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Pitfalls of a Small Business

By Angela Krout, owner of Mojo Mama‘s metaphysical store in Independence, MO, guru at www.mojomastery.online & editor in chief of Good Mojo Magazine.

I find people fascinating. I’m a witch who used to work for NASCAR. Seriously, the stories I could tell. Anyway,  if you’re not convinced that people are fascinating, just sit in an airport on a 3 hour layover anywhere in Atlanta, waiting to go to Kansas City (or O’Hare, GOD, O’HARE!) and people watch.  It is quite the education on people! I have found that airports are some of the best places to re-connect with the cross section of culture that is our America. The cultures are all there, and it can can be the best show in the world without ever having to leave your seat at the bar near your departure gate.

Wherever I travel, I do my best to engage people in conversation, if they are so inclined, to share a tidbit or two about their life and occupation with me.  It doesn’t matter if it the person is the one sitting next to me at that bar near our departure gate, at a local restaurant, or sharing an Uber across Memphis.  It reminds me that this country is absolutely great and is filled with incredible and enterprising people, filled with an entrepreneurial spirit. Be they bartender or team owner, or transient journalist, I often get a real education into their psyche:  those either out of the workforce, those trying to get into it, those trying to change the course of their lives or most sadly, those who have recently been forced to leave (laid off, company downsizing or out of business) and who desperately want to be in it, in some capacity.

One such memorable conversation was with an amazing young man on a flight home from Minneapolis. He was an insurance salesman who was trying to break into the burgeoning food truck scene in Kansas City.  He was an attractive, confident person who had amazing ideas and presented himself as a well-educated man, and would do well at anything he set his mind to.  But he had decided to jump into something he didn’t know a lot about except that he was great at cooking and wanted to be out of the rat race and into his own business.

I am not an expert, especially in food service.  But I grew up in a family business and have always worked closely with business owners and told him that I was willing to answer any questions he might have about starting up a business. So from seat 14A and 14B, we made a checklist and talked about what he wanted to do. I figured I’d set down with you and share with you some of that knowledge.

The basics are the same whatever kind of a business you may want to start.  But how do you proceed from an idea to actually making it happen?   As a farm girl, I use the analogy of planting a field.  You use relatively the same techniques and fundamentals to plant each crop, but remind yourself, like crops, all businesses are different.  So you must be flexible to change your methods to suit a whatever “crop” it is you want to harvest. It is the same for business.  Here are some of the things I advise people to do if they want to get into their own business.

1. Be Honest with Yourself – How badly do you want this? What’s your competition like? Can you compete? How will you differ enough to not look like a copycat of your competition?   Will you need to hire employees? Can you manage people without being taken advantage of?   Are you self-motivated and can you motivate others?  (If not, stop right here.  If you can’t motivate yourself, you belong working for someone else. Seriously.) Will you need a store or office location or can you do all of this at home?  Answer all of these honestly, before you even pull out the pencil and calculator to start making up a budget or crunching numbers.   After the end of a day, will you still be passionate about what you want to do?

2. Don’t Quit Your Day Job – If you are presently working, stay where you are at until you have time to research fully your idea, develop your goals, and explore the viability of the business. Don’t attempt to do it while you are on your regular job as it may be grounds for termination. Make sure you can pay your bills. Not just the business bills, but your day to day living expenses. Unless you have a spouse or significant other who is willing to support you in your venture, and foot all of the bills, you need to stay working at your day job.

3. Figure out your money – You must sit down and do a business plan and a prospectus for your idea and your business. You MUST have an idea, even if you aren’t asking for outside investment, as to what this operation will cost. Don’t even think about the potential profit. Don’t count those chickens before they hatch. It takes (or can) up to at LEAST year two to make a business profitable, and then sometimes, 5 years or more. This is a cold hard fact of starting most businesses is that often people fail to do this homework and end up finding out –SURPRISE!- They didn’t realize how much it was going to cost!  These very hard numbers may give you a wake-up call as to whether you even want to go forward.  Write down everything, including the cost of light bulbs and toilet paper. Seriously, write down every filing, tax, permit, and cost you can think of. It sounds stupid but those things are all part of your business plan.  Be honest with yourself and, if anything, overestimate.  It will give you a financial cushion that you may need down the line. Sourcing and costing all of this out will take time so please see Item #1.

4. Always pay your bills – Make sure that before you spend a PENNY on restocking, that you’ve paid your bills. Electricity, insurance, water, rent, phone, etc.

Speaking of bills, operating without insurance is STUPID. INSURE YOURSELF, your business and your stock!

5. Learn the most important word in the English language – “NO”.  One of the biggest challenges most small business owners face is spreading themselves too thin.  People will ask you for donations, for favors, and more. NO. This does not make you a bad person, just a conscientious business owner.

6. Ignore the critics – One of my favorite sayings is something my father always instilled in me: “Never pay attention to those who will tell you that something cannot be done or that it will never work.  They will be the same people that, once you are successful, will say they knew it would work all the time.”  He was so right.  Believe in yourself, focus on the goal and ignore those who have no skin in the game.  Often people want to see you fail because they do not have the courage to take the risk. Don’t misunderstand.  There will be days that you will feel like just throwing in the towel.  But, in order to be successful, remember it isn’t how many times you are knocked down.  What matters is how many times you get up.

7. Social Media. – learn it. Do NOT rely on someone else to do it for you. Instagram, Facebook, Snapchat, Youtube, all of it. Learn it. Live it, use it. This is going to get you new customers!

8. Remember your roots. Do not take anything for granted. Those people who invested in you, in your business. Those people who listened to you rail and bitch about how unfair life is, and who also celebrate your victories when you have a great day, BE THANKFUL FOR THEM!

9. You can’t fix everyone. I’m telling you, that as a small business owner, people will come in with every sad story imaginable. You are NOT responsible for everyone, you can’t fix everyone, and trying to do so will drive you crazy. At some point, you will have to show these people to the door, politely and wish them all of the best. You’re running a business, not a counseling center.

10. Don’t sweat the petty stuff. There will be petty stuff. Someone will be mad that you don’t carry 7,000 types of incense when you carry 6,000 already. Someone will be upset that your herbs are from local, organic sources and they’re not from some exclusive XYZ warehouse. (I kid you not) These are petty, petty things.

11. Check your Credit. Vendors (for the most part) will NOT extend you credit, NO ONE will extend your business credit until you’ve been in business at least one year. Make sure your personal credit is above average. Work on it constantly. FILE FOR a D&B (Dunn and Bradstreet number!) The number is free. DO NOT PAY for their services! Waste of time!

12. Network. Find other similar businesses, close small businesses. Build a network.

13. The Tax Man Cometh – Keep immaculate records. Of your inventory, your receipts, your sales receipts, your purchase receipts. Invest in quickbooks and a scanner. You have state, local, federal, employment and sales tax. Keep RECORDS. And keep them for up to 10 years.

Good luck, keep the faith and, as long as you have your head above water, remember the famous words of Winston Churchill; “Never, never, never give in.”

 

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