I'd just love to hear some success (or failure stories with lessons) about some of you guys trying to startup your own business. I'm in the early stages and admittedly it's gonna be rough but I'm committed and I truly believe I can do well even in an oversaturated market. Anyway, bring on the updates!

1/11/2010 10:03:20 PM

Quote :

"even in an oversaturated market"

haha. let me fucking guess.

1/11/2010 10:07:21 PM

Quote :

"even in an oversaturated market"

you lost me

1/11/2010 10:10:05 PM

Is your product $.99?

1/11/2010 10:11:02 PM

i'm not sure if you're thinking some app for some market but no, not even close

design/printing/distribution

1/11/2010 10:19:33 PM

so you decided to be a realtor? j/k

me and a friend have been talking about starting up a business for years, but i honestly don't see it happening. i think the biggest issue is we lack a real idea for the good or service we should provide. while he's probably more technically capable than i am, but i have years more experience in the business world. his idea is to "try to do some contract work, just find out what they are paying and do it for 10% less". there's so much wrong with that i don't even know where to begin explaining it. if only it were that easy.

1/11/2010 10:19:38 PM

I realize this thread is about those who have started their own company.... which I have not. Hear me out, maybe I can offer some insight.

I am in outside sales, which is currently salary+commission, but will move into straight commission starting at the beginning of July 2010. I have been in this position since July 2009. I have competition from several direct manufacturing sales reps, large distributors, and local distributors. Here are the advantages and disadvantages of each:

Direct Advantages: Immediate knowledge of new technology, no middle man mark up, one shipping bill (paid by manufacturer or buyer of goods), access to larger range of non-commodity items, control inventory, have access to many distributors that can effectively sell their goods which increases market share, and set prices of commodity they manufacture.

Direct disadvantages: Typically have 1-3 sales reps per region (i.e. southeast, mid-atlantic, northeast, etc.) limiting the number of accounts they can successfully manage/cold-call, lack physical customer service or physical technical service available to or affordable for smaller users or altogether, are sometimes not trustworthy because they will go in behind their distributors that sell their commodity to one account in large quantities (i.e. they missed a big account, and have found out about it through a distributor selling their particular product) which leads to the distributor not selling their product anymore, have too many distributors selling the product ultimately driving the set price down through deviations, possibly rely on distributors to actually sell the product, and competition from other direct sources.

Large distributor advantages: have access to other commodities that go hand in hand with other manufacturers (poor example- grocery stores sell milk as well as cereal), get direct pricing, many locations regionally or nationally easing the shipping burden of buyers with multiple locations, personal service either customer or technical, many sales reps that are able to cover a broader territory, access to multiple manufacturers of the same commodity allowing to keep prices in check, service programs that smaller companies can't offer and direct providers can't match in price or value, and experts of many many commodities as opposed to one or a few.

Large distributor disadvantages: smaller local distributors creating price wars (think Michael Scott Paper Co vs Dunder-Mifflin), direct mfg's going in behind and stealing business, limited access to all of the mfg's (you won't find Harris Teeter name brands in Food Lion and visa versa), can't truly set prices because it's based on both supply and demand, territory management, and tough growth prospects in slower economies (this is true for direct as well really)

Local distributor advantages: Typically a good ol' boy setting where the seller and the buyer know each other for years (this does happen at all levels, but mostly at the local level), local folks are right down the street and can be used in emergencies, if the local guy buys at high enough volumes then there is no shipping charge to the end user, and access to both direct mfg's and large distributors.

Local distributor disadvantages: easily beaten in price, array of commodities, array of technology, lack of trained staff, low cash flow, etc etc etc.

This is what I have noticed in my six months, I am sure there are plenty more that need mentioning. The way I am setting myself apart as a sales person is this: I go after the big accounts right now while I am new. The big accounts, if I land them, will take care of me while I am new and building a customer base. The money made off of those allows me to focus free time on smaller accounts that get me higher margins. I build up big accounts, I would like to have 5-10 of these, then get 20-30 medium accounts. If I lose 1 or 2 big accounts, the 20-30 medium accounts keep me afloat while I go after new big accounts. I don't really waste time on small accounts simply because they basically pay for breakfast or something really small.

