Things I Learned from my Failed Business

I started a company a few years back based on an idea that I thought would make enough money to pay for itself. As it turned out, there were a lot of external conditions that made this not the case. For the sake of anyone else trying to ride the fence between a hobby and a business, here are some things I learned from that foray.

Don’t start a business when you aren’t in full control of access – in this case, one individual who owns the property where we were primarily operating, had the power to shut us down.

Don’t overestimate the need of your potential customers. We assumed that since people liked Ford Mustangs, and those same people did not like Miatas, that they would like 4-cylinder Mustangs more than something else. That seemed to not be the case.

Don’t recruit customers who are your friends.  Some separation is needed.  If you want your friends involved, don’t charge them.

Don’t expect your partners to have the same goals and work ethic as you do.  It’s nearly impossible to judge someone’s work ethic until it’s too late.

It’s harder than you think to have a business on the side if you have a salaried, full-time job already.  There are only so many hours in the day, and Murphy’s Law will enter the fray as soon as you have a bad day at the main job, you will have high demands at the side job, creating much tension.

Even with your friends, sign contracts and make things formal. You’ll thank me later.

Get a CPA who knows your industry early on. It does cost money, but it will pay back in spades. A lot of decisions are purely financially-based.

Learn some basic accounting practices. It will help you understand profit and loss. Without this understanding, it’s difficult to understand if you’re actually a profitable business.

A hobby stops being fun once you try to monetize it. You better really love it.

Listen to those you trust.  In my case, it was my spouse. She wasn’t involved early on, and then started giving me warnings of things to come.  I should have listened and followed some advice.

Overall, I learned a ton from my business, and if I do decide to do another one, I will have “experience” now, something I didn’t have three years ago. Being stubborn as I am, I’m not sure I would have taken any of this advice had it been given to me, but maybe you are a little less stubborn and a little smarter than I am.

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