Corrections or additions?
This article by Bart Jackson was prepared for the May 30, 2001
edition of U.S.
1 Newspaper. All rights reserved.
A Shop of Your Own? First, Try It Out
Launching your own new business is a lot like
discovering
sex: It’s a novel, exhilarating experience, drenched in guidelines
based on others’ mythical successes. “I went into the jungle as
a young man,” quoth poor Willie Loman’s envied elder brother,
Ben, “and five years out later I came out rich.” Alas, such
tales, true or not, proffer very little to the novice business person
struggling to get his new and better mousetrap before a skeptical
public.
A better bet than listening to locker room, or board room, advice
is to make swift pilgrimage to the Mercer/Middlesex Small Business
Development Center, which is specifically designed to aid in
individual
business startups. Located in the Chamber of Commerce building, 216
State Street, Trenton (609-989-5232; www.yourbizpartner.com), the
Center provides a wealth of workshops and literature on all aspects
of initiating commerce, from the basics of how to file government
papers, set up payroll, and borrow money on up. In addition, the
Center
will unite novices with experienced veterans in person-to-person
mentorships.
On Monday, June 4, at 6 p.m., one of the Center’s primary and most
popular workshops, “How to Start Your Own Successful
Business,”
will be held at the Trenton Public Library at no charge. Forty-year
business owner and corporate executive Martin Mosho will walk
prospective owners through start-up procedures for every type of
venture
from a small restaurant to various franchises, to large store chains.
Call 609-392-7188. The workshop runs about three hours with another
hour to handle specific audience questions.
Mosho’s four-decade business experience is as wide as it is deep.
He has sold advertising space for newspapers and magazines ranging
from U.S. News & World Report (during the Watergate years) to
Mademoiselle.
He has owned and run retail stores and franchises, including one of
the largest Snelling Personnel Franchises, and more. Mosho readily
admits that his has been a business career littered with mistakes.
Yet it is one from which he has emerged profitably and triumphant.
“The real problem,” says Mosho, “is folks don’t know how
to jump-start their own business. Once they’ve filed their state
papers
and received their federal E.I.N. (Employment Identification Number),
they don’t know which step to take first.” In Mosho’s view,
initiating
the right steps in the right order often proves as important as doing
them thoroughly and well.
Try working as an employee in your target business. Thismay seem an obvious point of common sense, but too many people wholove something, perhaps sports, come in waving a business plan drawnup on the kitchen table outlining a sporting goods store. Moshorecallscounseling one woman desperate to buy a Subway Sandwich Franchise.A month after he had finally persuaded her to take a job as anemployeeat one, she returned. She hated the work, hated food handling, andnixed the whole idea. Give yourself at least a few months on the frontlines, Mosho suggests.Research the form of ownership you want. Soleproprietorship,partnership, corporation — each carries its own benefits andrestrictions.To some extent, your choice may be curtailed by your sources offunding,but Mosho says each entrepreneur should avoid trends and examine hisor her firm individually. In the l980s, many small firms were sweptinto the prestige of incorporating their companies, which addedsubstantialset-up and bookkeeping fees, and in the end afforded little in theway of practical tax or liability protection.Shop for Start-up Cash. Myth has it the Small BusinessAdministration makes loans. Not so, Mosho laughs. “They got toobadly burned on that years ago,” he says, adding that the SBAnow only guarantees certain, select loans from banks. Banks loans,carrying a lower rate of interest than many other types of financing,are the first port of call for borrowers, but they want to see youshoulder a major part of the risk. These institutions are very fondof instilling commercial incentive by putting your stock portfolio,house, or your parents’ savings on the line. If you haven’t got thiscollateral, best lower your sights and move up the interest chain.Your stock broker may be willing to margin your portfolio and thuscome up with more cash than a bank could allow. But beware theinterestrates and a labyrinth of Byzantine conditions.Until recently, financial waters were brimming with venturecapitalistswho abandoned traditional loan guidelines in a frenzied search forinvestment profits. Unfortunately, the recent glut and fall ofE-commercefirms dried up this financing source. Currently, Mosho notes, venturecapital firms are turning down about 98 percent of all applicants.But if you can lure one in, venture capital funding remains a wayto get your needed funding with minimal collateral. The good newsis that frequently venture capital firms will allow you to launchon a larger scale than first anticipated. However, Mosho warns,”theinterest will come higher and almost invariably, they want apercentageof your action.”B>Consider a franchise. To those beginning to havesecond thoughts at entering the lonely, chimera-strewn forest of soleproprietorship, Mosho offers that popular and potentially profitablemiddle ground — franchise. Purchasing a business franchise mayusher you into a very supportive club, “but the initiationscrutiny,”says Mosho, “will rival and exceed any bank loan inquiry.”Typically, franchisers are seeking stable candidates with businessexperience. People with a strong managerial background are consideredideal. Ironically, they seldom seek veterans of the same industry.”Most franchises,” says Mosho, “spend millions on trainingtheir people expertly to run the business their way. My own past yearsin the field, I was told, were not an asset, but baggage bestforgotten.”Choosing a Franchise. Mosho reminds entrepreneurs toconsiderthe six percent fee, plus two percent advertising cost franchisestypically take from the top of your profit each month. Do you reallyneed the mother company’s network and support? Is it worth eightpercentof your profits? If you are a personnel firm seeking cross-countryplacement, yes, the network will help. However, if you want to startan advertising firm, a franchise is probably not going to bring youenough new business. If you want to sell pizza, go it alone. But ifyou want to sell burgers, best not to face off against MacDonald’sand the other Big Boys. Equipment rental, yes; cleaning service orcar detailing shop, probably not.Deciding on a location. Usually, this proves to be oneof the strongest points in favor of going with a franchise ratherthan striking out on your own. They have the cash and the businessanalysts to set you up in an ideal trading area, and don’t wince overhigh rent if the traffic merits it. But this can be a two-edged sword.All too frequently, Mosho says, “corporate egos push franchisesinto very expensive malls where the rent and necessary furnishingscripple profits.”Examining your need to innovate. Join up with any bigchain, and you will serve it their way, thank you. Carvel franchisessell ice cream. They sell yogurt. They do not sell thick shakes. Moshosuggested that this would be a natural and wanted to try it. Theyforbade his straying from the product line. In any franchise, thecorporation, not you, is the monarch of what you survey. Be honestwith yourself before you sign that independence away.It takes a great deal more nowadays to urge your own businessout onto the open waters of commerce. More marketing considerations,more new tools, and heaven knows, more legal entanglements mark thehorizon. Yet, we also hold an advantage. The Good Old Days neverofferedhelmsmen so expert and easily accessible as Mosho, nor safe harborslike the Mercer/Middlesex Small Business Development Center. Theguideshave improved.— Bart JacksonPrevious StoryNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
