Entrepreneural Advice - What business to start?

October 30, 2012 2:38 PM

Advice Wanted: I'm a MBA graduate with 10 years of business experience and $50,000 in cash and am looking to start my own business. What would you do in my situation? Advice?

I currently live in Western Kentucky and am looking to start up my own business in Western KY, Southern IL, or around the St. Louis MO area. I've between $30,000 - $50,000 dollars cash on hand and the potential to raise up to $150,000 from friends and family if I have a solid business plan. I've a degree in Finance and am 80% through with my MBA. Since August of 2004 I've been working as a Financial Analyst, Business Analyst, Project Manager and Executive Assistant to the CEO and COO of a small education company. For several reasons I believe that I will be leaving current job in the next six months to year.

I've a wealth of general business information but no real niche. I'm either looking to partner up with someone who has the technical skills to complement my business skills or else I would like to go into business for myself. What would you do in my situation? Thanks!

posted by Paalen to Work & Money (21 answers total)

Only a fool risks his own money on starting a business. Despite the stories.

You say you have no real niche, but you must have a network from your current job. What niche is the bulk of that network in?
posted by mr_roboto at 2:48 PM on October 30, 2012 [3 favorites]

You don't sound very focused.

Come up with a list of potential businesses that you think you would enjoy starting and running.

Do market research on each one,

Determine what resources are required to start and run each one.

Develop a financial model for the most promising ideas.

Go with the one that (1) interests you the most and (2) seems like it would offer a return on your investment.

But, first, get more focused. Starting a business when you are as apparently unfocused as your question suggests is a recipe for disaster.
posted by dfriedman at 2:49 PM on October 30, 2012 [1 favorite]

Join a consulting firm that focuses on your strengths and see how much you like this world. It sounds like you haven't done any of the hustling/client building that is essential in this type of business, and risking your (and your family's) money on this right now doesn't sound like the best idea.

In a couple of years, when you learn how to develop your own clientele and know exactly what your area of focus is, then it might be time to start your own company. But not now.
posted by xingcat at 2:53 PM on October 30, 2012

Response by poster: Please know that I'm asking a very general question on purpose. I've spent the last 10 years developing very general business skill sets to complement a business partner with technical knowledge so that person can focus on the product or service while I run the business.

Also know that I've done research into many different businesses but I'm still learning and am looking for attractive areas to continue my research.
posted by Paalen at 3:03 PM on October 30, 2012

You have to find something you are passionate about. That is the only way you will survive the soul crushing hell that is starting a business. If you don't know what you are passionate about, don't start a business.
posted by COD at 3:11 PM on October 30, 2012 [6 favorites]

You have to find something you are passionate about. That is the only way you will survive the soul crushing hell that is starting a business. If you don't know what you are passionate about, don't start a business.

I cannot reiterate this enough. I'm 3.5 years in and it's great and wonderful and I'm very lucky and also some mornings I want to stab myself in the face instead of plodding through one more day. If it weren't literally 1. something I loved and 2. THE ONLY THING I KNOW HOW TO DO, it would never have happened. Oh also and 3. with business partners who were committed.
posted by RJ Reynolds at 3:29 PM on October 30, 2012 [2 favorites]

Nthing the passion thing a bajillion times. I'm 8 years in and going mostly strong because I have a lot of passion for the field and for the changes that I hope I'm making in it. I would also strongly recommend looking for an online business rather than one that depends on a local economy. Not only does being online protect you from local economic pain, it gives you a lot of freedom. (As I type this, I'm in an air-conditioned cafe in a charming colonial city in the tropics.) Look for a service or, better, a digital product that you can provide online to people around the world who have deep pockets and who treat suppliers decently.
posted by ceiba at 3:39 PM on October 30, 2012 [1 favorite]

You have capital with the potential to add more investors, and you have an MBA. You could just start a capital-intensive but unsexy brick-and-mortar business like a laundromat or liquor store which provide a steady stream of income.
posted by deanc at 3:55 PM on October 30, 2012

Cat cafe.
posted by timsneezed at 4:15 PM on October 30, 2012

I'm trying not to be too negative but really the hard part of starting a business is not "running the business", the hard part is the product. You need to bring a lot more value to the table than just general business skills. So in general you should really look at this as YOU are starting a business and you're going to hire people to actually build the product - that you have defined that serves a market you have found.

