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Post by Deleted on Jun 17, 2011 9:09:04 GMT -5
Somehow I doubt an ice rink has lower startup costs than a bolwing ally.
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IPAfan
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Post by IPAfan on Jun 17, 2011 9:16:09 GMT -5
Agree with midwesternjd. The point of the coffee stand idea is not that it HAS to be coffee. The idea is to create a business which can be grown with small incremental investments of around $30-$50k per location, that can be turned into a A-Z system, and sold to your most promising employees. The eventual business plan is to derive revenues from selling your own products to a captive audience (your franchisees) and perhaps taking a small royalty from their total sales.
There are plenty of other things you could sell from a stand from hot dogs, asian-mexican fusion, weird tea drinks, etc. The thing is that you may find an area with less competition where you can make a lot more money for a time, but it's likely to be a fad. So the idea of a coffee stand has pros and cons. The reason I like coffee is that you get regular customers that come back 1-2 times EVERY DAY for their coffee. You're not going to get that out of most other types of stands (but you'll have less competition).
Pros -
Low cost of entry Addictive product Coffee is not a fad...people will always drink it, and if they drink it then they'll buy high margin pastries, ice cream, yogurt, etc. on the side
Cons
Lots of competition low barrier to entry
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Post by Deleted on Jun 17, 2011 9:30:50 GMT -5
I would take qofcc's idea and add a sick ward... accessed by a different door, with small rooms with half baths attached, beds, tvs, game boys, nurse on call.. to take care of sick kids at a premium rate when parents need to go to work but the kid is ill...
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shanendoah
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Post by shanendoah on Jun 17, 2011 9:40:49 GMT -5
Okay, if just about every other restaurant in town is a pizza place, avoid that. And ice rink is going to have huge start up costs. Do you have any idea what a Zamboni costs? And while you could conceivably do a combo ice/skate rink, you'd not only have to have all the special equipment for the ice, you'd have to have a really good team of professionals to set up/take down. I know that since the NBA and NHL play-offs overlap, both MSG an the old Jersey stadium could go from court to rink in a day, but there were always concerns about ice quality. If the derby team needs a place to practice, a skating rink isn't a bad idea. Our derby team just got their original home rink back up and running. (I keep meaning to get up there to skate.) If you do this, work with the derby girls (I know, terrible thought, isn't it). Host their home bouts, take a small percentage of the door,set up a premium skate shop to feed the derby girls and the derby brats (as we call our youth teams). You also have skate rental and food.
I would not go with day care of any sort because of all the specific legal hassles. You can't just hire anyone (no matter what people say) due to background checks needed and then there's the additional state oversight, etc.
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jeffreymo
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Post by jeffreymo on Jun 17, 2011 10:17:05 GMT -5
In the Midwest those demographics would be good for any number of businesses, but in CA I'd be afraid that the disposable incomes are kind of low. What's the median home value? Don't CA residents spend a disproportionate amount on housing compared with other parts of the country?
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tskeeter
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Post by tskeeter on Jun 17, 2011 12:14:46 GMT -5
Seems like lots and lots of people think opening a restaurant is a good idea. If they are a good cook, they think they are qualified. Having spent a good chunk of my youth working in restaurants, I can assure you that restaurants are a good way to lose your life savings. If you don't have a ton of restaurant management experience, you don't have the background to run a restaurant. I view opening a restaurant without having extensive experience a bit like defending yourself in a capital case without every having been to law school. There is an exceedingly low probability of a successful outcome.
Checklist: Are you willing to gamble your life savings with a better than 50/50 chance of failure? Are you willing to accept a net profit of about 1% of your total sales? Do you know how to identify a good location vs. a bad location? Do you have experience managing large groups of people, especially teenagers/young adults? Are you ready to work between 12 and 20 hours a day, every day, all year long? Do you know how to cost out a menu? Do you know how to plan a menu? Do you know how to buy and stock supplies? Do you know about the different quality levels of food products, their common uses, and relative costs? Do you know food sanitation requirements? Have you successfully implemented programs that meet those requirements? Do you know what food products can be stored and can not be stored above other food products.
If you can say yes to all of the above, you might be able to reduce the probability of failure to less than 50%.
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Sum Dum Gai
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Post by Sum Dum Gai on Jun 17, 2011 12:42:16 GMT -5
And while you could conceivably do a combo ice/skate rink, you'd not only have to have all the special equipment for the ice, you'd have to have a really good team of professionals to set up/take down. I know that since the NBA and NHL play-offs overlap, both MSG an the old Jersey stadium could go from court to rink in a day, but there were always concerns about ice quality. Oh, no no no. I meant you'd have ice and roller skating at the same time. With a big snack bar type area in the middle. It would have to go into a truly huge building though. I don't know what the cost to maintain and condition ice is, but I know on the roller skating side once you pour a pad and put the covering down over the top, it's really low maintenance. You need a minimum wage punk or two to sit there renting skates and that's about it. I don't even really want to know what the insurance costs for a business like that would be though.
