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Old 02-14-2020, 02:42 PM   #21
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I would not waste my time with the SBA. I went to them for advice back in the early 80's and had I listened to their advice, I would not have been able to retire from working full time in 1992 like I did.

I was opening a video rental store before the VCR was mainstream and several SBA people from two different locations told me that renting video tapes would not be a viable business. They suggested I open a record and cassette tape store!

They also recommended I devote more capitol to purchasing expensive fixtures, and signs to make the store look classy to attract customers. I disagreed and said a better selection of tapes was more important to a renter than a fancy store. They also said to borrow money for video tapes. I had around $10,000 and opened with home made and thrift store fixtures and purchased as many tapes and rental VCR's as budget allowed. I think I started with around 100 tapes and 30 VCR's.

SBA also said that no one would pay a membership fee to rent tapes.

On opening day, I charged a membership fee, discounted for the first 100 customers and made $3,000 on the first day in membership fees and another $1,200 in VCR and tape rentals. I bought additional tapes and VCR's the next day. And pretty much every day for several months.

Opened a few more stores after video rentals got real hot after the Sony Betamax case was settled. What's amazing is that the first store was opened with $10K and 100 tapes. The second $80K with 1200 tapes due to the expansion of the market and expectation from customers. Bought the fancy fixtures as cash flow exploded.

Sold the stores after 10 years before Blockbuster, Hollywood Video and other chains started moving into the state putting "Ma and Pa" video stores out of business.

One of the other suggestions from SBA was to lease stores instead of purchasing in order to have more capitol for inventory. I leased the first store but subsequent ones were purchased. When I sold the business, not the buildings, rent income was close to the income from the stores. When I first opened I was the only store within 10 miles, but by the time I sold, there was a Video stores at every shopping center and net profit was declining. The income from the buildings allowed me to pursue part time side hustle businesses that was more fun and less time working.

SBA might be helpful for starting an established type of business, but for something new, they have no imagination and tend to discourage startup.
I recommend a small business accountant, but I also caution not to judge the SBA today based on one situation in the 1980's. That's nearly 40 years since. Things change in 40 years.
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Old 02-14-2020, 03:04 PM   #22
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Syjos: I would not disagree with anything you say, except when you dismiss the SBA advisors out of hand. Remember that some of them are people exactly like you.



A person has to take a close second and third look at any advice. We did that for our first clinic: I went to my bank to enquire about a business loan. They said I needed to write a business plan, and handed me a 60 page booklet. I threw that in the trash and we started on a shoestring with cash in hand and IKEA cabinetry. That was our best ever decision. But we knew our business well, as my wife had managed other clinics before, and there was nothing new or revolutionary in what we were doing. It is different if you are new to independent business and need to understand the basics.



I say get as much advice as you can and then sift it all carefully. Borrow as little as possible: once you are approved for a business line of credit, financial institutions want to lend you as much as possible, often against their own long term interests as a lender. Resist the pressure to borrow more than you absolutely have to.


Tugboater, if what you really need to know is if an idea will fly, or at least float, then you are probably going to have to rely on your own judgement for the final decision. You will surely be taking a risk. Never know till you try.
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Old 02-14-2020, 03:30 PM   #23
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Borrow as little as possible: once you are approved for a business line of credit, financial institutions want to lend you as much as possible, often against their own long term interests as a lender. Resist the pressure to borrow more than you absolutely have to.
Bob-thanks so much for your time. This bit quoted here sounds so much like another one I've read a few times on these forums. It sounds something like, "Don't buy the biggest boat you can afford, buy the smallest that fits your needs & can live on."
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Old 02-14-2020, 04:35 PM   #24
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I recommend a small business accountant, but I also caution not to judge the SBA today based on one situation in the 1980's. That's nearly 40 years since. Things change in 40 years.
The SBA has not changed much in 40 years. I know several SBA advisers and they are still too cautious and discourage taking risks. I tried volunteering with them but they are too restrictive with wild ideas for my taste.