I will say this, if you can't get a big account in the first 6-8 months (assuming you have cash flow that you can ride this long) you could be in a world of trouble. If you can get one, it will really make going after the others a lot more enjoyable and less stressful. It's simply just very exhausting wasting any time on anything other than big accounts in the very beginning. You work just as hard on the medium sized accounts and see 1/3 to 1/36 of the money in my situation.

If you have any other questions, you can PM me. I hope this helps in the slightest!

1/11/2010 11:26:22 PM

^What the hell are you talking about?

1/11/2010 11:28:20 PM

i'm not sure, lol

but i'm doing a mix of direct/large/and local from your descriptions for the most advantages and the lowest price

1/11/2010 11:40:27 PM

I was comparing starting a company to outside sales... I basically will be in business for myself in July. I'm not sure where you are confused? You asked for lessons. The lessons in my business are that I have competition (or super saturation) from direct mfg's, other large distributors like myself, and smaller local guys.

I also wrote about success, or large accounts which I have gained. Failures, which are wasting time on smaller accounts that are just as exhausting as big accounts.

Sorry you are confused kayak.

1/11/2010 11:46:03 PM

well starting a company isn't really comparable unless you took out a 40k loan to go work for your company? when you start one, you're risking all your assets to stay afloat and turn a profit eventually.

what you're talking about is being able to put food on your plate OR you'll just have to find another job, which is pretty much like every other job out there that already exists


and i havent taken out a loan, and actually i'm going to try and self fund but still i'm losing money to try and gain it back whereas you're just trying to gain money or you'll be wasting time.

not trying to insult just wasn't what i had in mind for this thread

1/11/2010 11:51:28 PM

Those are very true counterpoints, I agree.

I was merely trying to say, that while you are starting out... things that could also go into consideration are the competition you will face.

Good luck in your endeavor, though.

1/11/2010 11:59:56 PM

thanks, you too!

1/12/2010 12:00:56 AM

I worked at Carrboro Plaza Veterinary Clinic for a number of years. When I started there they had a horrible free website that was on the verge of being non-functional, full of outdated information, few features, and that our clientele were pretty dissatisfied with. In looking all over for the best affordable website design we could find, I ended up going with a company I heard about through tww.

http://mercury7design.com/

http://www.carrboroplazavet.com/

Quote :

"About Us mercury7design is a digital and print design company. Based in Raleigh-Durham, NC, mercury7design is a freelance design firm that utilizes the technical expertise of Luis Chacon and the creative talent of Mark McLawhorn. mercury7design offers web and graphic design, application programming, web retaining and custom training. The company name was inspired by the Mercury Seven, the group of seven Mercury astronauts picked by National Aeronautics and Space Administration in April 1959. They are also referred to as the Original Seven and Astronaut Group 1. This was the only astronaut group with members that flew on all NASA manned spacecraft of the 20th century."

1/12/2010 12:29:38 AM

Comparing working on straight commission to starting up your own comany.

Wow, I have heard it all now.

1/12/2010 1:05:24 AM

Remember: 80% of all startups fail. #1 reason is because they run out of cash to continue operating the business. Not because the individuals running the business are stupid, but, because they run out of cash.

1/12/2010 6:28:22 AM

Quote :

"^What the hell are you talking about?"

I lol'd at this.

1/12/2010 8:27:43 AM

^^ I have thought about that alot ...

I have a small business ~20k per year in revenue, which turns a 75% margin, and I don't really have to do anything to make that money ....

But, I actually appreciate the perspective of the outside sales experience above... I could drastically change my revenue if I actually tried doing some sales myself, devoted a handful of hours to pursuing big corporate clients... right now, I just let them contact me, which in most cases is the smaller businesses which do the contacting ... every once in a while, a marketing rep from a bigger firm will contact me, (and surprise me), and sometimes I am unprepared for it. However, if I focused on those bigger clients first, and added some additional features to my service that were focused on those bigger clients mainly, then I bet I could see some more incremental success with the bigger clients.

