How to Start a Small Business and Make Big Money
"Mrs. Fields" started selling cookies door to door and now is a major food company. "Harry and David" began by offering boxes of fruit and became a flagship company in the gifts industry. Even "McDonalds" started with just one store and developed into a business that sells billions of hamburgers. These examples are food-related, but nearly any small business will grow under proper management. You can start a small business and make big money. It takes business acumen, effort and planning.
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Instructions
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Start the Business
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Develop a business plan before you start the business even if you won't require a loan or investors. The process of business planning prepares you to start the business, find your market niche, determine your competitors and develop promotional programs. It establishes goals and objectives for revenues, expenses and profitability.
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Choose a niche and industry in which you have experience. For example, learning how to repair bicycles while you're starting a bicycle shop doesn't work well.
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Obtain the necessary management experience. Take courses or hire someone who is knowledgeable. Operating from a positive cash flow basis as soon as possible leads to profitability.
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Differentiate your company from your competition. Your product should solve the customer's problem faster, better or for less money.
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Market to your potential customer base. If consumers don't know about your services and products, they can't buy from you.
Make Big Money
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Clone the business. Replicate the business in different locations or offer similar but different products. For example, if you have a small nursery specializing in succulents, open another nursery in a different part of town. A major metropolitan area such as Phoenix could successfully support five or six nurseries. If one nursery makes $100,000 a year, five nurseries make $500,000. This works with websites as well. Establish a website offering weight-loss products. Build another website based on exercise and a third on sportswear.
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Franchise the business. A franchisor is willing to pay the franchisee -- that's you -- an upfront fee and an ongoing revenue stream to avoid the learning curve of the business. You provide everything the business needs to be successful, including assistance in choosing a location, training, marketing materials, vendor relationships and brand recognition. The initial franchise fee ranges from a few thousand dollars to hundreds of thousands of dollars. The ongoing fees are usually a percentage of revenues. For example, 20 franchisees each paying royalty fees of $5,000 per month adds up to $1.2 million per year.
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Sell the business. Websites can also be sold. Serial entrepreneurs do this on a regular basis. They start a business and after it's been successful for a few years, they sell it. Businesses sell based on the value of the assets and the potential earning power for the future. That earning power is based on the past profitability of the company. For example, if the business or website has earned $50,000 per year, it might sell for between five and 10 times that amount, or between $250,000 and $500,000.
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Go public. This isn't an option for every business, but it is a lucrative alternative. The shareholders of the company sell part of the stocks they own to the general public. The company doesn't even have to be profitable for a successful initial public offering (IPO). It does have to show potential. Demand Media Studios and LinkedIn had successful IPOs.
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Tips & Warnings
Grow at a rate your cash flow can support, or make sure you have funding sources lined up ahead of time.
Be honest about your business's performance if you're selling it or franchising it.
