Sunday, January 2, 2011

Be Careful When Starting A New Business!

"You don't know until you know how much you don't know.” ~Anonymous

Starting a business is hard, but many people believe that if you have the passion and energy, you can be successful. This however, is just not the case. Before you step up to run a business, you must have experience and knowledge.

A wonderful lady was referred to us for help with her new restaurant venture. She had worked as a nurse for over 20 years and was just worn out. Her hardworking son, who was a good cook and currently unemployed, would join her in the business. She really felt that this restaurant would provide the income she and her son needed.

After months of searching, she found a location she could afford. Though the rent was a perfect fit, there was no parking, the location was poor, the equipment was in need of repair and three other restaurants had already failed in that very same location. The owner of the property was aware of its shortcomings, which probably explains why he was willing to offer a year lease. A one-year lease is completely unheard of in the restaurant business.

My colleague, Barbara Lay, and I met with the hopeful restaurateur one morning over coffee. She was three days away from signing the lease on the property, and she was so excited about what she had convinced herself was the perfect location. You could just feel it as she told us about the building.

This woman was completely convinced that starting her own restaurant would solve so many of her problems. However, as we talked, we discovered that she had absolutely no experience with accounting, marketing or even setting up a menu.

She did not consider her lack of experience a problem. She thought she would pick things up quickly once she put in the requisite effort. She also said that, like her son, she loved to cook, and she had waited tables in college.

Though her can-do attitude was admirable, we had to caution her against moving forward without experience. Being inexperienced in the business you are trying to start will frequently result in very expensive mistakes.

In response to these warnings, she kept insisting that she would learn as she went along. To prove my point, I asked her if she would let an untrained person perform nursing procedures. Of course the answer was no. This example seemed to resonate, and she understood my point.

Many of this woman’s friends had encouraged her to move forward with the venture. However, we advised her not to completely trust her friends’ opinions. Because they are her friends and they want to see her succeed, it would be very difficult for them to be completely honest with her. They were acting out of their desire to be supportive.

As we continued to gently prod her about her concept, some tears were shed, and we knew she felt that we were destroying her dream. However, we continually reassured her that we were not suggesting she abandon the restaurant idea altogether, merely that she postpone it long enough to acquire the necessary experience and knowledge. Once she had the tools she needed to succeed, she could move forward. We suggested that she take QuickBooks classes, a marketing course and start working in the industry.

This potential start-up turned out fine, but many other start-ups fail because the owner lacks the tools to successfully manage their new business.

Now go out and make sure you have the training you need to be successful before you start or buy a business.

You can do this!


  1. How's the woman now? You are right, experience helps a lot, and she was one step away from making a bad start. I hope the second try comes out better.

    Danny Riddell

  2. Venturing into a new business is a big decision -- especially if you consider the amount of time and money you need to invest in it. Knowing the fundamentals of starting and operating a new business is a must. It is also essential to understand the dynamics of the market niche you want to enter. This way, you have a clear idea on how to put together your business plan that is responsive to the existing market dynamics.

    Jamie Shellman