Thursday, July 25, 2024

Doctor Love: Business Tips


Dear Doctor Love,
My husband and I moved to this island three months ago. Our intentions were to either buy a small business that we could run ourselves or to buy one that is already established. Now that we have been here a while, we have found one that we think we would like to buy. It is affordable for us, which means it is within our budget. We do not need to turn a profit for the first year but we would at least like for it to break even so we can turn a profit by the second year.
Do you have any tips that would make it easier for us?
/s/ New In Town


Dear New,

There are always tips that would make it easier for anyone but those tips are rarely followed or even given any consideration. That is because, even though the buyer does not know it, he has already made up his mind on how the business is going to be run. Even though he might ask for advice he rarely follows it. That is part of human nature.
Having said that; the Doctor offers the following advice:

Ask yourself if you really have any idea of what you are doing. The Doctor suspects that you know nothing of business. You left a big clue about this by saying that you would like to break even the first year. In order to break even your business would have to generate enough profit to pay for the initial investment (buying the business), salaries for employees, expenses and a salary for you and your husband. Do you realistically believe this to be possible? Unless you are buying a hot dog cart the Doctor can think of no business on this island that will allow for this.

Research what you intend to do before you start. Is anyone else in the same type of business? Are they making mistakes that you can avoid? Can you do it better than they are doing it?

Have a business plan. The business plan should be like a roadmap of where you intend to go with your business. Stop and check it frequently to make sure that you are sticking to your plan.

If it is not broken, don’t fix it. If you have a business that is working, make it a hard and fast rule to change nothing until the first six months have passed. This will give you the opportunity to find out how your new business actually works; not how you think it will work. This especially applies to changes in the building, which can drain even more capital than you have already spent. Make allowances only for regular maintenance and painting. After six months you will know what you really need; not what you think you need.

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