BLK4CYL

Here's my situation:

I'm 26 yrs. old. I made some good investments in the housing boom a few years ago and got out leaving me with $200K liquid in the bank. I work full time in the banking industry making $65K/yr. salary. Lately I've been getting the yearning to stop working for the big man and become my own boss. The only problem is I don't know what type of business I want to get into. My experience is only in banking (working both in retail and commercial) and it's difficult to be an entrepreneur in this field. I realize that I should definitely pursue a business I truly enjoy doing every single day, even if it means sacrificing some financial gains.

A friend of mine approached me to possibly start a business together within the next year. I have some concerns about this because I know that mixing friends and business is generally not a good idea. However, if I were to partner up with another person, I would want a friend I can trust and this guy is that person.

Finally, I've been messing around with the idea of starting a franchise. I've read numerous books, magazine, blogs and I still can't decide if thats what I want.

Should I start my own business ground up? Partner with a friend? Franchise?
Anyone been in a similar situation as mine? If so, I'd love to hear your story.

Thank you in advance.

sahtt

First, having the money doesn't mean you should do it. Make sure YOU are ready, not just your bank account. For the record, with 200k you will probably need a partner for most standard businesses.

You can make a lot of money with almost any franchise if* you know what you are doing. What are you doing with that 200k? Is that seperate from your retirement/temp. savings etc.?

If your friend is a smart, trustworthy hard worker then he can be extremely valuable. It's hard to do it all yourself, emotionally, physically, and financially.

I would start by trying to take advantage of what is "on sale" right now. The franchises in particular are always adjusting their requirements. Of the people I know who know about/own franchises, Wendy's is probably the best IMO, if you haven't looked at them yet.

In most people's opinion, you need several to actually "make it". I'd say a minimum of 3 successful ones. So consider it a long term project before you drop the cash.

My best advice is make sure that money is making some money and be very patient in the mean time. It's hard to gauge anything right now.

BLK4CYL

You're right, having just the money shouldn't mean I'm ready. I've actually been thinking of going on my own for a few years now but wasn't serious about it until just recently.

The job I'm in right now is also a start-up company (community bank) and we're experiencing our own start-up struggles. I work really hard just to make our company $1. This is when I realized I could be putting forth this effort/energy on my own business where I would be the direct recipient for its success. For some reason, I just don't feel motivated working so hard for a company that pays me the same check every 2 weeks when I can go out there and exert my skills/energy/effort and have it come right back into MY pocket.

Does this seem reason enough to start my own business?

Right now the money is sitting in a money market account earning 5%. I played with the thought of investing in the stock market but right now I'm more leaning towards taking a big risk while I'm young and going "all in."

cthree

Having been an entrepreneur most of my life here is my advice:

Partnerships rarely work. They just don't. It's a very rare case where both partners are equally motivated and work equally as hard. Avoid it unless your partner has more money and is more motivated than you. Try to go it alone if at all possible. If you want a friend in business buy a dog.

A franchise is a great idea especially if you don't have a very specific plan. Do you research. Finding a good franchise is not easy. It could take you a year or more to find one which is the right fit but once you do find one your chances of success are much better. IMHO this is way better than having a partner. Buying a franchise yes BUT you must do your homework and become something of a franchise expert before you can make good decisions.

I recommend you start to work on the franchise concept and take your time. Learn everything there is to know about how franchises work and what franchise options are available. Take a year to do the investigation and to educate yourself, attend the seminars and all that jazz and then a year down the road when you're very knowledgeable you can decide where to go. It may turn out that you decide not to buy a franchise and to do a start-up instead but that decision will be made intelligently.

Take your time and don't jump in. Not liking your job is the wrong reason to start a business. Build your knowledge and build your plan over a one year timeframe and then make your decision then. You will be very happy you did. Once you start the process you will find yourself open to opportunity and opportunity you didn't know existed will come your way.