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Sum Dum Gai
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Post by Sum Dum Gai on Jun 17, 2011 12:52:46 GMT -5
Tart frozen yogurt shops - pinkberry knock offs - seem to be sprouting up here. Never heard of either of these. I imagine they could do pretty decent volume here when the temps hit 100 in the summer. Are either of you "animal" people? Not really. Don't take this the wrong way but people who treat their barking cats like children freak me out. Dogs are supposed to be bigger than cats to begin with, and no matter what size they are they shouldn't have birthday parties or sleepovers. It's weird. Have you thought about a Pump it Up franchise? Never heard of that one either. We have a huge Gold's Gym in town that's pretty busy, and somebody just opened a Crossfit place right near our house a few months ago. I don't know if they're busy because their parking lot is blocked by another building from the angle I drive by everyday.
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Sum Dum Gai
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Post by Sum Dum Gai on Jun 17, 2011 13:00:37 GMT -5
Oh, and about the whole coffee shop thing. Loop has been saying for a few days that this town needs a coffee shop. We have three Starbucks, and two Java Expresses. The only local coffee place is owned by a local church and they serve like canned coffee. The coffee shop is more of a hangout area, and they do a lot of community or activity functions in the building. Town hall type meetings, kids musical recitals, that sort of thing. The coffee itself is basically the same stuff you'd make at home though, and not popular at all.
She also wants to open a bookstore. Granted it drives me crazy that we don't have one, but nobody reads anymore, and the people who do get ebooks, so I'm not sure how viable it would really be.
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Sum Dum Gai
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Post by Sum Dum Gai on Jun 17, 2011 13:08:26 GMT -5
the waiter would then note the order directly on their i-phone, the order would show up in the kitchen as a picture on a monitor, the order would then be filled, noted on the monitor, causing a phone message that the order is ready, then when the order is delivered, the order is closed, recording the event, tallying a bill, and allowing for e-payment. Why not let the customer input their order directly? I've always wondered why nobody starts a restaurant where you put an ordering screen right on the table. The customer comes in, sits down, looks over your menu, inputs their order directly, and they come to the counter to pick it up when it's ready. Put a drink station in somewhere. Obviously only do this in a casual eating place. You wouldn't need waitstaff, which lowers your overhead, in a business that has notoriously high overhead and low profit margins. The up front costs are a bit higher, but point of sale systems area lot cheaper than they used to be, so it might not cost all that much. The restaurant gets lower overhead and employee management hassles, and the customer wouldn't have waitstaff to tip, which is an immediate 10-20% discount for them. I'd eat there.
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Wisconsin Beth
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Post by Wisconsin Beth on Jun 17, 2011 13:12:49 GMT -5
Oh, and about the whole coffee shop thing. Loop has been saying for a few days that this town needs a coffee shop. We have three Starbucks, and two Java Expresses. The only local coffee place is owned by a local church and they serve like canned coffee. The coffee shop is more of a hangout area, and they do a lot of community or activity functions in the building. Town hall type meetings, kids musical recitals, that sort of thing. The coffee itself is basically the same stuff you'd make at home though, and not popular at all. She also wants to open a bookstore. Granted it drives me crazy that we don't have one, but nobody reads anymore, and the people who do get ebooks, so I'm not sure how viable it would really be. Can you offer to do the better coffee stuff suggested before in the church shop, splitting the profits by whatever % works? Because if people are hanging out there, they'd probably prefer a better drink...
