5 Lessons Learned Starting a Business

May 3, 2010

My friend and his wife started their own consignment sale business this year and held their first sale this spring.  We caught up with them last weekend for the first time since the sale and as we talked about what they’d learned from starting a business I asked if they could share some of thier lessons learned.

Of course, when you start a business there are many things you learn about as you go, but these are some of the ones that stuck out in their minds.

Don’t Underestimate Start Up Costs & Time Required

I was thinking early on that a consignment sale business was the perfect way to make extra money.  No inventory to keep a hold of, only work a couple weeks out of the year. 

Unfortunately, the start up costs were double what I thought they would be.  We made about as much as I thought we would for our first sale but not enough to cover up the start up costs. 

Also, the time it took to get it up and running was incredible.  There were so many things that kept popping up that made it impossible to get good rest and the lack of sleep really took it’s toll.
 
 
Study Small Business Marketing

I don’t have a background in marketing and could have done more to attract customers. I thought I would be fending people off to come shop our sale so I focused soley on getting consignors to list items for sale up until the final week.

We did a decent job attracting customers via word of mouth through our personal network but we were still left wondering “Where are the shoppers?  Who wouldn’t want a good deal?” 

Our location probably had something to do with it but the lack of marketing to shoppers was definitely a big part of it.
 
Beware Burn Out

You can only work 16 hours a day for so long.  Even since the sale has been over, I’m having some major motivation problems to focus in on the next sale.  The parts of the business are all in place now. The web site is built, the point of sale system is in place, etc but I’m having a hard time gearing up for the next one.

Hopefully I’ll be over this hurdle soon.  Also, maybe the year we had twins wasn’t the best time to start a business venture like this. (Editor’s Note, I imagine doing anything with twin babies would be exhausting, let alone starting a business!)
 
Location, Location, Location

We picked an older building for the cheaper rate.  In hindsight it was a bad decision and we had many, many complaints.  Next time we’ll find a better location to hold the sale.

The Value of a Dollar

When you’re an employee you don’t always appreciate what it takes to earn a dollar.  As long as you go to work each week your paycheck shows up in your bank account.

When you start your own business you have to earn every penny. At one point in the sale I took money for 3 hours straight, I thought for sure we were making money enough that day to cover start up costs.  Unfortunately, it wasn’t close but it did make me appreciate how long it can take those dollar to add up.

We hit some roadblocks along the way but we certainly learned a lot.  Although starting our own businesss was exhausting, I’d do it again but this time learn from these lessons and make better decisions.

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Ben

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Ben
Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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4 Responses to 5 Lessons Learned Starting a Business

  • Daddy Paul

    What software package would you get? Keying a shoebox full of receipts and odometer readings into excel does not seem ideal.

  • Kevin@OutOfYourRut

    With all of those lessons in mind, I think you’re generally better off starting a business than not, even if it doesn’t work out..

    Any time we try something new, we gain experience, skills and perspectives we wouldn’t get otherwise. In the case of the couple above, they may not have gotten all that they wanted, but they took that all important first step forward.

    Because of that, they now have some real life experience to build on. Each time they try, they”ll get better at it. Or they’ll move onto something else where the lessons and skills learned will advance them that much faster.

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