Echoing what was already said, you need some focus. What type of business interests you? Retail or manufacturing?. Technology or traditional? There's just a bunch of simple questions you need to answer first to narrow the search down.

For example my starting point for my current business was - 'technology manufacturing' because that's what I know - then a focus on alternative energy and solar because I wanted to do something that (at least theoretically) would contribute to a solution for global warming. I ended up founding a chemical company that makes solar panels self-cleaning.

So once you know where you want to focus you need to uncover some existing problems. Some pain point that people will ultimately pay you to make go away. It doesn't have to be original, just meaningfully better that what already exists.
posted by Long Way To Go at 4:31 PM on October 30, 2012

Only a fool risks his own money on starting a business. Despite the stories.

That's one of the more asinine things I've read about business recently.
posted by alpinist at 5:07 PM on October 30, 2012 [3 favorites]

This is not a question you'll get an ANSWER for here. You'll get advice, suggestions, derision, misinformation based on the extremely limited info you provided.

To join in with that worthy process, let me say that partnering is easier with a mate than a business associate. At least you have love and sex to soften the conflicts. With a partner, unless you are starting the business I dream of starting! you have neither. All you have is the financial stress.

I have said it many times.... I'd marry people I wouldn't go into business with. No kidding.

Fifty grand will buy you a little SOHO assets, some various toys, a small salary for a brief time. If you really have 50K, and you are determined to do this, take 40 of it and put it in a CD you can't get to for 5 years. Play Businessman with the remaining 10k. If you lose it without making it back, you're no businessman and you've saved yourself 40k. Take 5 of that and send it to me for my sage advice.

Final comment... NOTHING HAPPENS UNTIL SOMEBODY SELLS SOMETHING. Go find a customer. That is job 1. If you master that, you have a reason to start a business. If you don't, I think you know what that implies.

SELL. Find a paying client.

The 50k is irrelevant.
posted by FauxScot at 5:32 PM on October 30, 2012 [5 favorites]

Your question just defined what perhaps you should be doing as a business. There's others in the same situation. Now you just need to figure out a method of getting the people together, maybe something like a dating site for entrepreneurs. Or maybe you can join this site.
posted by anon4now at 5:40 PM on October 30, 2012 [1 favorite]

A few suggestions from a person who has had his own business for 16 years:

1. If your partner has technical skills and you have general skills, that's still not enough because one of you needs to really know the particular business/industry/market you will be entering.

2. Find a niche. Find a niche. Find a niche. Don't try to go head-to-head with established players.

3. Make sure you write a detailed business plan. You can go over it for free with SCORE counselors. They also have seminars.

4. Find a mentor (or several), and have a formal or informal advisory board.

5. Make sure you develop sales/salesmanship skills.

6. Networking is incredibly important. Often things happen in business not because you are the smartest and best and not because all outcomes are the most rational outcomes but because you know someone.

7. Have a back-up plan in case you fail.

It's great that you have the ambition to be self-employed. Just make sure you are being realistic and you are well prepared. Good luck and feel free to MeMail me any other questions you have.
posted by Dansaman at 6:10 PM on October 30, 2012

You need a creative. I would talk to graduating students at art schools, architecture schools, and computer science or engineering departments. Someone is bound to have a clever idea but no idea how to get it off the ground. You are looking for people who are dreamers but don't have the initiative to start a big project from scratch.
posted by painquale at 8:14 PM on October 30, 2012

Response by poster: Thanks all! I'm interested in exploring all options available. That's why this post is so general; so I can explore various ideas others may bring to the table without pidgeonholing anyone with a particular set of ideas I have previously developed.

I have many passions but have always been a "jack of many trades" kind of person. Really, I love investing and have always been fascinated by how money makes money if it's used wisely.

Long run objective is develop a portfolio of assets with positive cash flows.

It might sound weird to others but my passion is just to by my own boss and work with a product where, if I put in the effort, time, talent and energy, I can be successful.
posted by Paalen at 6:38 AM on October 31, 2012

Honestly what is the attraction of working for yourself? Most people who own their own business work more hours per day, more days per week than a standard 9-5 drone, and they make less money and have more stress.

