How to get started? (credit, borrow, loan, health insurance)

[stepka]

I'm thinking about starting some kind of small business but when I start looking into costs I practically get catatonic. I have a creative brain and lots of good ideas and don't do well working for other people because I often don't fit in with the status quo, but obviously this is not enough to manage a successful business.

Right now I'm certified to teach English and special ed, but teaching jobs are all but gone, and again I don't seem to fit in well with the public school culture. I will be putting out an ad to tutor in the fall, which will require a minimal outlay, but of course the profits are limited as well--I could only hope to make about $10-15,000 a year if I just confine it to my own tutoring. I could also market myself to the niche of working with special needs kids and/or homeschooled kids, since I've done that in the past. Anyway, I work well with kids and have a special rapport with them. Another direction I could go with this: start a homeschool resource center and lead tours in other parts of the world for groups of homeschool families. I've never done this before but I will probably be giving a talk this fall to a group who is interested in long term travel. I can see getting a free trip out of and maybe a little pocket change but not actually building a business out of travel--esp in this economy.

Another thought I've had is a small bakery start-up. Every time someone tries one of my cakes or breads they always rave about how I should start my own bakery. Now I know there's more to running a bakery than the ability to bake well, but it's a start.

I have the advantage of having two very bright teenage dd's who are willing to work with me. The 19 year old has an amazing creative brain where ideas just fly out and land where they will. The other is more grounded and sensible and has a good chance to be valedictorian of her class in a couple of years and she has a good business brain. I have an $8000 savings account, decent credit and no debt, I have done a great deal of world travel and have a degree from an ivy league university. Oh yeah, and child support from my ex will cover my bills and a little bit more but not much. Those are my assets.

I don't know if I need a pep talk or ideas or just some good books to read to get started--most of the books I've seen in the bookstore are kind of basic--they say to do market research but don't mention how. The websites I've looked at were pretty basic too. I'm sorta clueless about business really but a fast learner. I can do the tutoring while I keep my day job and won't need to borrow money to get started, but I won't be able to lose the day job ever if I just keep tutoring--health insurance alone would eat up any profits. I'd have to borrow a great deal of money to start the bakery and not sure how to evaluate an existing business to see if it would be a good buy. The costs are mind boggling--$3000 for a commercial oven, $2000 for a dough proofer, $3000/mo for an old Starbucks store to rent . . . You guys are probably shaking your heads over me. Any thoughts? Advice on how to get started? Encouragement?

Oops, a PS: On the bakery. Selling food made in a home kitchen is prohibited around here, but I've thought about approaching a church to see if I can use their kitchen, assuming that it meets code. Anyone ever heard of this or done it? It would be on a smaller scale but might be a way to get started.

[NinaN]

If you are thinking of starting a bakery, go get a job in a bakery. Work there long enough to learn the ins/outs of it. Then decide if you like it, if you're good at it, and if you can do the management side of it. Same with your other ideas.

Or think about selling your baked goods to local (not chain) restaurants/delis to add to their dessert counter - and look up the local laws on how those are regulated.

Don't go out and spend a bunch of money until you are sure of what you are going to do, and you have some good prospects for bringing in cash. Buy used. Rent. Borrow. But know what money you do need and make sure you have it ready. Hate to spend all your cash getting set up, then not have enough to continue.

Go to the Small Business Administration in your area...they have cheap and free classes that help guide you on startups. Check out local universities for entrepeneur classes. It might be the best $400 you ever spend in your business.

SCORE is a group of business retirees that volunteer to help counsel small business owners. Google them for your local area.

Most of all, figure out what it is you want to do, and how the money will be made, before you start.

[MrRational]

Stop thinking about the "thinking" aspect...
and start thinking about the actual dirty fingernails working aspect.

What skills do you have that are strong enough for YOU to be the boss??
And of these... which are you willing to commit to using for 60-80 hours each week?

Of the several choice you might have that qualify:
1) which skill are complete strangers most likely to pay you **well** for using?
2) which requires the LEAST amount of cash to start up? <--(see note)
3) which can you most easily shift (your time) into the supervision of others doing the work?
---

hth

*note: whatever cash you have now is NOT to be "invested"...
that is your reserve to maintain your life until the business is doing that.