Instead of playing with newer ideas and stupid venture Ideas, I should focus more on the business I have that makes money regularly, and stop letting entrepreneurial ADD control my efforts.

1/12/2010 11:11:42 AM

I run my own law firm...but it's basically on the side.

I'm a full-time bartender/bar manager, but take on small clients on the side. I'm too in-experienced and/or I'm too big of a pussy to do it full time. But I make plenty of money bartending, so I have a comfortable lifestyle. I'm waiting to where I'm busy enough and feel comfortable enough being completely on my own to where I can quit bartending...or at least scale it back to where I just work weekends for good cash.

My expenses are extremely low...so I really can't say that I'm running my own business...but I'm definitely not working for anybody.

1/12/2010 11:28:32 AM

Quote :

"I was comparing starting a company to outside sales... I basically will be in business for myself in July. I'm not sure where you are confused?"

I am confused, well not confused, more amazed that you would even try and say that starting your own company and working for yourself is comparable.

Working on commission, you are still working for another company. I am going to assume that you have an office, and maybe a company car, possibly even an expense account. The company covers the cost of all this for you, so that in itself is big savings. You dont have to rent office space, pay utilities, pay for a car, gas, etc....With your own business or working on your own, you are going to have to assume all these costs. Which add up and are one of the major reasons for companies failing. High fixed costs.

Health insurance working for a company is also going to be a lot cheaper. Have you ever seen how much personal health insurance is, its ridiculous.

Working for an established company is also better because they obviously have an established product and customers in place so you can somewhat gauge the success.


Even though yuo might be working on straight commission don't trick yourself into thinking you are basically "in business for yourself" It couldn't be further from the truth.

1/12/2010 2:01:12 PM

Where did I say that this is exactly the same?

It appears that all I have mentioned is the competition. Perhaps you can give us the insight on how to set up insurance KaYaK? You are a business owner, right?

1/12/2010 2:21:22 PM

no no, please more replies like robster and jbrick to stay on track

1/12/2010 2:25:33 PM

^^Where did I say they were exactly the same?

1/12/2010 2:28:22 PM

im pimpin yo momma

1/12/2010 2:35:42 PM

I mean you are sitting her basically saying you are going to be in business for yourself because you will be on straight commission. Sure, they aren't exactly the same, but to even compare them is just retarded.

1/12/2010 2:40:09 PM

I think brownie has a great comparison ... being in business for yourself is essentially working on 100% commission all the time.

If you make money, its 100% yours ... and if not, you get 100% of nothing

Many people who work on 100% commission also do it for many companies at the same time (my dad did this with medical equipment for 20+ years), representing a plethora of products to a specific market of clients ... sorta a one stop shop for your customers. In doing so, his business was registered as his own, he just did not make any of the products himself.

1/12/2010 4:58:47 PM

Jesus Christ, you can't be that fucking stupid.

Working on 100% commission and working for yourself are not even close.

As stated here....

Quote :

"working on commission, you are still working for another company. I am going to assume that you have an office, and maybe a company car, possibly even an expense account. The company covers the cost of all this for you, so that in itself is big savings. You dont have to rent office space, pay utilities, pay for a car, gas, etc....With your own business or working on your own, you are going to have to assume all these costs. Which add up and are one of the major reasons for companies failing. High fixed costs. Health insurance working for a company is also going to be a lot cheaper. Have you ever seen how much personal health insurance is, its ridiculous. Working for an established company is also better because they obviously have an established product and customers in place so you can somewhat gauge the success. Even though yuo might be working on straight commission don't trick yourself into thinking you are basically "in business for yourself" It couldn't be further from the truth."

When you work on 100% commission and you make a sale, and say you make $1000, then you have made $1000

If you are in business for yourself, whatever you make in profit goes to covers costs of running the business, you get whats leftover, which at sometimes, can be nothing after all expenses are paid. So basically you just made that sale for free.

Sure, they are "comparable" in the same sense that a Kia and a BMW are both "cars"

[Edited on January 12, 2010 at 5:06 PM. Reason : .]