If you aren't passionate about what kind of business you'd like to own, and are relying upon someone with expertise, you are putting yourself in a vulnerable situation.

Think of this.

You go into business with a guy who is the best tractor repair dude known to man. You get lots of business, you do the books, marketing etc, and the dude repairs the tractors. You rake in the cash.

One day Tractor Repair Dude dies. Now his wife owns 1/2 of the business, she brings nothing to the table in the way of Tractor Repair Skills and now you have to hire a guy.

(This is one of the many valuable things I learned in MY MBA program.)

One thing you might think about is investing in cheap houses and then renting them out. But you'd have to be very good at managing property, so I'd see if I could get a job doing that first, training on someone else's dime, before investing MY money in such a scheme.
posted by Ruthless Bunny at 7:26 AM on October 31, 2012

Response by poster: Thanks for the reply. I understand what you're saying.

The attraction of working for myself is that I don't have to answer to anyone but my wife and God. I've personally seen and heard of too many horror stories where people give their lives to someone else's business only to get screwed over in the end. I have no problem working 12 hours days if I am the one to benefit from my success and hard work.

Please know - I definitely plan on developing the specific skills sets required to also be an asset in developing and working on the product or service. I just find that I'm more of a student of business and a jack-of-all trades kind of person where many aspiring entrepreneurs seem to have specific skills with little general business knowledge.

In your example, if I did choose to go into the tractor repair business I would first make sure that I was interested in tractor repairs and I would become a student of "Tractor Repair Dude" and if the dude was as good as you say then I'd be taking out a nice life insurance policy on my greatest asset! Once the wife came along then it would more than likely be time to sell out.

My MBA program hasn't been a failure. I'm just a very thorough person who likes to explore all options and using my weekly MeFi post to hear the hive's opinions is one step I chose to take in this exploration process.
posted by Paalen at 7:48 AM on October 31, 2012

Paalen, your skillset and background puts you more into the category of "executive for hire" who comes into small startups or other troubled businesses and puts them in order and gets them on track or ready for sale. You could team up with a venture capital or private equity firm and work with the businesses they invest in and transition to being a partner in the firm itself making the investment decisions.

People who are simply determined to "work for themselves" for its own sake generally just start the sort of standard brick-and-mortar businesses you can see on many street corners or get into real estate investing: things that take a lot of work and investment of personal time, require a fair amount of cash startup capital, and don't rely on highly specialized skills that you couldn't otherwise learn yourself.

It's highly unlikely that you will be able to go up to someone who has a lot of specialized skills and tell him that you should start a business together on the basis of your MBA and $50,000 in the bank unless you can bring something very tangible to the table in terms of customers or partnerships that a startup business can work with from day 1.
posted by deanc at 9:12 AM on October 31, 2012

Sounds like the best business for you is a consultant firm for other small businesses who need help managing finances and making a business plan. For that, all you need is a successful marketing strategy and a home office.
posted by Potomac Avenue at 9:18 AM on October 31, 2012

It sounds like what you're interested in is business and finance per se. In which it case it might make sense to start some kind of financial services or consulting company, perhaps aimed at small businesses, possibly via franchising. This list of financial services franchises may suggest some ideas.

One key thing that may be missing from your skillset is selling and negotiation. Be aware that getting a "technical" partner might well not cover that either, and it is typically much more of a challenge for new businesses to make enough sales and get actual paying customers than it is to do the work of making good products, delivering good service or operating the business.

On a related point, a word about the "passion" thing which has come up a few times in this thread. It's true that it's important that you have some kind of an emotional commitment to your business that will see you through all the ups and downs, whether that it because it's your lifelong dream to do that thing, or you are a driven soul, or some other reason. On the other hand I've seen plenty of people fail following their passions because their particular passion made no business sense. Make sure there is an adequate market, which you can service profitably, and that your offering has sufficient advantages to a sufficient subset of the market compared to the competition that you have a chance of capturing enough business to be viable.
posted by philipy at 9:20 AM on October 31, 2012