There are a lot of people who are losing their jobs due to the current state of the economy and they are looking for businesses to get involved in. I had the opportunity to talk with such an entrepreneur and he was opening a tanning salon. When I asked him why that he said because he thought it would be easy.
As we got into the discussion a little bit it quickly bubbled up that this was not going to be a walk in the park. His previous job paid him over $90,000 a year. Along with that salary, he had acquire some pretty high expenses as well. Over $15,000 a year in property tax on his home. A $3,000+ a month mortgage and the list went on and on.
What could he do to help stop the bleeding? That is the question he asked me. It’s a great question with a simple enough answer. Sell all that you don’t need now. The tough part is, he is underwater with the house and if he sells it, he would lose any equity he had in it.
In an ideal world, we could all one day wake up and decide today was the day we are going to be our own bosses and quit our job. Then we could pick some kind of business to start and we would be up and running within a week and be making the same amount of money.
The reality of it is when you step out of your full time job and decide to open up a new business, you can expect to not make any profits for years, if ever! Most business that are started fail. Why? The simple answer is lack of capital but the larger answer is you just didn’t give yourself enough time to pick up the pace and learn about your new business before you ran out of money to support it.
You can’t start a new business and carry on expenses you acquired when you had a full time job. It’s simply not going to work. To make your new life work, you are going to have to shed all the dead weight and only then might you have a chance.
If I were him and I wanted this new business to work, I’d sell everything and live in a tiny room in the back of my tanning salon for a year or so until it started producing a profit. Give your new business a chance to survive. Rid yourself of as many of your expenses as possible before you start.
What’s your view on this? Join this discussion at the Gopher Lawn Care Business Forum here.