I’ve gone through this with at least two or three different family members. They hit on the idea of turning their hobby or interest into a money-making proposition, and turn to me ostensibly to see how it sounds.
But as soon as I start asking a few (what I think are) common-sense questions, they start getting angry or pouty and feel that I don’t support them. I suppose part of it may be my attitude or tone of voice–I might come across as a bit challenging (but still respectful, of course), asking how are they going to find startup capital, who’s their competition, what are their financial goals, etc.
At first they’re kind of hand-waving, “oh, I don’t know the details yet, I’ll figure that out somehow” and then start talking about how much fun it will be to do such and such and the people they’ll meet and the pretty office they’ll set up. But when they come to me again for validation, and I ask the same questions and they still don’t have answers, then they get upset and imply that I don’t care about them as a family member.
Oh yeah, all the time. It’s basically part of my job.
Here’s how to do it.
Dispassionately set forth all your concerns and reasons you think it may be problematic.
Listen to them tell you how you’re wrong.
Say “O.K.!”
You don’t have to get into an argument with them about it. In any case, I know I’m not God, and they might actually be able to pull it off, who knows? You’ve given them the benefit of your knowledge and experience - whether they choose to listen is entirely up to them.
I have one friend in particular who’s had some “brilliant” ideas to “get middle class quick”: a catering business that doesn’t involve cooking but delivering food to a tent set up in a park, or a T-shirt business (that he doesn’t quite understand already has a zillion established competitors for silk screening and Cafe-Press to contend with for original designs) or currently a “do it yourself debt collection” sideline that frankly I think is the ultimate in hypocrisy considering he’s always avoiding his own creditors (which he thinks qualifies him well because he ‘knows the tricks’ [but as I’ve told him ‘you also know you can’t bleed a stone’]). The most frustrating thing is that this is an intelligent guy.
One thing I’ve used with him is the same thing I used with a friend who wanted to sell AmWay: the "Yes, there’s money to be made, BUT only if you’re willing to absolutely work your ass off like you’ve never worked before for any employer (i.e. those ‘Now I lounge by the pool all day playing with my dachshunds and work 3 hours a week selling crap on e-Bay’ commercials are “results not typical” and total bullshit)… A lot of otherwise bright people seem to actually think self-employment means you work less and make more money when anybody who’s ever been self employed knows that it’s 100 hour weeks plus no benefits plus the threat of financial ruin hanging over your head at all times until you have a profitable business (when you can perhaps drop down to 80 hours per week).
The best luck I’ve had is showing them the tax forms and filings necessary for self employment. Taxes scare people a lot more than anything else for some reason.
How serious is the family member about this idea? Often people get excited about a fantasy and will talk about something they really will never follow through on. In those cases, it’s really not your place to shoot holes in their dream balloons. Just say, “That sounds interesting. I’d like to see your business plan when you finish it.” and then change the subject as soon as you politely can.
This response works on two levels. 1. You get to sound supportive. 2. It reminds said family member that a business plan is necessary so you get to be helpful and realistic at the same time as being supportive.
If said family member ever shows up with a business plan, follow through and read it. This is when you can ask questions. Luckily, the act of writing a business plan forces the planner to think about all those little nit picky things anyway. You can sit back and help them finesse a few things and refer your now better prepared family member to a local service for small business planning. (Our community college has a small business center that offers classes for a small fee and free one on one advice on certain issues. You may have a similar service in your area.)
Basically, you don’t have to be the wise, worldly family member. They’ll find out soon enough if their idea really isn’t workable.
Having read The Millionaire Next Door, it’s kind of amazing to me what will fly. However, what it mainly needs to fly is a huge heaping helping of hard work and some time. Of course, the idea does need to be basically sound. But at least from what I see the failures are more in execution, or having no idea about execution, than the ideas themselves. Someone probably could make a middle class living doing no-frills catering or making t-shirts. But it would be blood, sweat, and tears.
So I try to take the approach, yeah, that could work if you … and point them to real resources like others mentioned. And if the idea of finding some books about the topic and reading them seems too hard, that’s very much not a good sign.
Not exactly a business idea per se, but I once has a Japanese client who wanted to bring out a product for sale overseas called suky suky (cosmetics). Can you imagine how uncomfortable it was to explain to him and his wife why they shouldn’t do that?
Three words: “Seven minute abs”. If you don’t like it then step into my office because you are fucking fired. (Obligatory “There’s Something About Mary reference”).
Well, I knew some people who talked about opening a brewing supply store just at the peak of the hobby, when there were already at least 8 local stores open (that I knew about).
I knew of people who wanted to open a local gaming store when there were local stores going under (because to them, that meant an opening in the field rather than thinking of WHY those stores were going under).
