Opening a second business questions/thoughts

jamscal · Jul 26, 2020

***I don't have it all figured out, obviously, so this post isn't the be-all and end-all for my thoughts on this...I could write a book...this is for discussion***

I have an idea for a second business, but I want it to be system that can run on it's own. (And possibly franchised.)

I know plenty of you have started from scratch...I have as well, but mine was organic growth out of a garage, and I still don't have a 'system'

So my main question is:

If you had the money to start a business from scratch, the 'right' way, how would you do it? Timeline or nuts/bolts, I don't care.(Considering maybe the following

-I want 4 employees to start: A manager, sales person, a technical shop person, and a shop helper/delivery person.

-My role is to set it all up and get it going, then step back.

-Initial thoughts show I'm going to need to borrow 2-300k to start, and this includes some working capital. I see the money as the easy part.

-I will need some good software(erp?), good advertising, a good lease and most importantly some good people.

jamscal · Jul 26, 2020

Current situation is I own a Welding/fab shop with 3 employees and it's very hands on for me. But also successful in that I have no debt, at all, and do well. Also, I generally work 40 hours a week only so I think I have it easy as a business owner in that regard.

I have a good accountant but run off my cell phone and computer at home. I have no phone line or internet at my shop and I'm often as dirty as my guys working. This works for me and I like it, but it's definitely not a system.

kustomizer · Jul 26, 2020

I would be Leary of borrowing money to create those 4 jobs, the folks to help you likely have hair with more gray than yours. Finding one person that can help you while you watch over them is a challenge these days, I would think hiring a team to take things on their own would be unobtainable, but my optimism is waning, good luck! We operate 3 businesses but 2 or relying on the primary machine shop.

Milland · Jul 26, 2020

I'm a better machinist than I am manager or salesman (and that may not be saying much), but I don't quite see having the one tech guy (not counting the helper) generate enough work income to support management and sales. Don't you need more income producers, or are you farming some of that out?

kustomizer · Jul 26, 2020

Milland said:
I'm a better machinist than I am manager or salesman (and that may not be saying much), but I don't quite see having the one tech guy (not counting the helper) generate enough work income to support management and sales. Don't you need more income producers, or are you farming some of that out?

When I "farm out" yellow corn, I more often than not get Indian corn or green beans and cannot sell it to the costomer as provided.

I can hold my own in the shop but am best at drinking on the porch, hearding cats is for the birds.

jamscal · Jul 26, 2020

Milland said:
I'm a better machinist than I am manager or salesman (and that may not be saying much), but I don't quite see having the one tech guy (not counting the helper) generate enough work income to support management and sales. Don't you need more income producers, or are you farming some of that out?

Good point, but I'm thinking of an all hands on deck approach when necessary. I've seen it work at a couple places.

Also, my current employees could chip in depending on the circumstances, and at least one of them is a good fit for a half inside sales/half technical role.

I do want to keep this separate from my current business, but there are also reasons why this will benefit both.

LOTT · Aug 1, 2020

Is this new venture a machine shop of some kind? Seeing you are posting about it on PM I would guess so, but from your structure and wanting something that could be franchised a machine shop doesn't make sense. A few more details might get better suggestions.

jamscal · Aug 1, 2020

LOTT said:
Is this new venture a machine shop of some kind? Seeing you are posting about it on PM I would guess so, but from your structure and wanting something that could be franchised a machine shop doesn't make sense. A few more details might get better suggestions.

No it's not a machine shop.

And as much as I value PM and it's members (that's why I'm posting here), if I say what it is the focus will be on that rather than the nuts and bolts I'd rather discuss.

But for the sake of discussion only, let's say it's a small machine shop whose customers are local and have relatively simple and known needs.

Mcgyver · Aug 2, 2020

jamscal said:
Good point, but I'm thinking of an all hands on deck approach when necessary. I've seen it work at a couple places.
.

sounds like that general manger better come with a cape. If the new idea is great and you really need to try it, hire a GM for the existing business, its at least established. When you read that, all the objections that raced into your mind on why it wouldn't work are probably amplified expecting them to in start up

The intense amount of time needed for a startup is time away from your existing business

You don't need an ERP for a 4 person business...its small enough one person's head and excel can keep track of things. However as you mention franchising, it must scalable in which case you better nail systems and work flow and codify it in excruciating detail from the get-goi. As per "the e myth revisted", that is your business

Guest · Aug 2, 2020

I don't see how anyone could give even the slightest bit of reasonable advice or things to consider with such vague details.

