Author Topic: Please tell me your start up story!  (Read 3242 times)

JanF

  • 5 O'Clock Shadow
  • *
  • Posts: 87
Please tell me your start up story!
« on: January 05, 2018, 10:35:02 PM »
I'm trying to gather the courage needed to open my own business and I'm researching a bunch of things to make the best of it. I would like to hear how you started and where your business is at now to encourage myself :)
It would also really help me deal with real world situations if you can throw in some numbers in there.
- How much did your business cost to start?
- How long did it take to get it up and running? Particularly from when you start paying rent to opening day.
- How long did it take to profit?
- What was your biggest hurdle?
- What would you do differently?

SeattleCPA

  • Handlebar Stache
  • *****
  • Posts: 1226
  • Age: 58
  • Location: Redmond, WA
    • Evergreen Small Business
Re: Please tell me your start up story!
« Reply #1 on: January 05, 2018, 10:46:16 PM »
This blog post, which describes one of my own experiences, might be useful:

https://evergreensmallbusiness.com/six-common-formulas-for-small-business-success/

This other post, about what business failure really means, might be useful too:

https://evergreensmallbusiness.com/your-real-odds-for-business-start-up-success/
« Last Edit: January 05, 2018, 10:48:11 PM by SeattleCPA »

asauer

  • Pencil Stache
  • ****
  • Posts: 586
  • Location: North Carolina
Re: Please tell me your start up story!
« Reply #2 on: January 06, 2018, 03:22:29 PM »
Try it!  It's the best learning experience ever.  Short story- I'm a spending coach.  I help working moms break their spending habit.  I coach 1:1 for a 6 week program over Zoom conferencing.

How much did your business cost to start?   I had a year 1 budget of 5k which included marketing.
 
- How long did it take to get it up and running? About 4 months to break even and another 3 to start turning a profit.  Took about 5 months from idea to launch.

- What was your biggest hurdle?  Learning all the technology shit.  websites, blogs, ads, etc. Second was learning all the tax implications and processes.  Learning the marketing stuff wasn't tough and I already knew how to coach and design programs. 

- What would you do differently?  Hire someone to do the backend tech stuff.  I would have gladly used some of my budget for that.  Would have saved me about 2 months.

maizeman

  • Magnum Stache
  • ******
  • Posts: 2853
Re: Please tell me your start up story!
« Reply #3 on: January 06, 2018, 03:41:41 PM »
I'm trying to gather the courage needed to open my own business and I'm researching a bunch of things to make the best of it. I would like to hear how you started and where your business is at now to encourage myself :)
It would also really help me deal with real world situations if you can throw in some numbers in there.
- How much did your business cost to start?
- How long did it take to get it up and running? Particularly from when you start paying rent to opening day.
- How long did it take to profit?
- What was your biggest hurdle?
- What would you do differently?

I've been lucky enough to be involved in three startups so far. Let me tell you about the first one.

- How much did your business cost to start? Our total starting capital was $25,000, which all of us founders contributed to. A lot of that went to buying a couple of very nice (at the time) servers, plus rent and travel to a couple of conferences in the field to drum up business.

- How long did it take to get it up and running? Particularly from when you start paying rent to opening day. We had our first customers before we rented our first office (it was actually people saying "hey can we pay you to do this" which made us realize we might have a business opportunity on our hands).

- How long did it take to profit? The first two years we made small profits on paper, but the founders were doing almost all of the work for free so was really profit (as opposed to a part time second job) in name only. Year 3 revenue kicked up a lot, and we were able to hire full time folks to do the actual work, so profits from that point on were actually profit.

- What was your biggest hurdle? Scaling. When you're already feeling overworked just trying to keep up, and frustrated that you're not making much money for all the hard work, it's hard to commit both extra time and extra money on top of all that to develop automation and hire new people so that six months down the road your workload won't be as bad.