1/12/2010 5:05:04 PM

brother, this thread was a mistake

1/12/2010 5:08:31 PM

what I am saying is that that two are not mutually exclusive ... you can do both

ctfd and stfu

1/12/2010 5:08:32 PM

Well obviously if you are one man running your own little "company" you are going to get to keep 100% of the money left over after all your expenses have been paid.

My point is, sometimes the expense out number the $ you are making.

Which is why most fail.

In a job where you are working for a company on 100% commision, and say you get 10%, and you make a $100,000 sale to another company, you pocket $10,000 and you get to keep that $10,000 entirely because for the most part, all the major overheard is absorbed by the company.

If you go a month on 100% commission and have $0 in sales, you really aren't losing any money because you don't have any expenses you are having to pay for.

[Edited on January 12, 2010 at 5:13 PM. Reason : .]

1/12/2010 5:11:45 PM

read my example ... you can be running your own business, and in so doing, selling other peoples products(AS YOUR BUSINESS MODEL), where you yourself are still paying for your own expenses, and overhead.

So, in essence you are BOTH running your own business AND working 100% on commission. Not all salesman get paid for the expenses they incur.

1/12/2010 5:15:16 PM

Unless you invent something and sell it, or offer a service, isn't every single company or salesman "selling someone elses product"

Quote :

"So, in essence you are BOTH running your own business AND working 100% on commission. "

Yes, its known as a small business owner with one employee, themself.

I mean I see where you are going with it, and I somewhat agree.

People who own their own business obviously work on 100% commission, but not everyone 100% commission person owns their small business or can even compare to it.

[Edited on January 12, 2010 at 5:25 PM. Reason : .]

1/12/2010 5:22:37 PM

i own a small automotive shop (partnership LLC).

biggest piece of advice would be to do it yourself, without partners. the partner i am working with now is good, but we had another one a while back and, to be nice about it, it was less than ideal.

if you have any specific questions let me know.

1/12/2010 5:55:08 PM

KaYaK...STOP trying to derail this thread. no where did brownie attack you so you should leave it alone before i suspend you.

1/12/2010 9:57:41 PM

I've owned or been a partner in several companies.

Kayak doesn't have a clue what he is talking about, brownie27 has a lot of valuable info in her post. Her strategy has been absolutely the mindset I have used in every single cash-flow dependent business I've been in. You have to land some big fish ASAP, and then build out a safety net customer base.

The things I've learned:

Never quit your day job to start a company unless you have at LEAST a full year of expenses saved (if you don't have 50-75k in the bank, on top of capital costs for the business, forget it). You will increase the likelihood of failure due to personal cash-flow issues by 10,000%. Even then, don't quit your day job. In my experience, without a single exception, every self-started business that is still in business and successful today was started in someone's spare time.

You don't need 98% of what you think you need to get started. You do not need an office. You need a mailing address (use your home address), a telephone number (get a Skype number and skype phone) and an email address (godaddy+1and1).

If you are creating a partnership, never split 50/50. There must be a majority partner. 51/49 is fine.

Create an LLC, or a S Corp. I personally recommend the S Corp if you intend to make more than 50k a year in net income, or if you will be dealing with consumer sales. The LLC is a better option for low income businesses, it's cheaper, and still affords some liability protection.

PAY YOUR: Income, Workers Comp, Unemployment taxes as well as any fees/permits/licenses required by the state. NC requires permits for damn near every sort of business, and if you get caught without one they will anal rape you. Same goes for your taxes, although MANY businesses are exempt from workers comp and unemployment taxes (ask your accountant)

Don't buy ANYTHING you can't get an immediate return on. Buying equipment can sink your new company faster than you can blink an eye. Like brownie and robster have said, cashflow is the number 1 killer. Avoid spending money at all costs until you have a substantial buffer in cash.

If you don't have GREAT credit, forget about it. Improve your credit rating, then think about starting your business.

If you do have GREAT credit, find a bank that will give you credit cards, a line of credit and a business checking account. BB&T was the only bank in NC that would do this without linking to a private personal account. You will need this to help even out cash flow issues, and if you are a S Corp, you MUST have this to ensure your limited liability status.

