. Did he spend it on advertising?
Or maybe on more materials, or tools to expand his available
services? No, he bought himself a pair of nice cowboy  boots
and went to a party.  His business lasted about a week. When
it  was  time to pay the second week's bench rent, he didn't
have it!  You laugh, but it's a true story,  and  variations
of it are surprisingly common.

     Before  you  start a business, it is usually impossible
to know exactly how much money you will  make.   So  you  do
some  calculating.   You  must  have  a realistic idea about
whether enough money will come in to your business to  cover
your  costs.   First,  make a list of costs.  There are more
overheads than you might at first  realize.   For  instance,
you  might be able to rent a nice retail store for $1000 per
month.  But, if you need 40 hours of help per week,  that'll
cost you another $1000 per month.  Phone: add $25 to 200 per
month.  Heat/air  conditioning:  $100-500 per month. Parking
lot maintenance: $150 per month. You get the idea.

     Now, how many people are going to walk  in?   How  many
will  buy?   Of  those  who  are likely to buy, how many are
going  to require some sort of deal or creative financing to
swing the deal?  How many  dollars  per  customer  will  the
advertising  cost?   If  you  can subtract all your expected
costs and still have a strong profit, you'll do ok.  If  you
have  a marginal profit, you already have a problem, because
there is probably something you haven't considered, such  as
a competitor opening up next door, or a sign ordinance which
makes you take down your most effective advertising.

     If  you  calculate  your income and costs with the best
information  you  have  available,  and  the  situation   is
somewhat  marginal,  please,  consider  some  other business
idea!  If you prove to yourself over  and  over  again  that
everything  will  work out fine, then that's great.  Even if
something unexpected comes up, you'll probably do well.

     Make  sure  you  understand  the  difference  up  front
between making money,  and  coasting  on  savings.  So  many
businesses look good because there is money to pay the bills
for  several  months  in a row.  The proprietors are relaxed
because, the profits will start coming in next month, or the
month after that.  Then, one day, the money is all gone!  If
you start a business that has a great pool of  capital,  and
if  it  is  not  making  a  profit  as soon as it should, do
something now to change it, before your life's  savings  are
gone.

     It  would  be  ideal to start a business in a fail-safe
way. Sometimes, a married couple will team up like this: One
spouse keeps  his/her  job  while  the  other  tries  a  new
business.   The business has time to gain its footing, while
the family expenses are paid by the other  spouse.   If  the
business  fails,  nothing  is  lost.   If  it succeeds, both
husband and wife can work in the business together!

     Many businesses can be started  at  home,  after  work.
Mail-order  businesses  and  local consulting businesses can
often work this way.  All that is at stake is your time, not
your living.

     Ok, I stated  that  4  out  of  every  5  men  fail  in
business.  This should not scare you.  This should warn you.
It means you might have to try 5 different businesses or try
your business 5 different ways  before  you  get  it  right.
Knowing  the  bleak  statistics in advance only prevents you
from being disappointed the first time around, and  prepares
you  to  be  ready to pick up the pieces and try again a few
times.

             SOME MORE GENERAL BUSINESS ADVICE

     You've  probably  heard   that   of   all   businesses,
restraurants  are  the most difficult to establish.  This is
because of several factors, which may or may  not  apply  to
your business ideas:

1.  Many  people  who start restaurants are not particularly
enamoured with food services -  a  restaurant  simply  seems
like a nice idea.  This is a mistake.  You must be an expert
in  and  thoroughly enjoy the product of your business.  The
sports shop owner who  enjoys  children,  baseball,  soccer,
skating,  etc.  is  far  more likely to do well financially,
because he/she really enjoys the subject.  This manifests in
one who will seek out the latest trends and  technology  and
sell  what  people want to buy.  This type of salesman is is
irresistable because he or she is enthusiastic and can  pass
that  feeling  along.   This type of salesman can sell where
others can't because he/she knows how to adjust or recommend
the right product for marginal situations  and  because  the
person  WANTS to get the customer involved in their favorite
sport.

2.  Many  people  who  start restaraunts don't know anything
about food  service.   Without  the  collection  of  special
techniques,  extra  efficiencies, and knowing when something
is right or wrong, it is very difficult to  make  a  profit.
For  instance,  if you can't tell when the seafood is fresh,
how will you know when to start shopping elsewhere at  great
inconvenience,   versus   when  to  place  orders  with  the
convenient supplier?  Will you know why the customers  don't
come  back  after  the salad bar looks wilted every night by
8pm?  Will you ever be able to come up with a winning  sauce
recipe  which  causes  the whole city to crave meals at your
place?

3.  A restaraunt is an expensive proposition.  You must have
employees, and at $5/hour minimum wage and insurance  costs,
employees  cost  a  minimum  of  $1000  per  month.  Well, I
suppose you could cook and serve  and  bus  the  tables  and
operate the cash register, but certainly not part time while
maintaining  your  regular  job.   The  restaraunt must also
conform to local health department regulations,  fire  laws,
and  must  be  appealing  to the clientelle.  The restaraunt
requires expensive stainless steel sinks,  walk-in  coolers,
and  industrial  kitchen  facilities.   And  generally,  the
restaraunt  must  be  well-located  with  a  sign  that   is
noticable  to  traffic and a parking lot that beckons people
to stop in. Generally, you are risking tons of money just to
open the smallest restaraunt.

     Compare  this  to  a  service  business,  a  consulting
business, or a mail-order business.  With service,  you  can
usually  start without any sort of retail location.  You can
do house  calls,  and  all  you  need  is  your  car  and  a
telephone.  Consulting  is  the same way.  Mail-order can be
done out of  your  own  home  at  no  increase  in  overhead
expense.  In the case of all these latter businesses, if you
fail,  little is lost because little was invested.  However,
if you start showing a moderate success, you can then invest
in improvements such as a retail location, more advertising,
industrial high-volume equipment, etc.
     For  this  reason,  I  don't  even  cover  the types of
businesses you can start with borrowed money.

     So, if you are truly  in  love  with  your  service  or
product, can start it on a shoestring or have money that you
can  afford  to lose, are already an expert in the field you
want to make your business, then  the  statistics  are  much
more in your favor.

     Let's bring in one more advantage.  You'll want  to  be
as  mentally  prepared  as  you  can be.  If you can prevent
depression,  waffled  decisions,   and   incorrect   outside
influences,  you  are  much  more likely to succeed.  If you
have some knowledge of the art  of  personal  communications
(sales)  you'll  succeed  all  the  more.  Here are two book
suggestions which will help you in business tremendously:

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