- What would you do differently? Be more flexible about pricing. One of my cofounders really really hates the whole dog and pony show of "list price of X, currently on sale for 60% of X." But in reality, there were times when we had too much business and had to turn people away. There were other times when we had a lot of capacity sitting idle, discounting our prices a bit to bring in more business would have lead to a lot more cash flow (since all the fixed costs of building up our capacity were already paid).

where your business is at now Profits started low, shot up for a while, had a scary decline and are now relatively stable. I doubt startup #1 is ever going to get acquired, but I don't see it going out of business anytime soon either (*fingers crossed*). After an awful lot of pain and suffering we really do have either employees or automated systems in place to handle almost everything (except when things break in interesting ways), so I think we've managed to avoid the trap of creating a lifestyle business that sucks up a lot of the founders' time and attention without paying out any more than they could get working a regular 9-5 with a lot less stress.

JanF

  • 5 O'Clock Shadow
  • *
  • Posts: 87
Re: Please tell me your start up story!
« Reply #4 on: January 07, 2018, 01:10:54 PM »
That's really interesting, thanks for your insight! I'm trying to open a poke bar/restaurant so the start up cost is lower than a traditional restaurant but it's very daunting since I finally became debt free last year and now I'll have to borrow money for my business.
My biggest hurdle right now is putting together a business plan and I'm having a hard time dealing with numbers in the 5-6 figure zone since I've never dealt with numbers that big before.

SC93

  • Pencil Stache
  • ****
  • Posts: 618
Re: Please tell me your start up story!
« Reply #5 on: January 07, 2018, 03:01:12 PM »
Nooooooooooooooo don't borrow money!!! A million people might say it's ok, people borrow money every day and succeed. But for every 1 that borrows and succeeds, there are 1000 or more that don't succeed. The odds are, you are NOT that 1.

maizeman

  • Magnum Stache
  • ******
  • Posts: 2853
Re: Please tell me your start up story!
« Reply #6 on: January 07, 2018, 03:36:26 PM »
That's really interesting, thanks for your insight! I'm trying to open a poke bar/restaurant so the start up cost is lower than a traditional restaurant but it's very daunting since I finally became debt free last year and now I'll have to borrow money for my business.
My biggest hurdle right now is putting together a business plan and I'm having a hard time dealing with numbers in the 5-6 figure zone since I've never dealt with numbers that big before.

I had to google what a poke bar was. Is this the hawaiian dish? (My mind originally went somewhere else.)

Storefront business are hard. Lots of upfront costs (rent, remodeling, permits, hiring staff), extremely competitive which leads to relatively high failure rates, and best case payoff is good but not big enough -- generally -- to attract equity investors, so you're probably looking at loans you'd be personally liable for if the business cannot cover them. To me that sounds like a rather scary prospect, particularly if you've just clawed your way back to a positive net worth.

I don't have first hand experience with the restaurant/bar business, but maybe someone else with a little more experience can speak up?

Anyway, I wish you the best of luck.   

nara

  • Stubble
  • **
  • Posts: 186
Re: Please tell me your start up story!
« Reply #7 on: January 07, 2018, 04:45:28 PM »
We started our business slowly with no upfront start-up costs. I worked as a contractor for several years until I was able to build up my own caseload to work entirely for myself. My husband was the first employee of the business. We didn't have an office space at first and we never took large risks. We were profitable immediately and this has increased significantly every year. We leased an as-is office space for one year. We were able to increase our client load to account for the rent so that our profits never dipped. After several months, we asked to expand our office space into one of the two empty offices next door to us without lengthening our lease. We were able to take on even more clients to account for the growth and we then expanded our office a year later and underwent a complete remodel which required us to extend our lease to 3 years. We've grown to include 7 full-time employees. We've had a lot of hurdles along the way (we deal with insurance which makes it hard to diversify when there are difficulties or lapses in payments) but I think one of the biggest ones is taxes. Our accountant messed up and now we owe about 50% of 2017's taxes in one quarter. You need tons and tons of money, especially as you grow because your expenses are so enormous--but I think it's very doable to start a lucrative business without investing tons of money up front or taking lots of risks. You just need a real good accountant, business adviser, and a huge business emergency fund.