[Hemlock140]

many people have successfully turned a hobby into a business. For every one of those, many more have failed. The main reason is lack of funds to start up. You cannot expect to open up and immediately make a profit enough to live on, people have to find you, try your product, like it, return and refer others to you and that takes time. Generally a new business owner should have enough funds in the bank to pay for all startup costs including materials, equipment, rent, advertising, and utilities, plus enough to live on for 2-3 years. Depending on your current home budget that could be in the neighborhood of $100,000. In your situation, if the child support covers your
home bills, and you can manage to get started with the $8,000, you will have to make enough to pay the business rent and other bills immediately just to break even. Think how many cakes etc. you will have to sell just to pay the rent. With a $14 cake, assuming $5 for flour, eggs, etc, you would have to sell 100 a month to pay $900 rent. Can you do that? More importantly, can you do better than that and make a profit?

[killer2021]

Use the lean startup method.

Keep your day job and do tutoring on the side.

As for the bakery, unless you have amazing recipes then don't go into the business. You'll definitely need to do your due diligence on that one. Probably would require a minimum of 100k capital. These days the food/restaurant business is all about marketing but could be lucrative if you know how to use facebook to drive customers to the store.

[stepka]

I was afraid you all were going to laugh at my naivete but you guys gave some great advice here. Nina, I looked up SCORE and will be going to a new startup seminar in a couple of weeks. Hopefully I'll have a better idea which way I'm going to go just before or after that. I am not investing any money or going for a loan until I am really clear on what I plan to do and I'll have a business plan written.

Originally Posted by MrRational

Stop thinking about the "thinking" aspect...
and start thinking about the actual dirty fingernails working aspect.

What skills do you have that are strong enough for YOU to be the boss??
And of these... which are you willing to commit to using for 60-80 hours each week?

Of the several choice you might have that qualify:
1) which skill are complete strangers most likely to pay you **well** for using?
2) which requires the LEAST amount of cash to start up? <--(see note)
3) which can you most easily shift (your time) into the supervision of others doing the work?
---
*note: whatever cash you have now is NOT to be "invested"...
that is your reserve to maintain your life until the business is doing that.

Yeah, it's the thinking that's stopped me every time before, but I don't want to rush in like a fool either. #1 Which skill will they pay me for? I'm hoping either one--I'm a good tutor and a good baker. Kids love me and people love to eat my cooking. 2. Least amount of cash would be the tutor but future returns will be limited unless I take it another direction and it doesn't really appeal to me to be the boss of several other tutors 3. shifting time onto others would be baking and I have the 2 girls to help me and they're willing to work with me on this.

Bisjoe, I certainly will have to think about that--it certainly is the crux of the matter.

Killer, the lean startup method sounds like something I will probably do. One thing I've always been good at is getting the best value for my money and I've always been thrifty--I can do this on a lean budget and plow my profits back into the business. I would buy used equipment as much as possible and start with the minimum of what I need. Heck, if I could figure out how to sell baked goods out of my home kitchen I would, but can't do that in this city. Legally. Even farmer's markets are risky for that.

[NinaN]

Originally Posted by stepka

I'm hoping either one--I'm a good tutor and a good baker. Kids love me and people love to eat my cooking. .

You could try doing some cooking classes for kids or parent/kid combo. Maybe an after-school activity (our school offers cooking, spanish, art, etc for 1.5 hours after school) or part of the community services offering. Low startup costs and potential for decent money if you can fill a class.

Good luck.

[stepka]

Originally Posted by NinaN

You could try doing some cooking classes for kids or parent/kid combo. Maybe an after-school activity (our school offers cooking, spanish, art, etc for 1.5 hours after school) or part of the community services offering. Low startup costs and potential for decent money if you can fill a class.

Good luck.

Do they pay people to do that or use parent volunteers?

I'd love to do it--I"ve seen some of the examples of cooking classes that kids have had in their FACS classes and can't believe how poor the offerings are at times. Like when I was in HS, our home ec teacher had us cook kidneys! For Lord's sake, I never had a desire to try them again. Or in my dd's facs class they made spaghetti from Ragu in a jar. I know I could do better than that!

[NinaN]

Originally Posted by stepka

Do they pay people to do that or use parent volunteers?

!

They are paid instructors. You would work with the school or the community district and make your proposal. I'm sure they charge rent or a % of your tuition in return of adding your offering to their list.

Look up the local programs in your area and go talk to the managers of those classes. You'll get all the info you need to make a decision.

[Wartrace]

SBA - Business Plan Template

I would suggest creating a business plan. You would be surprised at what it forces you to think about and how you re-evaluate things once you have them on paper. I did it when I was coming up with my business plan and it really helped me focus on things realistically.