Tell me about starting your own sm biz

I’ve done some research already of course, but I wanted the smartest & most opinionated people I know to lay it on me - advice, warnings, checklists, anecdotes and opinions are all welcome.

I can go into details as needed but to cast the widest net, let’s start with generalities:

I can produce a commodity that’s locally in demand in a somewhat specialized market, and seems popular enough to support shipping nationwide if I want to add that option. For now this would be a home-based business.
I am in Texas if location-specific legislation is relevant.

Talk to me about inventory management, how to assess demand, factoring in costs such as my time & labor … the works.

tip-tapping away by phone, but why would you care?

Make sure you have capital put away to live on.

Former small business owner and consultant here.

First and foremost: how well do you know the industry? How are your connections?

Without knowing what you are doing it is pretty hard to comment. But just from my perspective as someone who has run small businesses most of his life the first thing that comes to mind is keeping over head under control. Example, instead of a 3,000 sq. ft. warehouse that might cost you 3 grand a month. Think more in terms of trans shipping or setting up to produce your good faster so you have less need for warehousing. Time management is another big one. Avoid doing $10.00 per hour jobs if you can make $100.00 per hour selling or marketing. Efficiency is a big thing in a small business. Your mental attitude is paramount, avoid getting behind on financial things and commitments, it will kill your spirit. My strongest point turned out to be my downfall because I carried it too far. I gave top priority to sales and marketing. As other areas of the business started to require more of my time I quickly trained someone to take it over. The businesses always grew rapidly as did my overhead, if for some reason my attitude slipped and my sales fell off the overhead would quickly start chewing me up. You need to find the balance.

I’m being intentionally vague about details simply to avoid poisoning the well. The commodity has the potential to incite irrational reactions in some people, or has potentially objectionable emotional connotations that tend to veer the conversation off-track.

Now that you’re imagining all sorts of nefarious schemes :smiley: think more along the lines of someone raising feeder goldfish, to sell to petstores or individual pet owners. (What? You don’t have your own pet piranha? You’re missin’ out, man.)

In that example, the convo eventually will most likely veer wayyyy of course by someone horrified at feeding a still-living animal to another animal and how that’s outlawed in such-and-such unrelated area … or how Petsmart or Petco or some other Evil Corporate Empire is awful so you shouldn’t sell to them … or how running your business commoditized living souls … or I dunno, why piranhas should convert to veganism.

Trying to avoid all that, and stick to (again for ex.) monitoring water quality data, marketing to hobbyists at exotic aquarium expos, and the pros & cons of glass fishbowls vs. acrylic both in terms of weight and maintenance costs.

tip-tapping away by phone, but why would you care?

What is a sm biz? Sado-Masochism? Social Misfit?

I went into business ownership fairly ignorant, got a PhD from the School Of Hard Knocks real quick.

Get yourself hooked up with SCORE as quick as you can. They were lifesavers for me, and taught me the value of accurate business plans, including giving yourself a living salary as part of your overhead.

For inventory and accounting, we use Quickbooks and it has worked a treat for us. As far as setting reorder points, etc., you’ll have to take a s.w.a.g. to start out with, then refine them as you build a history.

Local Chamber of Commerce is a good place to build business contacts. A very good contact to make would be a lawyer who can help you with incorporation and other things. And yes - incorporate from day one. We went Subchapter S, simply because it’s just me and SWMBO. That might work for you, it might not. Hence the lawyer.

Plow profits back into advertising to start out with. Later on, you can settle down to 10-15% of gross income as a rule of thumb.

Be prepared to have many, many sleepless nights. Good luck!

I can agree with this based on my experience, but… what about the early days before you HAVE any profits? That’s where I am now. My overhead is rock bottom, literally under $100/month, but my sales aren’t even high enough to cover that. I’ve been struggling with the decision to invest money in marketing while not knowing if I’ll recoup that investment or just lose my shirt. Definitely without any marketing, you’re not going to get sales. But knowing how much money to budget for marketing has been nearly impossible to figure out.

In my experience dealing with many aspiring entrepreneurs, the ones who play the most coy and are incredibly secretive about their ideas inevitably crash and burn. The ones who are hard nosed, pragmatic, lay it all out on the table and just treat it like another job do a lot better.

Hence the business plan to start with. It should have had an allocation for advertising to start with. Then you monitor and adjust.

If it is going to a home-based business is it also going to be a spare time business or a full time business? With a full time business you need to have saved enough money to handle start up costs as well as living expenses for a significant period of time.

Is your product the type of product you could market either in person or by telephone? You can save a lot of money this way and it is extremely effective depending on the product of course. For example if you are dealing directly with pet shops then show up in person at the pet shop with some product. Research all possible end users that might be of interest to you and then start working out a web page to target them. Advertising in general is a big looser unless it does a good job reaching your targets.

But you have to be really careful with any assumptions about free advertising. For example, when I did my business plan, I assumed that I could advertise my shop in various internet forums for free. Turned out most don’ t let you advertise unless you pay a small subscription fee, like SDMB does. That’s fair. But then I learned that this kind of advertising really doesn’t bring in that much in sales, very minimal. So you still need do to some kind of paid advertising.