A great place to start in by getting involved in SCORE http://www.score.org/ the wealth of knowledge you will gain is unbelievable and it's free for the most part.

DryCycle

If you want to buy a franchise, you can usually buy used, but distressed is probably a better term for what you're shopping for. The nice thing about buying a used franchise is that you aren't paying for potential, you are paying (probably) a discount on potential roughly equal to the selling franchise's (probably lack of) performance. In my area, Quizno's franchises are for sale all over, along with lots of hotels, convenience stores, and bars.

Also, plenty of regular old mom and pop places are for sale on the internet. Search Google "business for sale" to get an idea what kinds of things are available.

sahtt

I was looking at investing in a Jason's Deli startup [not by myself by a long short] but the payout was too far in the future for my goals. The upstart is about 700-1m total. If I was going to get a franchise of my own I think they have room to grow and a good niche market, at least in most parts of Texas.

Scot

I always thought a franchise was the way to go, but lately it sure seems like there are too many.

I went to a "Liberty Tax" franchise seminar. They had a bunch of numbers and made it sound so promising until we started asking questions. 2 years ago when we went, the gross income per office was under $35k, so the net must have been about $3,000..

Our local mall had a "soup man" franchise for about 3 months, then it was for sale for $185k. ahaha.. then down to $150k... then it just went out of business....

Our 3 local Quizno's are all for sale right now at some crazy ($100k+++ each) price and none of them are ever busy. I would have to bet they are actually losing $ on all of them.

A great story though - Nurse Finders - I did their accounting for the local franchise about 6 years ago. They bought the franchise for $100k from the owner who couldn't make it work. 2-3 years later they were Netting $5M+. The new owners just happened to be a nurse and a previous restuarant manager..... in the last 5 years they have bought out the franchise (so they no longer pay royalties) and have grown even bigger.

Goodluck! I cannot find anything other than working for the man and my shitty rental houses....

SD_S2K

This statement immediately makes me think: NO RUSH. If you don't have a dead set dream business you want to start, then slow down. Let your money sit in the bank and earn some interest while you figure it out.

This is widely considered very true. Many relationships end because of disagreements. If he is that good a friend, I would reconsider. Or draft up a VERY solid business plan that you both agree on should something go sour or one partner want to sell or exit the business.

[QUOTE=BLK4CYL,Oct 21 2007, 02:58 PM]
However, if I were to partner up with another person, I would want a friend I can trust and this guy is that person.

BLK4CYL

Thanks for all the replies. I definitely know now not to rush into things. I just took a 2 week vacation where I stayed home and did nothing but relax. During that time I got to thinking and that's how this whole thing began. I know I want to be an entrepreneur one day but I can't afford to lose my life savings on an impatient, miscalculated move. I'll just keep my eyes and ears open for opportunities. It could be next year, it could be next month...I don't know.

Right now I'm exploring a few things in all categories:

1. Franchise - Still haven't decided what industry. Looking at everything right now.
2. Partnership - Good friend wants to start a niche business in a niche community.
3. Start-up - I've been toying around with the idea of starting a snack line. I'd need to use a contract packer and concentrate on marketing and distribution. All things I'm too new and unfamiliar with. More research will be required.

If anyone has any ideas, stories, advice, please share.

sahtt

BLK4CYL the advice posted has already been great.

However, I want to add a little perspective. There will probably never be a 'perfect' time to start your business. Life doesn't work that way. There will probably be risks, maybe huge ones. But just like investing in stocks, there is another risk that is always lingering but usually unnoticed. You'll never know if you could have beaten your sorry mutual fund [and maybe made a fortune!] if you are too scared of the risk of entering the stock market. You'd never have bought GOOG or AAPL stock because it's just 'too expensive'.

By the time you can comfortably start up a business you'd already have to be rich! Don't be afraid to fail and welcome the risk and respect it, but don't fear it to the point one day you turn 65 and realize man have I 'phucked up'.