Mission # 2-6 Starting Your Business On A Shoestring

Objectives:

• To appreciate that many immigrants start small business and become very successful.
• To learn that most businesses can be started on a shoestring, either small or part-time.
• To listen to all of your employees because one of them might have your next great idea.
• To understand that your business needs a hook to interest consumers in your product or service.

Background:

You may gulp when you see the asking prices for some franchises. Franchise investments can require downpayments from a few hundred to several million. Yes, it may be possible to borrow most of the capital you'd need to buy a franchise or to buy an existing small business or even start a small business but, when you're just starting your research, these investment amounts can look mighty BIG.

What's a budding entrepreneur to do?

You don't cry in your beer.

You don't feel underprivileged.

You take action. If not now, when?

You start small and grow as you "Learn and Earn."

Maybe, you need a hundred or two hundred thousand dollars to buy the franchise you want. Maybe, it will take you two to five years to save this money. If you want it, it will come. Remember where you are going to be in twenty years or less, the downpayments you are making today will seem reasonable.

Tomorrow, you might want to own a large landscaping company. But, today, you can take that one broken-down lawnmower and knock on doors. You are still Armando's Green Thumb Company.

Take action.

Tomorrow, you might dream to be the owner of a large fashion design house. But, today, you can use that old sewing machine to hem the skirts of your neighbors and girlfriends. You are still Designs By Tiffany.

Take action.

Tomorrow, you might aspire to own a luxury foreign car dealership. But, today, you can detail that old wreck and put an ad in the Want Advertiser. You are still Henshaw Motors.

Take action.

You don't have to wait until tomorrow. You can start doing something positive and profitable today.

If you follow the Action Principles^®, working every day to be your best and with your mind focused on helping others, you will succeed. The only difference between you now and the you that you want to become is only a little bit of time.

For generations, immigrants have come to the United States and made fortunes. No one is going to hand them bags full of money. They have to earn that money themselves. Often, they have a choice. Work in a crummy job for low wages or open their own businesses. What do the smart ones do? Look around. They are doing what you could be doing and you have language and cultural advantages that they don't.

Armando's Green Thumb Company

Come on, Armando. You can go to the local print shop and have them desktop publish a half-page sheet which lists your services. And, you can add a sales note to your flyer which notes your personal commitment to total customer satisfaction. You might even be able to make your own flyer on a computer at the local library for free.

You can probably pick out a generic logo for your business at no charge. Or in your circle of 250 people, you might have an artist or graphic designer who can make a customized logo for you. A logo is a symbol for your business. The logo is used on all your printed materials: business cards, flyers, newspaper ads, signs, truck doors, etc. With time, people will begin to recognize your business by your logo.

You can print up 500 sheets and cut them in two and have 1,000 ads ready for you to hand out and put on cars and put in store windows and on bulletin boards in your selected neighborhood. Armando, you can probably do this for less than $200.

For another $200 or so, working from home, you can order your own telephone line with voice mail. You landscape all day and you return your calls at night.

You can set up a simple website to include your services, prices and testimonials.

If you hustle and do this, you should have no problem getting forty lawns to mow at $25 to $40 per lawn. Now, you're making a decent week's pay.

Now, think free advertising. As you work, you keep a sign on the front lawn, announcing that this lawn is being professionally cut by Armando's Green Thumb.

Of course, you are doing a good job.

Don't be shy. Ask for more business.

Remember, you will always be doing a good job and you will always be asking for more business or business referrals.

You ask your present satisfied customers to further utilize your services. And, you ask your present satisfied customers to refer you to new customers.

You are doing a lot more to promote your business than other local landscaping companies.

Soon, your business begins to grow as the word of your quality service spreads. Now, the fun part starts. Now, to your new customers, you explain that you have to charge a little more, $50 per lawn, but for that money they can expect an excellent job. And, Armando, you deliver on your promise.

In no time, you have 60 accounts and you've leased a new pickup truck with a landscaping trailer. You are buying two new commercial mowers. You are about to hire an ambitious, hard working kid you know from the block to mow the lawns for you while you drum up new business and create new services.

Also, in the center of town, one of the key intersections looks awful. You offer at no charge to clean and landscape the intersection for the town. Of course, the town doesn't mind that you also erect a small permanent sign announcing your civic contribution.

This beautiful garden is brought to you compliments of
Armando's Green Thumb

Armando, you're on your way.

Yes, success in the landscaping business is like success in the roofing business which is like success in the pizza shop business and the art business.