Imagine Mark Zuckerber describing his idea for Facebook getting nods of approval from SBA. SBA - "You're not going to charge money to people using your service? hmmmmm."

Or Elon Musk pitching Tesla to SBA. SBA - "Mr. Musk, men with more experience in auto manufacturing than you have attempted launching their own automobile companies. What makes you, with no background in auto manufacturing, think you will succeed when they failed. Go home and read about Preston Tucker and John DeLoren before you lose your money".

Or Sergey Brin and Larry Page floating Google.

Or Space-X, eBay, Twitter, etc.

I haven't mentioned the other businesses I started after the video stores, but most of them would have been discouraged by SBA advisors.

As I posted earlier, SBA might be helpful for starting an established type of business, but for something totally new, they have no imagination and tend to discourage innovation.

An entrepreneur is born with imagination, resourcefulness, self confience, good work ethics, determination and no fear of failure. They have ideas. They are not created by the SBA.
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Old 02-14-2020, 05:40 PM   #25
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My experiences working with SCORE mentors at SBA really had nothing to do with "Is this a good idea or not?". Rather, it was more like "Here's the business I'm getting into. What do I need to know about financing, accounting, biz plans, licensing, regulations etc. etc. etc.", and I found them very helpful with that.
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Old 02-14-2020, 06:13 PM   #26
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The SBA has not changed much in 40 years. I know several SBA advisers and they are still too cautious and discourage taking risks. I tried volunteering with them but they are too restrictive with wild ideas for my taste.

Imagine Mark Zuckerber describing his idea for Facebook getting nods of approval from SBA. SBA - "You're not going to charge money to people using your service? hmmmmm."

Or Elon Musk pitching Tesla to SBA. SBA - "Mr. Musk, men with greater experience in auto manufacturing than you have attempted launching their own automobile companies. What makes you, with no background in auto manufacturing, think you will succeed. Go home and read about Preston Tucker, John DeLoren before you lose your money".

Or Sergey Brin and Larry Page floating Google.

Or Space-X, eBay, Twitter, etc.

I haven't mentioned the other businesses I started after the video stores, but most of them would have been discouraged by SBA advisors.

As I posted earlier, SBA might be helpful for starting an established type of business, but for something totally new, they have no imagination and tend to discourage innovation.

An entrepreneur is born with imagination, resourcefulness, self confidence, good work ethics, determination and an idea. They are not created by the SBA.
Interesting perspective. I am a somewhat successful entrepreneur but I'm conservative. Of those you mention, I wouldn't have had interest in Facebook or Tesla. Space-X too early for me. Ebay would have gotten my interest but concerns about trust and payments would have been on my mind. Still I thought it would work, just not to the level of success they had. Twitter I thought was a definite as others had paved the way. I had a cousin who had the first video department in his town and I thought it was shear genius. That said, I'm creative business wise, but not product wise.

So, brought me to the girl I've ended up mentoring. She had the idea and I believed in it and in her but she had no experience and I gave her the task of writing a business plan. She had no experience, hadn't yet taken any business or accounting course, and I provided no help. 10 days later she handed me one of the best business plans I've ever seen and I've supported her effort from there. She was and is a creative genius and also she is an incredible salesperson who at 19 was selling major department stores on her line. She is CEO of a business doing $2.5 million in sales in 2017, $80 million in 2018 and over $250 million in 2019. I still don't believe it all but I never personally could have done what she has.

So, your point in conservatism is well made.

However, there are advisers who can support and advise effectively, even if they wouldn't have undertaken the business. I never would have done what she has, but she couldn't have done what she has without me and others.

I watch shows like Shark Tank and The Profit. What I often see is very creative entrepreneurs but they are struggling and need someone to guide or support them on the next step. They have the ideas, have knowledge of their business, but lack the overall knowledge and experience.

