Going Into Business For Yourself
Not always as easy as one thinks and just because you do well in one year doesn’t mean you will do well the next year.
One person we talked to who was a fixture in the display business started another home-based business selling clothes hangers to hotels. He got a sample of a hanger they used and had them replicated in Hong Kong for very little, but he had to buy a million at a time. He sold them for a hefty profit to the hotel chains. After a few years, however, business people from Hong Kong and with-in the hotel industry started under-cutting him in sales. Where once he’d bring in $50,000 in hangers and sell them for $120,000 he was now bringing in $50,000 of product to make $65,000 in sales. He got out of the business because a T-Bill could earn him almost that much on a $50,000 investment with no work at all!
Another person we talked to got into the magazine distribution business by accident. He did a lot of networking one major publication offered to buy him a vehicle (which he would own) in exchange for him delivering their magazines for a period of time.
He eventually picked up other magazines and within three years was grossing almost a quarter million dollars. He hired a variety of part-time workers to help him out, but after a while some of those workers thought they could do the same thing, so they started stealing his business. Also, some of the new magazines he worked with would get his delivery list and cut him out of the picture paying some kid a few bucks to deliver to those addresses that came from years of doing the route! Finally some of the newer people he contracted with to do deliveries were simply throwing stacks of magazines into dumpsters and saying they delivered them.
Eventually he had to sell his house and go into bankruptcy over all the “rip-offs” and government regulator problems he eventually faced. Today he still runs the delivery business but he no longer uses outside workers. He does it all himself and makes a tidy profit. He found some live-in commercial space where he stores the magazines and he does all the work himself, which amounts to hundreds of miles of driving each week, but he pulls in three to four times more gross income than the average hourly worker, plus he’s his own boss.
Our final entrepreneur started getting into high end audio back in the 1980’s. He bought vintage tube mics and tube outboard equipment. He eventually started working long term leases with major studios. Over the years he built a stockpile of probably half a million dollars in total gear, but he’s always habitually $50,000 in debt. He recently started a major studio equipment rental operation, but he only caters to national acts signed to major studios and known producers. He still maintains long term leases on some of his equipment.
To pay for most of this he worked as an audio engineer at clubs in the area and sometimes even worked for mass tape replication houses loading blank tape for $17.50 an hour. Eventually he got his long term leases up enough to cover most of his living expenses and monthly bank loans.
In his new brick and mortar business his on-the-line staff of seasons veterans make a large amount of the net profits that come in from the operation and he takes only a token amount for the investment, but he actually does very little of the brick and mortar work. His main job is obtaining hard to find mics and other equipment so they can rent it out!
This is a new venture and it is making some increase in gross and net profits, but it is not grossing enough to keep everyone alive. Eventually the operation may grow and become a true bonanza and he may be able to sell the company and stock to investors a huge profits or the market could dry up and he would have to close down the operation and just go back to long term studio leases.
It took many, many years and thousands of dollars of his personal income (which mostly came from day jobs) to collect his stock of vintage equipment. It took years before that stock of equipment made enough to finance his $20,000 a year life style. Now it finances that lifestyle plus a small brick and mortar operations with several employees. So after 20 years of so of hard day job work his investment in equipment (worth hundreds of thousands of dollars) can gross about $100,000+ a year in rental income.
His success took two decades, a lot of personal investment in terms of money and day job, but he was very savvy about what he bought and to whom he would lease his gear. He also made friends and connections which eventually turned into a larger operation that still needs to prove its worth!