Designs By Tiffany

Come on, Tiffany. For less money than it would cost to buy a pack of cigarettes every day for two months, you could be in business. You need a sewing machine, thread, a phone, voicemail, stylish business cards and a nice website.

Here is objective number one for you, Tiffany - there should never be a single person anywhere at anytime who does not know that you do sewing. Everyone you meet should hold up his or her hand before you can speak and he or she will say, "Thanks, Tiffany. I know. Yes, I have your card. You do sewing. Tiffany, if I ever need sewing or if I ever hear about anyone who needs sewing done, you'll have the business."

You offer a quality product. You appreciate your customer. You keep improving. You are an exceptional businessperson. You are a warrior. You are not afraid or shy to talk about your accomplishments. If you don't start blowing the horn, who will? Later, your testimonials, awards and positive press will speak for you. In the beginning, start blowing.

Tiffany, you'll have to hire so many people to get all this tailoring done and there are going to be so many people sewing in your apartment that it will be a miracle if someone doesn't call the building inspector.

Tiffany, here is your typical day. You spend two hours a day soliciting new business, four hours per day supervising your workers and six hours a day working on your own new designs. Congratulations. It's hard work now but you're building a strong foundation for your financial future.

Most business owners do not spend 10-20% of their time looking for new business opportunities. However, direct marketing is one of the most important responsibilities of an owner.

The warrior keeps reminding herself that it is her job to bring in the new business. If you haven't got customers, you haven't got a business. In the beginning, it may be very hard for an entrepreneur to find competent salespeople. So, as the owner, you may want to make pizzas or plant shrubs but your primary function is to find new business.

Henshaw Motors

Come on, Sean. Everybody has always admired the way you can make an old car look like new. Now, you can turn those compliments into cash. You can buy a car for $2,200. Fix it up and sell it for $5,200. You can do this every week.

You realize that financing is a problem for some of your buyers, so you decide to offer your own in-house financing. You don't sell the car for $5,200, you sell the car for $4,400 with $400 down and a loan for $5,000 at 12% interest to be repaid over six years. Now, a lot more people can afford your cars and you're selling for a premium price plus interest. This is how business can work. At 12% for six years, your money doubles from $5,000 to $10,000.

In no time at all, Sean is buying better and better cars to rehab and resell. Sean does so well that he hires a detail man just to work on his cars at Henshaw Motors. Sean concentrates his efforts on buying and selling.

In six months, Sean is ready to lease a closed gas station site and turn it into Henshaw Motors. Sean is now buying and selling ten cars a week. Sean is on his way.

In one defining moment, you can make a positive decision to do what Armando, Tiffany and Sean have done. Don't look for excuses but solutions - simple solutions.

• You can start a business at home.
• You can start a business on the Internet.
• You can start a Ebay business.
• You can start a business with a mall kiosk.
• You can start a business on the street.
• You can start a business at swap meets.
• You can start a business at flea markets.
• You can start a business with garage sales.
• You can start a business by sub-letting part of a store.
• You can start a business part-time.

You can start a business right now!

Story:

The Lopez Goff Gallery, Continued

Each week Ana met with Sheila. Ana was handling gallery inventory and operations. Sheila was staying on top of Mr. Lansing and the renovations.

Ana had ordered eighty prints from various sources ranging in retail value from $200 to $12,000. She had delivery scheduled for two weeks prior to opening. This way, she would have time to have some prints framed and the rest shrink-wrapped. Ana also purchased two laptop computers, a desktop computer, printer and software for $2,400. The computers would help to track print return dates, handle inventory and manage the snail mail and e- mailing lists.

Ana hired an energetic, full time framer/sales associate, a recent graduate of the Museum School. The rest of the staff consisted of a part-timer who was a student at the Museum School and an older woman, with a long list of social contacts, also for part time work.

Sheila had suggested for employment a niece of hers who was interested in art but without an arts background. It was agreed that the niece would be hired on a trial basis. As a start, the niece worked on Saturdays and during opening show nights. Concerning the hiring of the niece, Ana recited back to Sheila what she had often heard from Sheila that "business is business." Actually, time proved the niece to be a valuable asset to the gallery. However, the niece issue had given Ana an opportunity to further establish working ground rules with Sheila. Ana was the managing and majority partner.

Sheila had Mr. Lansing in hand, who in turn had the building manager in hand, who in turn had the contractors in hand. Each week, the basement looked more and more like a real art gallery. And, thanks to Shelia's little touches, a first class operation.

Besides managing a thousand details, Ana had two pressing decisions to make. The first decision was the selection of an artist or artists for the opening show and the second was finding a hook to bring traffic and attention to the gallery between shows.