EmGo · Aug 2, 2020

jamscal said:
If you had the money to start a business from scratch, the 'right' way, how would you do it? Timeline or nuts/bolts, I don't care.(Considering maybe the following

-I want 4 employees to start:

If I had the money to start a 4 employee biz, I'd buy a 30-40' sailboat and see the world.

Or maybe a power bloat and see the US and Canada (sailboats aren't so good in rivers.)

A year or two on a canal boat in England and France ?

Something fast, with machine guns, for the Mediterannean ?

What about Africa ? Up the Amazon ? Crocodiles, pygmies with poison darts ? Penguins in tierra del fuego ? Australia, New Zealand ?

So much to see, so little life ...

jamscal · Aug 2, 2020

Thanks for the replies.

I guess I'm looking for for advice from people who own two businesses.

A Subway franchise might be analogous... $150-300k to start, and the idea is for the owner to not be there making sandwiches.

Presumably the owner has other things going on.

Mud · Aug 2, 2020

A Subway franchise might be analogous... $150-300k to start, and the idea is for the owner to not be there making sandwiches.

Presumably the owner has other things going on.

I was going to suggest a franchise of something successful would be what you need. Otherwise it would be like marrying a second wife and hiring someone to take care of her.

DanielG · Aug 2, 2020

Just looking at rough numbers, if the target is that a future franchisee can get started for $150-300k, I don't see how you're going to get started for $200-300k. You need to develop the things that the franchisee is buying with their % of gross they're paying you, like the computer system, etc.

I think the 'trade' franchises, as opposed to restaurant franchises, tend to have the owner working. I'm thinking things like bathtub refinishing, junk removal, etc. Part of that is with a franchised restaurant, you can hire someone who has done the job. If you need a Subway manager, go and hire an existing Subway manager or assistant manager.

woodsrider845 · Aug 2, 2020

I was actually going to say Subway. I bought an existing location for 30 grand. It's 15 from subway, but I walked in, turn key, for 30. I never touched a single fucking salami! Brought in an ex girlfriend as manager (she had a lot of experience ((hehehehe)), and ran as fast as I could. Subway sucks donkey dick. Their franchise fee is a "variable" percentage of your WEEKLY earnings. FUCK THAT.

Sold it for $125,000 2 months later, giving my ex a 30% stake, and never looked back.

Subway is the cheapest franchise to get into for a reason. They fuck you every chance they can.

Carry on

EmGo · Aug 2, 2020

woodsrider845 said:
I never touched a single fucking salami!

That's what Larry Craig said, too !

john.k · Aug 2, 2020

Last place I worked ,the partners started up a second business,and used it to cross subsidize the main business ,and improve the bottom line of the main business .....so they could sell out for megabucks ......place never turned a profit ever ,except their high living expenses ,and the new owners abandoned the business after 18 months and repurposed the land and buildings.

Guest · Aug 2, 2020

Whatever this mysterious business is, do consider how the Corona-Virus will effect people's future spending habits for the short term and long term. A business that looked like a no lose endeavor 4 months ago, could be a road to quick failure today.

woodsrider845 · Aug 2, 2020

EmanuelGoldstein said:
That's what Larry Craig said, too !

Well, there was a sign that said something to the effect of "wash your grimy hands".

LOTT · Aug 2, 2020

"The E Myth" method would be nice, where everything is neatly planned for, but I never seem to be in that world. The guy that started McDonalds nailed it, so it is possible. It seems to work in retail, food, maybe oil changes or similar shops. I know you don't want to talk details, but it really affects how to approach setting things up.

A better book might be "The $100 Startup" by Chris Gilliboe (sp?); he talks about building a minimum viable product to test things out. The thought of borrowing a quarter million dollars to test out a good idea makes me cringe. I have bright ideas all the time, we try them out fast and cheap, most fail, and the couple good ones become products that keep us going.

Opening a second business questions/thoughts

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