Papa bear

  • Pencil Stache
  • ****
  • Posts: 756
  • Location: Ohio
Re: Please tell me your start up story!
« Reply #8 on: January 07, 2018, 04:48:36 PM »
That's really interesting, thanks for your insight! I'm trying to open a poke bar/restaurant so the start up cost is lower than a traditional restaurant but it's very daunting since I finally became debt free last year and now I'll have to borrow money for my business.
My biggest hurdle right now is putting together a business plan and I'm having a hard time dealing with numbers in the 5-6 figure zone since I've never dealt with numbers that big before.

So a very well off guy I know, he started a restaurant. Absolutely fantastic food and location. He had a lot of experience in starting businesses as well. The advice he gives is this:

do you want to know how to make a small fortune?

Take a large fortune and open a restaurant.




Sent from my iPhone using Tapatalk

JanF

  • 5 O'Clock Shadow
  • *
  • Posts: 87
Re: Please tell me your start up story!
« Reply #9 on: January 07, 2018, 05:01:33 PM »
So a very well off guy I know, he started a restaurant. Absolutely fantastic food and location. He had a lot of experience in starting businesses as well. The advice he gives is this:

do you want to know how to make a small fortune?

Take a large fortune and open a restaurant.



Thank you. I don't know whether to laugh or cry hahaha

Quote
I had to google what a poke bar was. Is this the hawaiian dish? (My mind originally went somewhere else.)

Yes, think subway version of sushi rice bowl. They're delicious.

I'm fairly confident that this will work out. Since it's take out style, I don't need many employees to man the place. There's only 1 thing on the menu and only a few things are "fresh food" so I have lower food waste. And there's no other similar concept in the area but there is a demand for it.

As for financing, I have 15K in the emergency/house fund but I don't want to use it. I'm also planning on borrowing from my family.

maizeman

  • Magnum Stache
  • ******
  • Posts: 2853
Re: Please tell me your start up story!
« Reply #10 on: January 07, 2018, 05:21:04 PM »
I'm fairly confident that this will work out. Since it's take out style, I don't need many employees to man the place. There's only 1 thing on the menu and only a few things are "fresh food" so I have lower food waste. And there's no other similar concept in the area but there is a demand for it.

I'm not trying to talk you out of it, but how have you quantified the amount of demand you expect? Have you figured out what your price point/profit margin is going to be? Setting prices is one of the hardest decisions to make before you open. It's extremely hard, if not impossible, to significantly raise prices without ruining your relationship with your customers if it turns out your restaurant is popular but your annual burn rate ends up being higher than expected. But if your initial prices are too high a lot of the apparent demand may fail to materialize.

Quote
As for financing, I have 15K in the emergency/house fund but I don't want to use it. I'm also planning on borrowing from my family.

Loans from friends and family are good if they understand the risk of what they are getting into. If they don't understand and accept the risk, accepting loans from family can risk destroying relationships that are going to mean a lot more to you long term than the business itself.

It's probably worth reading through this article (posted on the forums a couple of months ago) about how opening a restaurant can go horribly wrong: https://torontolife.com/food/restaurant-ruined-life/ Again, the moral here isn't "don't start a restaurant" but "know when to cut your losses and make sure you never get so far in, financially or emotionally, that you cannot walk away if it isn't working."

JanF

  • 5 O'Clock Shadow
  • *
  • Posts: 87
Re: Please tell me your start up story!
« Reply #11 on: January 07, 2018, 06:14:59 PM »
Quote
Have you figured out what your price point/profit margin is going to be? Setting prices is one of the hardest decisions to make before you open. It's extremely hard, if not impossible, to significantly raise prices without ruining your relationship with your customers if it turns out your restaurant is popular but your annual burn rate ends up being higher than expected. But if your initial prices are too high a lot of the apparent demand may fail to materialize. 

I have to work out the number in greater details but the short answer is yes. For the poke bar most places have a similar set point and after my own math it makes sense ti set it at a similar point. The area  I'm looking at is surrounded by offices, apartments, and anchored by costco and walmart so there's lots of traffic and a potential to have a delivery service in the future.