Keep your company's assets, earnings and expenditures very clearly separated from your personal trio. This can be pretty hard to do as a sole proprietor, but it's going to be a nightmare come tax-time if you don't. And resist the urge to pay yourself. Keep every penny possible in the company, and expense everything possible to the company.

You better LOVE people. Because talking to people is going to make or break you. Customers, contractors, colleagues, distributors, suppliers, are all going to be critical to your own success. The more people like you, the more they will like your business, the better deals you will get and this will all translate into more and higher margin sales.

Don't expect to turn a profit for 24 months. If it happens great, but it's normal for a brick and mortar business to take 2-3 years to establish real, positive cashflow.

Forget about healthcare. It's insanely expensive until you hit 50+ employees and can qualify for group plans. Get personal coverage through BCBS. Depending on the type of business, you may be required to have a liability insurance policy, check with your accountant or lawyer on this.

Forget about vacations, time off, or free weekends. Forget about going home at night and not thinking about work.

Never hire your friends. Never hire your family. Personal relationships will eventually sabotage business relationships.

[Edited on January 13, 2010 at 5:11 AM. Reason : .]

1/13/2010 5:08:05 AM

^tl;dr He has some pretty damn solid advice there.

Quote :

"If you go a month on 100% commission and have $0 in sales, you really aren't losing any money because you don't have any expenses you are having to pay for. "

That is the most asinine statement if I've ever read one.


[Edited on January 13, 2010 at 5:13 AM. Reason : .]

1/13/2010 5:11:34 AM

^^ thanks for that, very helpful

i will not have an office right away, i can do my business over the phone/email or meet at their place of business or have a business lunch if they want...if i made some good cash then maybe after a year I would get an office just so that I can use the office space itself as one giant "advertisement" for what i do but i am definitely going the bare bones route in the beginning

1/13/2010 12:30:07 PM

I started a company about 12 years ago. I just finished my second year of college, had signed a lease for the summer, but had no job. So, after talking to some people who I knew had their own businesses, I went downtown and paid 15 bucks for a reseller's license. I decided that I was going to build and sell my own computers. This was 1998, and the era of cheap PCs had not yet arrived.

I didn't really know where to start, nor did I have any sales experience, but I did know that I only wanted to deal with businesses for the most part. Being a computer savvy student living in the dorms, I knew all too well that dealing with individuals was going to be signing up to spend all of my waking hours doing tech support for different people. With businesses, at the very least I would presumably sell multiple machines to the same company and there would be someone with a modicum of knowledge to maintain and do basic troubleshooting before calling me.

I started off walking into local businesses and pitching my PCs with my aim to undercut whatever they were paying now, and offering 24x7 on-site support (hoping no one would be calling me at 3a.m.)

After several weeks of getting turned away, a small music shop in north raleigh took a chance and bought 5 machines from me. A few weeks later after submitting bids to state agencies, the NC forest service contacted me, and I got a $25,000 contract to replace out of date PCs for Y2k compliancy. I was making around $300 profit per PC I sold, and they gave me the PC that was being replaced, which I then turned around and sold from $50 to $100 each. After exhausting the initial contract, they continued to buy more as more and more PCs from around the state were sent in for replacement. I had way more orders than I could handle by myself, so I hired some of my friends at $10 an hour to help out, and we'd stay up all night at least once a week assembling PCs and imaging them with all of the required software. I'm estimating that from 98 though 2001, I sold the NC forest service around 4-500 machines.

I buffered everything on my credit card, and would max out, and pay off said credit card a dozen times a month. I was fortunate enough to be profitable from the get go. I probably should have created an LLC, and naively operated as a sole proprietorship, but luckily it did not bite me in the ass.

after around 2001 or so, the forest service was done with it's upgrade cycle, and around this time, the ultracheap PCs started flooding the market, and I had no way of competing with that. Also, I had no real desire to do this forever, and closed up shop in early 2002. It was a pretty fun and profitable experience overall.

1/13/2010 12:43:49 PM

wow, thats a great story! so you pretty much gave yourself a 40k/year salary while you went to school at the same time, nice

1/13/2010 1:50:22 PM

It's pretty cool reading about all of the cool ideas that you all have for your companies. Good luck with whatever you try.