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resolution
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Post by resolution on Jun 17, 2011 13:19:38 GMT -5
the waiter would then note the order directly on their i-phone, the order would show up in the kitchen as a picture on a monitor, the order would then be filled, noted on the monitor, causing a phone message that the order is ready, then when the order is delivered, the order is closed, recording the event, tallying a bill, and allowing for e-payment. Why not let the customer input their order directly? I've always wondered why nobody starts a restaurant where you put an ordering screen right on the table. The customer comes in, sits down, looks over your menu, inputs their order directly, and they come to the counter to pick it up when it's ready. Put a drink station in somewhere. Obviously only do this in a casual eating place. You wouldn't need waitstaff, which lowers your overhead, in a business that has notoriously high overhead and low profit margins. The up front costs are a bit higher, but point of sale systems area lot cheaper than they used to be, so it might not cost all that much. The restaurant gets lower overhead and employee management hassles, and the customer wouldn't have waitstaff to tip, which is an immediate 10-20% discount for them. I'd eat there. Sheetz has that kind of ordering system. It is a huge convenience store chain here in the midatlantic. They do made to order food in their stores with a few tables outside, but it is generally takeout. The one by our house has about 8 terminals to order and then it gets transmitted to the cooks that make the food. The machine spits out a receipt and you pay at the register before picking up your food. The web link is a demo of their menu and how ordering works. sheetz.com/main/nutrition/web_op/op_interface.cfm?cid=1
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phil5185
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Post by phil5185 on Jun 17, 2011 13:24:49 GMT -5
Somehow I doubt an ice rink has lower startup costs than a bolwing ally. For sure. But I see small towns with bowling alleys that have 2 or 3 cars in the lot, open two nites a week. And I see the Ice Rink near my house that has a few 100 cars in the lot 7 days a week plus a waiting line of minivans in the 'drop off' line. I remember a roller rink that had swing-up doors along the entire length of one side of the building. There were trees and picnic tables outside & the inside lites partially lit the park. Families could sit outside while their kids skated. HS age girls skated, HS guys hung out outside to see who was there before going in (or not). One or two nites a week they scattered powder on the floor, brought in a band, and had a dance. Of course there was the usual six-pacs, cars cutting donuts in the lot, an occasional fight - but all part of the 'draw'.
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IPAfan
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Post by IPAfan on Jun 17, 2011 13:40:26 GMT -5
I think regardless of what you pick you need to focus on a business with lower than average capital requirements. Most businesses fail due to insufficient capital. The way to avoid this is focus on businesses that historically earn high return on invested capital.
Just look at SBUX balance sheet. Between Short Term Investments, Inventory, Long Term Investments, PP&E (i.e. the invested capital, as opposed to receivables, cash, goodwill, etc.) you have total invested capital of $3.9 billion.
Then look at the income statement. Earnings before interest and taxes of $1.47 billion.
That means that SBUX is earning 38% ROIC. THAT is why I think starting a coffee shop franchise is a good business. Also, a good company is usually going to have a lower ROIC until it reaches scale, but then will have a very high ROIC until it has difficulty reinvesting profits at the same returns. A mid sized coffee franchise operation that's already reached should be able to earn a ROIC of over 38% until you're very rich.
Also, I understand tskeeter's point about low margin restaurant businesses, but if you look at a company like SBUX it's earning 15% gross margins and 10% net profit margins. You're going to earn higher profit margins if you keep your PP&E low (which is exactly what you do by either running stands or franchising the business so the PP&E is on your franchisee's balance sheet.)
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swamp
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Post by swamp on Jun 17, 2011 13:41:39 GMT -5
Process server. We pay our guy $50 for each thing he serves. You need a car and a Tom-Tom.
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IPAfan
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Post by IPAfan on Jun 17, 2011 13:47:27 GMT -5
My ideal business would be a hedge fund. The general partner in an investment partnership essentially needs to contribute no capital whatsoever. The limited partners provide all the capital and have the right to withdraw it at any time. The general partner is paid on a % of assets and a % of total investment returns.
There's a reason why a large percent of the world's self made billionaire's are general partners for investment limited partnerships.
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IPAfan
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Post by IPAfan on Jun 17, 2011 13:48:25 GMT -5
Process server. We pay our guy $50 for each thing he serves. You need a car and a Tom-Tom. Or for that matter a PI. I pay $100 an hour just to get someone to take recorded statements from witnesses in criminal cases. Plus, it's fun
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swamp
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Post by swamp on Jun 17, 2011 13:49:59 GMT -5
Process server. We pay our guy $50 for each thing he serves. You need a car and a Tom-Tom. Or for that matter a PI. I pay $100 an hour just to get someone to take recorded statements from witnesses in criminal cases. Plus, it's fun You actually have to have some interviewing skills to be a PI. A process server just has to track the person down and ask if they are "Joe Blow" and whether they're in the military. Then toss the papers at him and do an affidavit of service.
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Post by Deleted on Jun 17, 2011 14:04:33 GMT -5
Have you thought about a combined indoor playplace/coffee shop? They are really popular where I live. Basically you have climbing equipment, slides, etc. indoors that are scaled for kids up to about age 6. You charge to use the equipment ($5-6 or less with frequent user pass) and then run a coffee shop. Offer wifi and you get a whole bunch of kids and parents. The places I know of offer paninis, salads and kid friendly food as well. They make money on the weekends by offering birthday parties and bringing in favorite cartoon characters (like elmo) or a puppet show. One place offers preschool classes and camps during the summer and on holidays.
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Sum Dum Gai
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Post by Sum Dum Gai on Jun 17, 2011 14:09:18 GMT -5
Have you thought about a combined indoor playplace/coffee shop? Not really, but that could work, and be franchised later. Well, I was joking with the wife that we should make a list of all the stuff we and the neighbors think this town needs and just throw them all together. We'd have a bowling alley/book store/coffee shop/arcade/pool hall/beach volleyball/skating rink/mini golf place. I think there was something else too that I'm forgetting. Oh, Thai food!
