A friend recently contacted me with the idea of starting a topless hair salon wondering what my thoughts were on the project. Granted that’s not the style of business I would ever own or start, however I realized my thoughts on, and more importantly my process for evaluating his business idea are the same that I would apply to any business. If you came to me asking if your idea is a good one and if you should start a business I’d answer in almost the exact same way. Since you may have to evaluate dozens of businesses before you find a great one, it’s important that you train yourself to think the same way. So here are my thoughts…
- I don’t recall ever seeing one in the 40+ states I’ve visited but I could have driven right by one and just not realized it.
- Sounds like it has business potential and I’m a big fan of owning businesses vs. working for them.
- It’s almost always better to buy vs. start a business since they already have a location, customers, equipment, cashflow etc. etc. In this instance I’m not sure that’s the case since the customer base may change drastically and the current employees may not be interested in your changes. Maybe take over a lease from one that’s going out of business so that all the equipment is there but the employees and customers are not… Have you been able to find one of these businesses yet? It’s always easier to steal ideas from other established businesses than come up with all of them on your own.
- If you’re really interested in buying/starting a business there’s a LOT more to it than coming up with an idea so you’ll really need to work on educating yourself. Check out my blog and particularly the Recommended Reading section. It gives a lot of good resources for you to learn what it takes to start/buy a business. Particularly since it chronicles a lot of what was involved with me doing the same.
- Las Vegas is in Carson County which currently has the highest unemployment rate by county in the US at about 12.5%. In the last year over 10,000 have left that county (for the first time in like 20 years the population has stopped increasing). Major hotel and building projects have been cancelled and thousands have been laid off. On the plus side, you can probably find cheap space to lease for a business. On the negative side, it may not be as easy to get an extra $20 out of someone for a haircut… This was in essence my target market evaluation. He mentioned starting the business in Sin City for obvious reasons so don’t you think information on the current economy in Las Vegas might be pertinent? Notice how I didn’t discount the idea altogether. A year or 2 ago when things were booming the upfront costs themselves may have made this idea completely cost prohibitive. The down turn in the economy in Vegas may just provide the perfect opportunity for a lease takeover and recruitment of team members at reasonable wages. That’s the beauty of buying and selling businesses. No matter what the economy is doing some businesses will always be available.
- Once you educate yourself a bit about the questions you need to ask about buying/starting a business, call one that’s already established and ask them about marketing, growth, pricing, how the community reacted, how they recruit talent, etc. If they don’t see you as competition a lot of times business owners/managers are willing to lend a hand by answering questions. This is very true. We entrepreneurs are a tough lot who work hard to get where we are. However we tend to appreciate and respect those trying to accomplish the same thing and so don’t mind helping out a little bit when we can. Obviously you can’t abuse the privilege of talking with someone who’s been there and done that. The best thing to do is to build up a long list of business contacts so that when you have questions you can always find an answer without bugging the same person every time.
Can you answer those questions about your business idea in the affirmative? If you can, the next step is determining your break-even point, your potential market, and your marketing plan. Starting with the break-even, if you can risk the money it’s going to take to get you to the break-even point go for it. What do you have to lose? Just be aware that over 90% of businesses fail within the first 5 years so if you don’t want that to be you, over prepare.
To your business starting success, Bryan