Yelp!!!

Cash Baby...

The most important rule I found is: Unless you know more about your chosen field than your competitors, you will fail. This knowledge is about every aspect of your business: product, the market, cost v price, advertising, location, market position, cash flow, credit, supply, turnover ratio, fixed asset and cost to turnover ratio. Profit is not only by iten but by square foot - even if you are selling a service!

The most important knowledge is to gain an understanding of how and why the failures in your field didn't make it. Avoiding their mistakes is often the most important element in the initiation stage.

I look at a business as an elements chart. Each element must be accounted for and dealt with. One false step and you can kiss your business goodbye.

I also learned that the easiest thing to do is to sell a salesman! A businessman? That's another story! Why? A salesman is basically a gas bag filled with bullshit which he won't recognize when it is incoming because he is already overloaded with it. A businessman is always calculating the effect of every action and reaction. No matter what product or service i dealt with in my businesses, I never hired salesmen. They worshipped the almighty dollar to the exclusion of seeing a freight train heading right at them. My floor staff were often teachers, pscyhologists and geeks. They worked with people. Salesmen work people. I always looked for long term gain not short term success. Going out of business sales were not part of my vocabulary.

Good stuff Milt please do tell us what business you where in?

Aloha!

Joe

I've had four businesses over my career:

I owned a 2-branch leather furniture store.

I owned a 5-branch addictions treatment clinic that I built from the ground up.

I had a successful porivate practice as a psychotherapist.

I presently own real estate in downtown Philadelphia- condos which I rent.

Businesses # 1 and 2 sold at a nice profit. Three was a service business that couldn't be sold becasue I was the service. Four has gone up in value 50% in a year - I was offered that amount to sell.

All four ventures have been successful. I'm presently negotiating to expand my real estate holdings. I have long-term leases which justifies a new mortgage. I have sufficient income that will guarantee I can remain solvent in the worst of times. My secret in both of the businesses that were not therapy related: Buy a low-cost high value product and sell as low as I can go. Turns/square foot was the name of the game in furniture and capacity X 365 days a year is the secret in real estate.

You figure this one: Which gives you more money - renting at $1000 a month or $900 a month? The answer is: You cannot tell. The X factor is how many months does it take to fill the unit? At $900, it is filled the day it becomes available. At $1000 it takes an average of 2 months to find an appropriate tenant for the same space. You do the math: 12 X 900 versus 10 X 1000. By gosh, the nine hundred is more a year! Nine hundred is as low as I chose to go becasue at that figure, my net profit is 5.8% just on cost. It doesn't factor in tax advantages or increase in value of the property with a lease in place.

In the furniture buisiness it is turns/ square foot of selling space X net profit/item minus cost of doing business which is basically rent, storage and advertising. Help is a fixed factor when you pay by commission because the more they earn, the more you earn.

I could talk business all day so I'll quit before I talk your ear off!

Execution. It's not the idea, it's what you do with it. Milt did an excellent job of describing the particulars, but it all comes down to execution - doing the right things right.

TN, to add to your progression of thought, that there are a number of sleezeball businesses I have had to deal with where execution would be too good for their workers! Maybe castration followed by defenistration?

#1 is strategy but that is useless unless you can execute so I would have to agree with TNKarl.