I was toying with the idea of starting a business. I’ve got some of the necessary resources and some highly interested and committed relatives. It would be a distillery for bourbon. Obviously the Mises Forum is not going to be the end-all decision on this issue. I did want to know what you would think about starting a business on what I would consider the verge of a breakdown. Obviously that will probably be bad for business, but how bad? After all people don’t really stop drinking, especially in times of trouble (I don’t mean that to sound parasitic). I realize I don’t have much information to give you so you can’t really help me personally, but what do you think about entrepeneurship amidst crisis generally?
Entrepreneurs tend to say the only real job security is in the job you create for yourself. So yes, there is an argument that tough times are exactly the times when you want to have something other than a W2 job. Sure, a “guaranteed” paycheck is nice…but it doesn’t mean much if your job isn’t guaranteed.
And yes, there are certain industries that don’t tend to suffer very much regardless of what’s going on. Alcohol certainly is one of them, so you do have that going for you. A few people have asked similar questions. Have a look at these threads. I’ll add more if I think of them:
9) The economy is about to boom. I don’t care if you believe this or not. Stop reading the newspaper so much. The newspapers are trying to scare you. Bernanke just printed up a trillion dollars and airlifted it onto the US economy. Who is going to scoop that up. You in your cubicle? Think again.
The two generic pieces of advice I’ll give (NB I have no business experience so this isn’t that kind of advice) are: 1) watch out for the red-tape… try to count the cost of compliance up-front, if you can; then maybe multiply that by two just to be safe. 2) Maintain an uncompromising customer orientation. Once you’re in (passed all the ATF’s red-tape hurdles), the temptation will be to sink to the baseline… high prices and low customer orientation. After all, this is the whole purpose of red-tape… it restricts competition and, therefore, cartelizes the market. Don’t sell out to the big boys when you’re successful; and don’t stop pleasing your customers.
Haha that was the idea. 100 proof for the cost of 80 proof or something like that. A guy I know says that the corn that grows on the land has a higher than usual sugar content, thus there would be a higher alcohol percentage at the end.
Thanks for the input, I got a kick out of Altucher’s 100 tips.
The best investment is to invest in oneself, so I agree with others here, starting a business regardless of a recession is a good idea. Be prepared to fail though, most successful entrepreneurs go through a number of failures before they hit the jackpot.
I learned the hard way the importance of keeping costs down and making every dollar count. I’d suggest Little Bets as the best book to read before starting a new business.
The tech industry is not the paragon of free-market virtue that you seem to believe it is. Note that I am an engineer for one of the very largest tech companies (roughly 100,000 employees).
Paragon of free-market virtue? What the hell are you talking about?
All I did was ask what is wrong with selling a company you create. If you can’t provide a sufficient answer, just say so. You don’t have to put words in my mouth.
My suggestion is that you think of the business not as a business, but as a means of satisfying the felt uneasiness of others. By this I mean, that many entrepreneurs get caught up in structuring their business to the point of being a bureaucracy and end up focusing on managing the business processes and controlling their employees, instead of focusing on the purpose of the business. Also, remeber that all exchange is beneficial to all parties, and have that attitude.
@JJ: You seem to have a short memory, this isn’t our first go-round on the topic of the tech industry.
There’s nothing wrong with selling your company. When I said “don’t sell out to the big boys” note that “sell out” is an idiom that doesn’t literally mean “make a sale to.”
However, I am skeptical of this new-fangled start-grow-sell-move-on model of business. If Jargon’s expertise is in the production of quality liquor and he’s identified a niche palate to which he can appeal, I think his best strategy is to do the hell out of it and never sell the business. If he can grow his business to sufficient profitability, he should seek to make the business brand his family’s crown jewel and pass it and its secrets on to his heir. On the other hand, the smart businessman will always document his business process to such a degree that he could literally walk out and sell it on a moment’s notice.
I think the temptation to get wrapped up in the business as an end-in-itself comes in part from the necessary care to make sure that you are not being swindled by your employees. Increased care is required in the modern environment of cartelized employment and (somewhat) cartelized employees and a highly impersonal employer-employee relationship. You might be paying an employee who is just treat the paycheck like welfare, sitting out back smoking while he’s supposed to be working. You might have an employee who’s keeping two sets of books or falsifying inventory records. You have to adopt methods and practices that will make sure you will be able to detect such abuses as early as possible … before they have a chance to bankrupt you. After you’ve been taken once, I’m sure it’s easy to get wrapped up in the bureaucracy and the control of the employees and lose sight of what the original purpose of the business was.
@Wheylous: You must be thinking of someone else. My employer’s revenues are entirely based on IP law. I can’t think of anything about IP that is free-market.
Again, what the hell are you talking about? How are we “going around” on tech history? You said “don’t sell out”, I asked what was wrong with selling a company, and you come back accusing me of believing “the tech industry is a the paragon of free-market virtue”. I reiterate that all I did was ask what is wrong with selling a company you create, and now you’re telling me we’re having a “go-round” on tech history?
It’s like you’re schizophrenic or something.
You admit you weren’t talking about selling a company, and you agree with me that there isn’t anything wrong with that. You could have easily said that on the last page. It’s like you’re looking to butt heads so you pretend there’s an argument taking place where one doesn’t even exist.
What I meant was that he shouldn’t go for the modern corporate model of structuring a business because it is very inflexible when it comes to reacting to the market. Most big companies today have molded their structures in accordance with the best practices learned from acadmic study and forced by the state, but they very often benefit from being in bed with state–whether it be special tax breaks, IP, regulations, licenses, etc–so they don’t need to adapt to the market.
Also, as Wenzel points out in his podcast, these practices are devised by people who have never ran a company and have a bureaucratic mindset. So, structure your business to be able to adapt to the market. Do side deals that have nothing to with your main business. Network with others and connect others who think ought to be networked; undercut everyone; provide the best service; do stuff for free just for the experience; but don’t start a business that will satisfy your own felt uneasiness, because you have to stay profitable and the market won’t care about you lifestyle business.
Do business to satisfy the felt uneasiness others and then use the profits to satify your own.