Jay Goltz founded Artists&; Frame Service. Today, the business is the largest retail, custom picture framing facility in the nation.

The Street-Smart Entrepreneur

133 Tough Lessons I Learned the Hard Way

By Jay Goltz, Jody Oesterreicher

Addicus Books, Inc.

Copyright © 1998 Jay Goltz
All rights reserved.
ISBN: 978-1-886039-33-9

Contents

Acknowledgments,
Introduction,
Part I ---- Start Ups: Starting Up without Throwing Up,
Part II ---- Being the Boss: There's No Such Thing as Boss School,
Part III ---- Management: If You Want the Job Done Right, Be a Great Manager,
Part IV ---- Customer Service: Getting Beyond the Hype,
Part V ---- Marketing: What the Hell Is It?,
Part VI ---- Finance: Paper Profits but No Money for Lunch,
Part VII ---- Administration: The little Things that Can Kill You,
About the Author,
Index,

CHAPTER 1

Part I – Start Ups: Starting Up without Throwing Up

If You Don't Want to Answer to Anyone, Find a Nice Cave

What I Used to Think: When you go into business for yourself, you don't have to answer to anyone.

Nobody Told Me: When you go into business for yourself, you have to answer to everybody. You have to answer to your customers, your employees, your landlord, your neighbors, the IRS — everybody. You may not have to take orders and you may have more control of your destiny, but you're accountable to everybody. There's a long list of reasons why people go into business for themselves. They're great salespersons, they're natural leaders, they're ambitious, they have highly marketable skills, or they have a vision. Going into business for yourself so you don't have to answer to anyone is the reason least likely to result in success.

Lesson #1: Going into business for yourself is more responsibility than you can possibly imagine.

Great Ideas Can Be Hazardous to Your Health

What I Used to Think: You think it's a great idea, your wife and kids think it's a great idea, and your friends think it's a great idea. It must be a great idea.

Nobody Told Me: You could come up with the most harebrained idea and find a dozen friends who would say it's great. Why? Because they don't know any better. Because they don't want to burst your bubble. Because they admire your ambition. When you have an idea, discuss it with someone who has enough business smarts and objectivity to say with authority, "I don't think that idea will work. Here's why." Or, "It's a great idea. Let me tell you why."

Several years ago I stumbled into the opening celebration of an ice cream parlor near my home in suburban Chicago. A corporate executive had opened the shop. He had planned for his wife to run the place until his retirement, when they would run it together. That night there was a big crowd of well-wishers. Everybody was smiling. The future looked bright. I went in there on a Saturday about a month later, and it was very quiet. The wife, husband, and their eldest child were working behind the counter. They looked disappointed but hopeful. I came back a month after that and found the wife working alone. The place was empty. I returned a few months later and found the windows covered with newspapers. The shop had closed.

I don't know enough about the ice cream business or about the personality of this corporate executive to say why the business failed. But I do know summers are short in Chicago, and running a small business is a far cry from running a corporation. I suspect this guy's friends and family told him the ice cream parlor was a great idea. But I doubt he thought it through very carefully either from a business or personal perspective.

It's crucial to conduct a careful business analysis and make a business plan before starting or purchasing a business. It also is important to talk to lots of people, like the owners of similar businesses, potential customers, a lawyer, an accountant, and anyone else who can shed some light on what you might be getting yourself into.

Lesson #2: Behind every failed business are a dozen friends who said it was a great idea.

Have You Thought about Your Assets Lately?

What I Used to Think: Hard work is the surest route to success.

Nobody Told Me: If hard work is the key to success, most people would be successful. Leveraging your assets probably is as crucial to success as hard work. When I say "assets" I don't just mean what you own. I mean anything you can use to your advantage. The kid who goes into business with his father may be leveraging his parentage. The guy who makes it big in sales may be leveraging his personality. The woman who opens a visiting nurse's service may be leveraging her experience as a nurse and administrator. You can leverage anything, including who you know, where you're located, and what ideas you have.

To get my business off the ground, I leveraged three assets: my best friend's father had a picture-framing business, I was well versed in customer service from having worked at my father's dime store, and I had a good head for math. The key to leveraging your assets is to take inventory of what you have. Some people do start from scratch, but they usually take longer to succeed than those people who use everything they have to fuel their ambitions.

Lesson #3: If you've got it, use it, even if it's just a great smile.

Putting the Competition under the Microscope

What I Used to Think: The best competition is no competition.

Nobody Told Me: Competition is one of the primary indicators of demand. If there's no competition, there may not be a market for your product or service. If you're trying to break into a competitive market, however, first do a competition analysis.

Location may be a vital factor in your success, whether you're a retailer, wholesaler, or manufacturer. Governmental agencies, universities, think tanks, and even the company that produces the Yellow Pages publish information that may help you determine the best location for your business.

If you want to give your competitors a run for their money, you have to know their weaknesses. Consider posing as a customer to find out more about the competition — how they do business and who their customers are. Your business will have a better chance of succeeding in a competitive market if you provide better prices, quality, or service than your competitors. If the market is saturated, there's nothing you can do to improve on the existing businesses, or they have unassailable competitive advantages, you might be better off getting into something else.

Lesson #4: It's easier to steal a share of the market than to create a market.

The Money Pit

What I Used to Think: Your start-up costs are pretty straightforward.

Nobody Told Me: A little thing called negative cash flow can blow the lid off your business before you ever have a chance to make a go of it. One of the keys to a successful start-up is to begin with enough capital to keep your business afloat until it breaks even. One of the biggest mistakes people make with their start-ups is underestimating the time it takes for their businesses to be up and running. You have to hire employees, train them, and often replace them because they don't work out. The time between starting and running the business can be weeks or months. Guess what, your new employees have to be paid during this phase!

That's why you have to project what your break-even point is and how much working capital your business needs until...