SeattleCPA

  • Handlebar Stache
  • *****
  • Posts: 1226
  • Age: 58
  • Location: Redmond, WA
    • Evergreen Small Business
Re: Please tell me your start up story!
« Reply #12 on: January 07, 2018, 07:35:27 PM »
do you want to know how to make a small fortune? Take a large fortune and open a restaurant.


FWIW, we have some restaurateurs as clients and some of those guys can do really well. Therefore I would say, as is case with other business categories, you need to know (or learn) what you're doing.

I've pointed out in many posts here that most small CPA firms also perform pretty blah... but the top performing small firms can do really well.

SC93

  • Pencil Stache
  • ****
  • Posts: 618
Re: Please tell me your start up story!
« Reply #13 on: January 07, 2018, 10:26:04 PM »
I started a residential cleaning business with $3.17. I made more than most will in a lifetime. I've started MANY.... MANY businesses and have never spent over a few thousand dollars. I could spend $100,000 to start a business tomorrow but why put that much money at risk?

Why put your GREAT life at risk borrowing money? Is it really worth it?

mustachedali

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Please tell me your start up story!
« Reply #14 on: January 09, 2018, 12:05:42 AM »
I'm trying to gather the courage needed to open my own business and I'm researching a bunch of things to make the best of it. I would like to hear how you started and where your business is at now to encourage myself :)
It would also really help me deal with real world situations if you can throw in some numbers in there.
- How much did your business cost to start?
- How long did it take to get it up and running? Particularly from when you start paying rent to opening day.
- How long did it take to profit?
- What was your biggest hurdle?
- What would you do differently?

In my opinion it sounds like the issue is more of a mindset change. You can start as small as you like or as large as you like and mistakes and successes will come from it - it's just part of the job. Why not start with a small, easy low cost business to get yourself into the flow if starting something is stopping you?

JanF

  • 5 O'Clock Shadow
  • *
  • Posts: 87
Re: Please tell me your start up story!
« Reply #15 on: January 13, 2018, 01:36:46 AM »
Quote
In my opinion it sounds like the issue is more of a mindset change. You can start as small as you like or as large as you like and mistakes and successes will come from it - it's just part of the job. Why not start with a small, easy low cost business to get yourself into the flow if starting something is stopping you?

Because in all honesty, I'm not confident, skilled, or creative enough to get into most of them. I've looked through lists of businesses that I can start and none of them resonate with me...which means I'll give up on it. This is the first business idea I had that clicked with me and I felt confident that I can succeed. The risks and start up cost isn't so high that it scares me from trying to make it happen. I did the math and I'll need about 50K and I think I can get 50-75% from savings and family which means the amount I need to borrow is less than 25k...I graduated college with more debt than that and managed to pay it back.
My mindset is set :) I just like hear to hear positive and encouraging stories to keep myself going!

SC93

  • Pencil Stache
  • ****
  • Posts: 618
Re: Please tell me your start up story!
« Reply #16 on: January 13, 2018, 10:35:16 AM »
You are 110% NOT ready to start your own business.

JanF

  • 5 O'Clock Shadow
  • *
  • Posts: 87
Re: Please tell me your start up story!
« Reply #17 on: January 13, 2018, 12:22:25 PM »
You are 110% NOT ready to start your own business.

Gee thanks. I guess I'll go back to being a minimum wage corporate slave then!

SC93

  • Pencil Stache
  • ****
  • Posts: 618
Re: Please tell me your start up story!
« Reply #18 on: January 13, 2018, 09:52:49 PM »
You do not need to get in to the real world of business until you can handle it. If you want all butterflies and unicorns, business is no place for you. Especially the type of business you want to open. You would be ready to close up shop after the first 15 minutes of being open. I know very experienced people that have a TOUGH time with any type of food/drink establishment. My buddy had the money, a customer base and a boat load of mentors in the same business and it still took him 5 tries before he succeeded. Will you ever be ready for business? That depends, but I know you aren't at this time. Am I hurting your feelings? That depends.... you are hurt now but if you waste your money on this business you will see that I was being honest and not treating you like a child that only wants to hear positive things. There are few rainbows in that type of business. There is nothing negative about my comments, this is the cold hard truth.... do not waste your money and put the rest of your life through hell for this. Hate me or what ever you want to do.... I'll take it to not have you put yourself through hell.