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Deleted
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Post by Deleted on Jun 17, 2011 14:14:07 GMT -5
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Deleted
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Post by Deleted on Jun 17, 2011 14:15:13 GMT -5
My great uncle made a fortune in corrugated cardboard. Any chance you want to start manufacturing cardboard?
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spartyparty
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Post by spartyparty on Jun 17, 2011 14:20:06 GMT -5
Indoor go-kart track!
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Sum Dum Gai
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Post by Sum Dum Gai on Jun 17, 2011 14:26:54 GMT -5
My great uncle made a fortune in corrugated cardboard. Any chance you want to start manufacturing cardboard? I'm assuming I'd need to live somewhere with trees for that kind of thing, right?
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shanendoah
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Post by shanendoah on Jun 17, 2011 14:32:20 GMT -5
My father is a PI who does Process Serving to help pay the bills, even though he's on a full government pension. Step-mom still has to work part time.
I don't suggest being a PI or a Process Server (or a combo of the two) while trying to raise a family. Especially don't become a PI if you don't already have a ton of law enforcement or legal contacts that will refer people to you. Most PIs get the majority of their work from lawyers.
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IPAfan
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Post by IPAfan on Jun 17, 2011 15:39:21 GMT -5
One other idea is to carefully study the guidelines for SBA loans. You're not going to get financing on a startup with insufficient equity. However, if you can start the business with unlevered cash (to the effect of $50k or less), and then develop a profitable business, you should be able to expand the business with an SBA loan after you demonstrate profitability. This is something I've been looking into doing with my law practice. You need 20% equity in a business for collateral and the ability to repay.
So if you start a business with $50,000 in assets and you're earning $15-$20k profit (after cost of goods and SG&A) then you could arguably borrow $200,000 to grow the business once you're able to demonstrate profitability.
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qofcc
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Post by qofcc on Jun 17, 2011 15:53:16 GMT -5
Have you thought about a combined indoor playplace/coffee shop? They are really popular where I live. Basically you have climbing equipment, slides, etc. indoors that are scaled for kids up to about age 6. You charge to use the equipment ($5-6 or less with frequent user pass) and then run a coffee shop. Offer wifi and you get a whole bunch of kids and parents. The places I know of offer paninis, salads and kid friendly food as well. They make money on the weekends by offering birthday parties and bringing in favorite cartoon characters (like elmo) or a puppet show. One place offers preschool classes and camps during the summer and on holidays.
They have those... it's called McDonalds with a playland
But I think it's a great idea to take that idea and upscale it.
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IPAfan
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Post by IPAfan on Jun 17, 2011 16:12:15 GMT -5
OK...I'm sorry I just sit around and think of business ideas all day long, and I've read thousands of SEC filings put out by public companies, so I can't help it. I could keep going and going, but I'm trying to restrain myself.
You could start a factoring business. A factoring business purchases accounts receivables from operating companies for a discount to the face value of the receivable. This provides immediate cashflow to the business selling the receivable, and lets the factoring business capture a spread. These receivables can then be used as collateral for a loan to finance working capital. Additional capital can be invested in more receivables.
There are a lot of businesses like this already running in the US, and I suspect it would be hard to start a business successfully without experience and capital. However, there's a lot of opportunity in emerging markets like South America, Africa, and Asia. This can be an excellent business, but obviously requires the ability to value accounts receivable and make estimates of the likelihood of default.
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phil5185
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Post by phil5185 on Jun 17, 2011 16:13:14 GMT -5
PayDay Loans? They turn about 300%/yr on their money. Rent a store front for $1000/m, put up $500 for licenses/permits, stock it with about $30,000. Lend out $1200/da in $300 increments, that is about $25,000 the 3 weeks. Then start 'rolling' your $25,000 - ie, $1200/da out, $1280/da in - and build on it, add a zero, or two?
Our Atty Gen'l went nuts, tried to 'protect the poor' and ban PayDay Loan Companies. But the people who use them said 'no way', we like them. If you can't make your final notice Elec Bill on Fri nite, the 'shut off' leaves you sitting in the dark, no heat, cold food spoiling, crying kids, until Monday. And then you are stuck with a new Deposit plus you must bring your whole bill current. It's way better to get a $300 loan on Fri nite, avoid all that hassle & cost, and pay back $320 in 3 weeks. Don't much care whether $20/$300 comes to an APR of 100% or 500%, the $20 was a good deal for the client.
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IPAfan
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Post by IPAfan on Jun 17, 2011 16:17:41 GMT -5
Very much agree with Phil on payday loans, and another good business is bail bonds. However, not sure I'd want my DW having a job as a bail agent.
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