So, I'd still recommend trying to find an adviser, whether a local small business accountant or through score or just finding a retired businessman. There are many people out there willing to share knowledge if one will listen. Now, what I generally would not do is take anyone on as a partner or investor unless one just has no other way. I do not like partnerships.
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Old 02-14-2020, 06:14 PM   #27
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My experiences working with SCORE mentors at SBA really had nothing to do with "Is this a good idea or not?". Rather, it was more like "Here's the business I'm getting into. What do I need to know about financing, accounting, biz plans, licensing, regulations etc. etc. etc.", and I found them very helpful with that.
If that's all you allow SBA to assist you with, you're safe.

I would rather pay a CPA to provide that service from the beginning. A small business will need one sooner than later.
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Old 02-14-2020, 06:35 PM   #28
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I watch shows like Shark Tank and The Profit. What I often see is very creative entrepreneurs but they are struggling and need someone to guide or support them on the next step. They have the ideas, have knowledge of their business, but lack the overall knowledge and experience.

So, I'd still recommend trying to find an adviser, whether a local small business accountant or through score or just finding a retired businessman. There are many people out there willing to share knowledge if one will listen.
I agree. One of the side hustle businesses I started was as a Retail Consultant. I started helping small business owners but soon I'm contracted to Bank of America and Key Bank wanting to assess and train their tellers and personal bankers how to upsell money market, CD, loans and investments to customers. It was more work than I wanted to conduct and dealing with bankers is not easy so turned it over to another consultant.
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Old 02-14-2020, 06:54 PM   #29
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Asking financial advice from boaters. What could go wrong.

First thing my financial advisor said to me was to sell the boat, first this I said after was he was fired.
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Old 02-14-2020, 07:00 PM   #30
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Asking financial advice from boaters. What could go wrong.

First thing my financial advisor said to me was to sell the boat, first this I said after was he was fired.
Our CPA says, "You sure you don't want to take a business deduction for any of their use?" I repeat, "No, they're pleasure boats, not business. When we have employees aboard there is no business reason. In fact we have a rule against discussing business."
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Old 02-14-2020, 07:06 PM   #31
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Our CPA says, "You sure you don't want to take a business deduction for any of their use?" I repeat, "No, they're pleasure boats, not business. When we have employees aboard there is no business reason. In fact we have a rule against discussing business."
Same here.

Writing off a boat is a sure way to get audited.
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Old 02-14-2020, 07:09 PM   #32
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Don't forget to line up a lawyer. You will want to look into laws, permits, regs etc. A good corporate lawyer in your area should work.
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Old 02-14-2020, 07:16 PM   #33
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Asking financial advice from boaters. What could go wrong.

First thing my financial advisor said to me was to sell the boat, first this I said after was he was fired.
Many entrepreneur and small business owners are boaters.

Gives them the freedom to boat when they want and for longer period than 2 week vacations.

And they tend to be risk takers.

Financial advisors, the investment types, would rather have your money to invest than you tying up your money in a boat. Reduces their commission and/or fee opportunity.
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Old 02-14-2020, 07:21 PM   #34
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Anyone who wants to start a business and do so the right way has my full support. Good luck.

While I might call my boat the floating office and work from there frequently in the summer, I would never consider trying to write it off.
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Old 02-14-2020, 07:26 PM   #35
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Same here.

Writing off a boat is a sure way to get audited.
Thing is audits don't scare me and it would be easy for our CPA to defend the deduction by pointing out that all those with us often are employees. However, factually, it's not a legitimate business expense, and if I was handling the audit, I wouldn't be able to defend it. I have handled our only audit rather than having our CPA do so.

Only been audited personally once and our businesses never. However, when I worked for a company, we had a perpetual audit for a long time there based on our size. Even had an office set up for them in our office. Over 20 years, the only changes were $240 a year in deductions for two years. Finally they figured out they were wasting a lot of effort and went to every two or three years.
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Old 02-14-2020, 07:44 PM   #36
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I've never been audited but have received IRS inquiries regarding home office deduction before home office deductions were recognized.

I avoid audits, not because I'm making questionable deductions, but to avoid the time, expense and frustration dealing with IRS bureaucrats.
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Old 02-24-2020, 03:47 PM   #37
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