Carrie

  • Pencil Stache
  • ****
  • Posts: 602
Re: Please tell me your start up story!
« Reply #19 on: January 13, 2018, 10:15:45 PM »
Have you worked in the food service business before? Do you have anyone you could shadow for a while to get an idea of the process involved?
Are you a good cook? Do you have superb recipes? Have you ever cooked for a crowd, under a time limit?
I have no advice, but these are questions I would have.

BlueHouse

  • Magnum Stache
  • ******
  • Posts: 2750
  • Location: WDC
Re: Please tell me your start up story!
« Reply #20 on: January 14, 2018, 05:24:56 PM »
Why don't you start making the food in your home, and selling it to small stores, construction sites, diners, etc.? 

My mother started baking cakes at home and bringing them to restaurants to sell.  She didn't have a business license, she didn't have any experience.  (She also didn't have any health inspections, etc.)  The start up costs were the ingredients.
Here's how she did it. 
She started with one recipe - a cheesecake.  She cooked a few cheesecakes, then went to a couple of different diners and high-end restaurants.  All of them said no.  So she told them to keep the cake, eat it themselves or sell it if they wanted and that she would return the next day to pick up the cake plates.  She also took out a piece of paper for them and showed them the math.  Split the cake into x pieces, sell each piece for $x.  Whole cake sells for $x, pay my mom $y each cake.  As long as you sell 1/2 the cake pieces, then the restaurant makes money for NO EFFORT. 

On the second day, when she picked up the plates, every single restaurant asked for more and started (very loose) business agreements with her.  It was basically a cash business.  As soon as the restaurants realized how easy it was for them, they started asking what else she could bake.  After the first month or so, she had 5 or 6 items that she made for 7 different restaurants.  She delivered some pretty fancy desserts in our family station wagon! 

It was incredibly difficult though, especially because she didn't have a commercial kitchen. 

So I would start at home, under the counter, see if you like it, and see if people like what you're making.  If you find someone that likes what you make, you may be able to work out a deal to use their commercial kitchen in off-hours to pre-make some food. 

Lots of different ways to get started without jumping into starting a new business with which you may not yet be prepared. 

calimom

  • Pencil Stache
  • ****
  • Posts: 723
  • Location: Northern California
Re: Please tell me your start up story!
« Reply #21 on: January 16, 2018, 09:36:01 AM »
That is a great story, @BlueHouse !

tralfamadorian

  • Pencil Stache
  • ****
  • Posts: 899
Re: Please tell me your start up story!
« Reply #22 on: January 16, 2018, 01:54:51 PM »
A poke bar just opened last week near me- great location, attractive storefront/interior. It was 100% empty while the thai restaurant on one side and the sushi restaurant across the street were both completely full. I imagine the food costs at a poke bar would be very high- sushi grade seafood doesn't keep and is expensive.

mustachedali

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Please tell me your start up story!
« Reply #23 on: January 18, 2018, 12:21:17 AM »
You are 110% NOT ready to start your own business.

Gee thanks. I guess I'll go back to being a minimum wage corporate slave then!

Honestly, I would meet up with biz owners in your network for mentoring and support. Good luck!

BlueHouse

  • Magnum Stache
  • ******
  • Posts: 2750
  • Location: WDC
Re: Please tell me your start up story!
« Reply #24 on: January 24, 2018, 11:39:52 AM »
That is a great story, @BlueHouse !
Thanks Calimom!  I baked a few desserts when I was in college and it was my third job.  It was exhausting and I didn't last too long doing it.  (maybe 3 months).  And then I gave up. 

Anyway, the idea to GIVE AWAY the product to prove it's worthwhile was something I'll never forget!