An open letter to a family member who’s about to embark on their own small business venture.
Hey. You. Yeah, you.
We’re not really on good terms. You resent me for things I’ve done in the past, and I normally don’t take the time of day to think about you. You lost my trust and respect a while ago, and while it may take a while to rebuild you’ve shown no efforts in favor of that activity. So as far as we’re both concerned, I’m estranged from you and you’re living your own separate life.
But here’s the thing. I heard from my sister yesterday that you’re about to sink a lot of money into your own business.
Normally I’d applaud you for your entrepreneurial-ism, but in this case, I’m going to tell you not to do this.
Here’s why. You worked as a hardware store assistant, then a HR manager in a medium-sized company, for over 30 years. You certainly have some retail experience (there’s no doubt about that), but I don’t think you have what it takes to open up shop yet. Yes, I’m being brutal here, but the stakes are much higher when the buck stops with you.
The business you want to open will require at least $20,000 capital, and that will be before you order any stock to sell. You need to pay rent, staff and taxes. You need to register a business name, research pricing and suppliers, and identify someone to do your business tax every year. You’ll need to fit your shop with racks and rails to display your stock, and pay for advertising so people know you exist. You’ll need a mobile, a business email, and probably some business cards as well. You lost your job in HR the year before last, and have been hopping from job to job ever since…I know for a fact that you and your immediate family don’t have that kind of money, so where are you getting your financial support? I sincerely hope you haven’t added a business bank loan to your already large credit card list.
On top of the financial cost, you need to be educated and prepared to open up a business and survive its first year. In Australia, the statistic for small businesses surviving their first twelve months is not in your favor, and you need the right combination of savvy, knowledge and support to succeed. You may have the savvy and the support, but you’re also at risk with your lack of knowledge. I can see you making a lot of rookie mistakes, and that will cost you dearly.
Are you familiar with the local employment laws for small businesses? They’re different to the laws you might be used to in your hardware years, because small businesses have extra regulations and expectations that large businesses don’t have to consider.
Have you done your research for pricing and inventory? Do you know how to manage, order and rotate stock regularly, and when to set sale prices? Having a sale for too long, or not long enough, can impact how your business is perceived by your customer base, which is only one tiny element of the small-business-customer-relationship matrix that you’re going to have to navigate.
Because here’s the facts; The product you want to sell has an incredibly niche market. Advertising to them will be expensive, and labor-intensive. They won’t be walking in every day to buy your stuff, and some days you’ll operate at a loss because you can’t forget to pay yourself wages plus Superannuation. And some of these customers may be aggressive. They might not like how you run things, and they’ll push your rules to see how much you’ll bend. Some customers will always try to get a ‘package deal’, and if you’re not careful you’ll accidentally give too much stock away for free in order to ‘close the deal’. When it’s your livelihood on the line, you can’t do that regularly.
The hours are long and unforgiving. You can’t just take a sick day unless it’s serious, because you’re the owner and the manager. Staff will stand you up some days, and how you treat them is a precarious situation. You need to draw up contracts, roster sheets, calculate overtime, and accurately predict your running costs. You need to identify where your product fits in to the local landscape, who your competition is, and how to effectively adapt to changing retail conditions.
Why am I so harsh? Why do I have such little faith in your capacity? Because you’re not the type of person who learns quickly. You were in the HR industry for over 20 years, and never went to university to brush up your skills – it’s why you couldn’t find a steady job for 2 years. You did the bare minimum of TAFE certification when it was expected of you, and you rarely put any of that theory into practice. When I studied HR, you showed no interest in talking with me about the new things I was learning, which was a red flag for your capacity for professional development. You didn’t engage with the wider professional community. Your network was closed, and poorly maintained, so it crumbled around you when you needed it to work the most, and speaking from personal experience – your people-skills need work. You may be a good leader when the situation arises, but you also have a temper. You’re rude, sarcastic and flippant at the worst of times, and the moment your job is linked to your attitude, you’re going to have a hard time keeping those flaws in check. The hours, the stakes, and the cost will cause you a lot of stress, and you’re not good at managing your stress while maintaining a professional level of composure. If I were your boss, you’d be a liability to the company. Articles in the news constantly harp on about Gen Y lacking ‘soft skills’, yet you’re a case study in the Baby Boomer type who raised these skill-lacking Gen Y-ers. You’re just as bad – if not worse – because you’ve had far more time on-the-job to learn these skills.
You do little research, are over-confident in your capacity for success, and aren’t good at forecasting risks. You’re under-prepared for dealing with people, and over-prepare your resources at a huge financial cost. You’re not up-to-date with current management strategies that would give you a competitive edge, are completely unaware of the benefit that technology would give your business, and you have no experience being your own boss. You weren’t prepared to do the grunt work in finding a new job for a company related to your experience, yet you’re entering a sector of Australian commerce that requires precisely the skills you weren’t willing to develop. You missed opportunity after opportunity in the lead up to your decision to open your own shop, which is why I suspect this is your ‘last ditch’ attempt at employment. You’re stuck and you want a job, so you’re intending to go ahead and create one for yourself. It sounds nice in theory, but you need to take off your rose-tinted glasses for a moment and look in the mirror first.
Are you really, really sure that you have what it takes?
Are you prepared to work from 7am to 7pm every day? Are you prepared to work weekends, holidays and when you have the flu? Are you prepared to bring your admin work home every day, because it’s either that or miss dinner? Are you ready to start reading books, taking notes, and asking people for their experience? Are you ready to learn how LinkedIn, Twitter and Facebook work for business? Are you ready to learn how to do market research, surveying and accounting? Are you ready to adapt, learn quickly and memorize your rights at work, as well as the rights of your employees and customers? Are you ready for community outreach and advertising on a weekly basis? Are you ready for negative feedback, poor reviews, and unhappy customers? Are you willing to mop the floor, clean the bathroom, and wipe down the microwave in the break room every Friday? Are you willing to do all that, every work day, and then come home to contribute to your family life in a meaningful and useful way?
As someone with experience in Management, HR, and research…I would say no. This isn’t a good idea, and you’re not prepared for the reality of an owner-manager workplace. I would support you and provide you with assistance for this, but as it’s already been established, you’re acutely disinterested.
So, dear family member who’s planning to start their own business…Don’t.
However, since you don’t read blog posts or long-format articles on the internet, you will And it’s going to be hard. And I sincerely hope that I’m wrong, and you do have what it takes after all.
(This is NOT general advice for small-business-owner-hopefuls – it’s specific to one person that I know personally).