Starting a small business – Social Entrepreneur


“I want to make the world a better place.”  “I only buy Fair Trade products.”  “I want to contribute X amount of my profits to XYZ charity.”  I am a newbie to these kinds of businesses.  As a misanthropic curmudgeon, I try to maintain an open, however skeptical, mind to these business models.

If you’re interested in this business model, check out lifeoutofthebox.  This is a young couple in Nicaragua selling handmade goods and suing some of their profits to supports schools in the country.  They are very passionate about their mission and I wish them the best.  I’m hoping that they start selling belts soon.

Listen, businesses run on capital (which can be synonymous with cash).  No capital means out of business.  I like to believe that every business, in its own way, is trying to make the world a better place.  But you MUST make a profit to stay in business (or you’re just a private foundation giving all your money away). Profit is just an addition to capital measured over time – like a space time continuum.  Profits are not bad or evil.  They are only a measure of success for your business.

Businesses must be run in perpetuity and you must plan for that perpetuity.  Just because you had a profit in March doesn’t mean you’ll have a profit in April or ever again.  That’s why profits are important.  They guarantee the continuity of your enterprise.

At some point, I’ll do a post on not-for-profits and how they are generally a bad idea.  I believe it is far better to generate a profit through hard work and then freely give that profit, or a portion of it, to a charity.  I’ll call this the Carnegie method.  So, by all means create your social entrepreneurship but run it like a business and plan on making a profit.  Add a line for charity in your budget and hold yourself to it.  Or, amass as much wealth as possible and give it all away like Andrew Carnegie did.

 

 

Starting a small business – Marijuana


A few more states legalized possession of marijuana.  Check out this map – I can’t verify the information.  But it looks like legalization is gaining momentum.  Does this mean that you could start a marijuana business?

Farming sucks.  You need arable land, water, seed, fertilization, a strong back, hanging barns and security.  (I’m basing this on local knowledge of tobacco farms.)  You need to know what you’re doing and do it everyday.  Once, you grow it, how would you distribute it – straight to consumers, through dispensaries, etc?  Farming sucks – 20 hours a day of work and you can’t tell anyone about it.

Manufacture supplies and peripherals?  Do you know anything about making paper, blowing glass or making pottery?  It might not be enough to make a profitable go.  You’ll find too much competition on paper unless you can make organic, bleach free, etc paper.  How will you distribute the products?  Potentially, you could start a web based store for peripherals but you’ll find lots of competition.

Regulation will eventually kill you.  Shortly after legalization will come regulation.  (If it makes money, tax it.  If it keeps making money, regulate it.)  We have a huge, permanent bureaucracy in this country that is always looking to expand.  Do you think the FDA and ATFE and related agencies won’t get involved?  Do you want to compete against Pfizer or Monsanto (probably not)?

How about downstream?  Could there be pot specific munchies that you can make and distribute, especially with Hostess’ demise.  How about providing a safe place for people to consume their product?  You could teach how-to classes for wannabes and newbies.

I don’t see it as a winner unless you find a niche.  As it becomes more mainstream, the Big Boys will enter and crush you.  Good luck.

 

Strategy for innovation – Society and Culture – AEI


Strategy for innovation – Society and Culture – AEI.

I think this is all crap.  Innovation shouldn’t be affected by government.  While I agree that government should get out of the way, I believe that innovation needs more private capital.

Let’s go outside the box.  Let’s introduce a 3% annual wealth tax on all accumulated wealth over $10 million.  At the same time introduce a new R&D wealth tax credit that offsets the new wealth tax dollar for dollar with each dollar invested in R&D, software development excluded.

Private capital has been misallocated for decades now.  Job growth and real GDP growth will depend on actual, tangible production.

 

Free Business Plan Review Offer


I must be crazy.  On April 16th, I posted an offer on Craigslist for a free business plan review.  I wouldn’t write it for you but give you creative criticism from the point of view of a potential investor or loan officer while also testing the feasibility of the plan.  There were NO takers.  I didn’t promote it and Northwest CT doesn’t get much traffic.

So, as part of my goal to help 1000 businesses in 2013, I’m reopening my offer to review your business plan for free.  I will sign any confidentiality agreement that you’d like.  I will review it for both feasibility – do the numbers make sense – and the likelihood of getting funding for your business.

This isn’t an offer to write a plan.  It isn’t an offer for funding.  I just want to help you be successful.  I won’t try yo sell you anything.  Email me at 2013smbizsuccess@gmail.com for more info.

 

Starting a small business Part 9


How much money do you need to start a business?

How do you make a small fortune in the restaurant business?   Start with a large fortune.  That one kills at most CPA gatherings.

Lots, to answer my first question.  When starting a business, you need to figure out what you need including capital equipment, start up costs, working capital, safety margin.

Capital equipment includes all of the tangible assets that you need – machines, furniture, computers, phone systems, copiers, resource material, and so on.  Don’t forget Leasehold Improvements if you plan to rent space.

Start up costs include things like professional fees to get your business going, building a website, branding, first round marketing and anything else to get the business off the ground.  It can also include deposits for rent, utilities, etc.

Working capital in this sense means having enough cash to pay 3 months worth of expenses without any revenue.  You’ll need to plan out monthly expenses in your business plan financials.  You should have at least three months worth of expenses in cash.  It may take a while to get customers to buy from you and pay you.  Working capital also includes opening inventory and supplies.  You can’t fix a transmission if you can’t afford the parts.

Safety margin.  Things go wrong all the time.  Survival may rely of having a few more bucks put away to handle the problems or pay for things that you didn’t originally plan.

Make a list and get prices for each.  Add it all up.  Can you find the money to pay for this?