Over the years, I’ve known a few people who talked about opening a store, having employees, selling or doing miscellaneous crap. The one question I have for them is to ask if they think they can sell at least $20k per month of something with at least a 30% markup, or something equivalent to that. Then talk about all the expenses they’ll have in running a store that require such numbers. The (minimum) numbers usually frighten people off pretty easily. As do the hours required. No, you’re not going to hire people to run the place for a very long time, if ever. You’re going to bust ass 100+ hours a week. And when you DO hire people to work there, the first thought in your head had better be to ask yourself if you trust them to take care of your livelyhood while you’re off doing something else.
I haven’t had many friends come up to me with half-baked schemes. But regardless of the idea, if their answer to rational questions about financing, break-even points, marketing and whatnon is “you don’t care about me” or other emotional pleas, then business may not be for them.
It happens to me a lot, only because I set up my own business about 10 years ago and I know lots of people who would like to do the same. They come up with ideas, they ask me my opinion.
Over time, I’ve learned to tread a fine line. I never (or hardly ever) offer an opinion unless it is asked for. But if it is asked for, then sure, I give whatever views and advice I feel is appropriate.
I’ve also learned to ask people if they just want me to make encouraging noises, or to actually give an honest opinion even if it’s not what they want to hear. I say I’m happy either way, it’s their call, and it’s worth taking 30 seconds to think about the choice.
Whenever I talk about this sort of thing to friends and contacts, I always make it clear that no-one knows what works. To borrow William Goldman’s advice about what makes a movie successful: ‘No-one knows anything’. History is full of businesses that looked doomed to fail according to every rational criterion, but went on to be hugely successful. There are also plenty of stories that run the other way, known as “can’t fails that did”. Speculation and guesswork make poor substitutes for experience, and the only real way to see if an idea will work is to try it out, go on the adventure, and see what happens.
If you have strong reasons for thinking that a given idea won’t work, I think the best you can do is give your reasoning when asked for, liberally salted with tact and a sympathetic voice, and try only to speak from factual experience rather than give way to speculation, opinion and personal feelings. It’s always very helpful if you can explain why such-and-such an idea isn’t quite as clear cut as it may seem, or why there may be other factors and things to take into account. In general, people enjoy being given good information that might be important, and that they didn’t previously know about.
Not that exact thing, since it’s not my field of expertise, but it’s happened to my brother (the finance specialist); one of my reasons to decide that my own business idea appeared sound is that he did think it so, but I do not ask for the opinion of experts if I don’t want to hear it.
I’ve had people get all pouty on me when they did ask my opinion on something I happen to be an expert on and then either they didn’t like my questions or didn’t like my answers.
One of my best bosses gave me this gem of a line after my direct manager had gotten angry at me for doing what I’d been told (literally, “use your own criteria and don’t bother me”): “when I delegate, I delegate! You can’t tell someone else to do the job and expect them to do it like you would rest lost as she stormed into his office and closed the door”
To that I add, “when I ask for someone’s opinion, I want somebody’s opinion.” Many people ask for other’s opinions when actually all they want is pats in the back, thus if your opinion doesn’t equal that pat, they get pissy.
A lot of people just simply never run the numbers through their head or on paper to realize how much money it would take and if you could even pay yourself a salary.
My wife is pretty creative and can sew. She had a co-worker pay her to make a Ren-Faire costume for him. The guy loved it and said she could start a business doing it and he had an endless client list for her. It sounded nice but in reality it could never come close to matching her 9-5 $50K/yr. office job.
After figuring out what her current job gave her (a consistent $960/week, 3 weeks paid vacation, 401k matching, affordable healthcare) there was just no way a work from home costume business could turn a $960 profit consistently week after week.
So instead she does it on the side, at her own pace, picks her own clients, and turn out about 3 costumes a year and makes about $300.
Back during the dot-com bubble, my company used to help clients write their business plans. Most of them didn’t have the slightest idea of what it took to get an idea to the business stage. One time after declaring for the zillionth time that the client was doomed to fail, my boss said to me, “Okay, you’ve told me why it won’t work. Now tell me what they need to do to make it work.”
After that I started framing my criticisms in the form of helpful suggestions. “Let’s put in more detail about how much you have in startup financing. Be sure and list the suppliers you have established lines of credit with. Tell me where you’re going to get the flying monkeys that will come shooting out of your ass before you turn a profit…”
So never, ever, be the one who asks the question that will burst their balloon. Instead, frame every concern as a helpful suggestion. “A sex shop in the mall? Sounds great! Fetishwear gets what – twice the markup of regular clothes? Three times the markup? Be sure and explain that to your potential investors when they ask about how much rent you’re willing to pay.”
My mom always gets hooked by my aunt for stupid business ideas. I’ve tried in the past to let her know they wont work and tried to get her to look back on her failures but she never listens she just started a new business a couple of months ago and she won’t even give me the details.
My dad on the other hand is normally pretty rational but he is looking at starting up a consulting business as a job for his retirement when I started to talk to him about his business plan he didn’t have any answers and mainly was just happy that he had printed up business cards and bought a domain name (that he was going to let my realtor aunt design). I think he can make money doing it but trying to get him to think it through is difficult he’s still at the early stage of seeing easy money.