The first task was easier. The winners of the Museum School New Artists competition from the last several years were invited to submit three works for display and sale. The exhibition would be a joint enterprise of the Museum School and the Lopez Goff Gallery. The showing would be promoted as a Museum School Professional Retrospective, with profit and proceeds divided between the school and the gallery.

Ana's rationale was that it was better to have a piece of some pie than no pie at all. If successful, the showing would raise several thousand for the Museum School. And, there would be enough additional income generated to cover the gallery's several thousand dollars in expenses associated with the show.

On the plus side, this type of joint venture would be promoted by the museum on behalf of the Museum School, allowing Ana to use the museum membership snail and e-mailing lists for the show's promotion. Secondly, the museum would pay for a poster to advertise the show. Thirdly, Ana could use personnel from both the Museum School and the museum for volunteer work for the semi-for-profit venture. In addition, a tie-in with the museum would assure press coverage for the event. Finally, if successful, the show would pave the way for future joint ventures with the museum.

The opening was in the bag.

Now for the business. Ana was a realist. It was one thing to run a "free" show for the art and arty crowd who came to be seen, sip free champagne and eat free hors d'oeuvres. It was another thing to get these potential clients to come back to the gallery on a Tuesday morning and write out a check.

Start thinking about hooks for your business. What reasons can you give consumers to take a first and then a second look at your offering? Something that says fun or interesting or useful or unusual

"No, we're not. But, the show isn't Picasso, either."

David shrugged, "But, one of your artists may be the next Picasso. If so, I've got a valuable poster somewhere down the line."

Ana was interested in learning all she could, "Do you only collect from shows in this city?"

David continued, "Oh, no. I read Art News, the Sunday New York Times, etc., and I look for the big name shows where the artists will appear."

"And, the artists autograph posters."

"Usually, yes."

"How do you manage to get the poster?"

David continued explaining his system,

"Don't make this sound complicated, Ana. I call the gallery the week before the show, tell them I'm a student with a keen interest in Mr. X, and would they please have an extra poster signed and mailed to me."

"And..."

"And, sometimes, they say, 'Yes.' Sometimes they say they want money for the postage and handling. Sometimes, they tell me to get lost. On average, I win. On average for $50 or for free, I get a signed poster that, should I wish, I could sell for hundreds of dollars."

"But, you don't sell them?"

"That's right. I'm a collector."

"But, you could sell them?"

"Of course. Listen," David had a question for Ana. "Ana, what would happen if you had a sign in your window, "Signed Picassos, $2,000?"

"They'd knock the doors down."

David nodded, "Right, you'd better believe it. They'd knock the doors down. A signed poster isn't that much different than a signed limited edition print."

Ana liked this young man's thinking, "David, I want you to work for me."

"Selling my art?"

"Well, we can talk about that. For now, you'll be in charge of our autographed poster business."

David thought, "But, it will take me some time to build an inventory, one poster at a time."

Ana said, "Leave that to me. I'll think about it."

David, the struggling artist, wasn't about to argue, "Fine, boss."

Ana ran the signed poster business by Sheila. They weighed the pros and cons. Were signed posters really art? Yes, the same argument that could be made for prints could be made for posters. Some artists had little more to do with their prints than signing them. Some artists participated in all aspects of print making. Some artists had little to do with the making of their art show posters. And, again, some artists participated in all aspects of poster making.

Autographed posters were legit. And, autographed posters would sell.

After several weeks of subconscious pondering, Ana got her idea. It could be expected that most artists would be cool to the idea of signing posters in bulk. How could they gain their cooperation? Live Aid. Farm Aid. Comedy Aid. How about artists? A sort of Art Aid.

Here was Ana's strategy. Call the artist's agency or primary gallery and find out the cause of most interest to the particular artist. Was it AIDS, the Heart Fund, the American Success Institute, United Way, Boy's Town, the "old artists' home"? What? Everybody cares about something. Find that something. Then, make the offer. Negotiate.

Say, for example, that the great American artist Frank Stella supports UNICEF. Offer to donate $5,000 in Stella's name to UNICEF in return for Stella's simply taking 15 minutes to sign 50 posters. The posters would each retail for $500 framed. There is nothing in the art world signed by Stella retailing at $500. Try $5,000.

So, the 50 posters sell quickly for $500 or a gross of $25,000. Each poster costs the gallery a $100 donation plus $25 for the poster, plus $2 for shipping and handling, plus $40 for framing, or a total of $167. The total cost of 50 posters is $8,350 leaving a profit of $16,650. Plus, there would be considerable framing profit to be made by the gallery. Business is wonderful and everybody is happy.