1/13/2010 4:19:57 PM

Quote :

"Kayak doesn't have a clue what he is talking about"

Seriously, I am not trying to "troll". But a lot of the stuff I posted is hardly false and the majority of it if not all of it is true.

There are a TON of differences in working for a company on 100% commission and working for yourself.

Working on 100% commission is not basically "working for yourself"

Sure they are a like in some ways, but to sit here and tell me I don't know what I am talking about with all I posted is just ridiculous.

Not attacking anyone here, just defending myself.

Take BobbyDigital's story.

He was working for himself and assuming all the costs inccurred in that business. Without his credit cards or some investment from backers, he more than likely could have never had the success he had, if at all.

Now if he was on 100% commission working for a company, he would have to have no money for the most part because he would be selling the product of someone else. He would have no costs to account for and basically would just rake in his commission off of sales with no worries about paying for what he just sold.

Big difference.

That being said, I will not post in this thread anymore.

[Edited on January 13, 2010 at 4:50 PM. Reason : ,]

1/13/2010 4:37:20 PM

Quote :

"If you don't have GREAT credit, forget about it. Improve your credit rating, then think about starting your business."

Definitely loopholes to open an LLC and get a solid clean line of business credit regardless of your personal rating.

1/13/2010 5:24:07 PM

well spill the beans!

1/13/2010 5:37:13 PM

i am in the second year of my own business. I have a full time day job but have a part time importing business. It has been good to me in a few ways and bad in others. I can not tell anyone I work with about it because is it would be a competition to my day job. Even though my day job does not sell those specific imported items they are still in the same industry. A secondary income that is more than my wife's full time income is nice. The paper work and extra taxes blow. Keeping up with all the sales tax, business lisc's, and banking is a pain in the ass. The competition is fierce right now but I believe I import the best product in our market for less than anyone else because they two step and I am direct. I lack the funding I need to make this big, also lack a good construction market currently. Last year we grossed over 700K. This year only 475K. Be prepared to work like never before and a real emotional roller coaster.

1/13/2010 6:58:01 PM

wow, nice gross!

1/13/2010 8:16:58 PM

Quote :

"If you are creating a partnership, never split 50/50. There must be a majority partner. 51/49 is fine."

what is your reasoning behind this? just so there is a clearly defined leader? I'm not trying to be an ass, i'm genuinely curious.

1/13/2010 8:33:54 PM

^Because without a majority owner, you can get into deadlocks. When critical decisions need to be made about a business, there must be a majority vote to determine a course of action. Otherwise you will end up going to court to determine who is actually the majority interest. This gets especially important when it comes to leaving a partnership, or dissolving a company.

Quote :

"He was working for himself and assuming all the costs inccurred in that business. Without his credit cards or some investment from backers, he more than likely could have never had the success he had, if at all. Now if he was on 100% commission working for a company, he would have to have no money for the most part because he would be selling the product of someone else. He would have no costs to account for and basically would just rake in his commission off of sales with no worries about paying for what he just sold. Big difference."

If he had incorporated, he could have used the corporations line of credit instead. You assume, incorrectly, that running your own business requires you to take on personal liability for losses and inventory. Neither of these are true.

In the eyes of the law, the only differences between running a corporation yourself and working for a company on 100% commission are ownership and payroll.

1/13/2010 10:10:04 PM

Quote :

"Definitely loopholes to open an LLC and get a solid clean line of business credit regardless of your personal rating."

Feel free to share. Possibly if you get a government grant to back you, or you have significant material assets. Otherwise, you pretty much have to have a personal guarantor to get started.

1/13/2010 10:12:10 PM

^ yeah really, because I'm under the same impression as Noen.

1/14/2010 12:18:42 AM

Quote :

"Definitely loopholes to open an LLC and get a solid clean line of business credit regardless of your personal rating."

Ok, I am back.

Sorry.

But if it were that easy, then every person with bad credit would be out forming LLCs selling dogfood and getting a brand new car on the "company" dime.

1/14/2010 12:26:02 AM