The Opening

The Lopez Goff gallery opened to a warm reception. The art public came, was seen, drank, ate, and some art was actually sold. The press coverage gave the gallery immediate credibility and the gallery took it's place among the prestige galleries on Sturgess Avenue.

Business slowly built over each of the next six months. The e-newsletter brought traffic. Each new signed poster offering causes a near auction war. Some paintings sell. Some limited edition prints sell. Some sculptures sell. The doll sculpture show was a success. Some framing is done.

Nice job, Ana!

Operational Limitations:

• It is not about what you want. It is always about what the customer wants. Study the buying habits of your customers.
• Don't use money as an excuse for inaction. You can start most businesses small or part-time. If needed, you can save money for investment.
• Consumers are resistant to changing their buying habits. They need a reason to sample something new. They need a good reason to make a permanent change. They need a hook.

Seeds for thought:

• What is the secret of starting in many businesses if you haven't got a lot of money or access to financing?
• What is a logo and why do you think a logo might be important to a small business?
• How could you acquire a generic or customized logo for your business?
• How would you use a logo in your business?
• How did Armando build his landscaping business?
• What sources did Tiffany use to develop her design business?
• What was the key for Sean to sell more cars?
• How did Ana staff her gallery?
• What opportunity did Ana take to clarify her status as managing partner?
• Why was joining with the museum for the first gallery show a good idea?
• How would a monthly newsletter draw business for the gallery?
• How was Ana able to convince artists to sign posters?

Jargon:

Angels - Angel investors are successful entrepreneurs who are willing to invest some of their gains in new ventures.

Bear market - A weak stock market

Blue Chip - Refers to top tier well run companies.

Bond - A debt obligation.

Bottom line - What's left, the last line on a profit and lose statement.

Bull market - A strong stock market

CEO - Chief Executive Office - the top guy or gal, the boss's boss.

Deficit - A financial shortfall.

Fiduciary - One assuming a position of trust.

Hook - A promotional tool to capture consumer interest.

In-house - Done within your organization, not farmed out.

In the bag - A guaranteed success.

Joint venture - agreement by two or more parties to work on a project together.

Premium - something offered free or at a reduced price as an inducement to purchase.

Shoestring operation - a business started with a minimum amount of money.

Question and Answers

You mention finding mentors to help you, but aren't mentors really going to see you as the competition?

If you want to open a floral shop in Dover, other florists in Dover might see you as competition. So, rather than looking for your floral mentors in Dover, you should choose an area not in direct competition. Interestingly, most successful business owners are not intimidated by enthusiastic newcomers who ask thoughtful questions. In fact, mentors are often flattered by your attention and actually see their younger selves in you. You will also have the opportunity to meet mentors through involvement in your trade associations.

What if you want to open a restaurant in a town where there are already enough restaurants?

There are two ways to look at this question, and only specific research can give you the best answer.

You might conclude that your research has helped you decide where not to open, so you look for a town where the demographics are more in your favor. On the other hand, you might find compelling reasons to open your eatery in the restaurant-crowded town anyway. Your concept might be different. You might be offering Thai food or barbecue food or health foods that aren't readily available elsewhere in town.

Here's another consideration. Let's say that the town only needs ten restaurants and you'd be the eleventh. Somebody is going to go out of business, but will that somebody be you? You've got a new clean place with an enthusiastic staff and you're ready to love your customers. The restaurant owner who has not changed with changing tastes or has forgotten his customer base may well be the restaurant to close.

Isn't there some kind of Warrior Success Formula?

There are a lot of formulas for success floating around. Here's one that I like, the formula is "SW ³ / N", which translates to "Some will. Some won't. So what? Next. Trying to convince a skeptic to try or buy your product is both time consuming and usually ultimately fruitless. Let the skeptic go. Instead, it is much more pleasant and productive to spend your time looking for customers who actually want to buy whatever you are offering.

Action Plan:

• Based on the roofing and landscaping stories, how would you start a house painting business?
• Read the quotes and circle six that really speak to you.
• Start thinking about hooks for your business.
• Consider why you are a regular customer at certain businesses.

Remember always look for used books on Amazon.com.

Support:

• How To Market Your Business on A Shoestring
• Starting Your Home Based Business On A Shoestring Budget
• Starting on a Shoestring: Building a Business Without a Bankroll (2002) by Arnold Goldstein

Inspirational Insights: