Planning on starting my own business

[Mr. Jollypants]

Doesn't matter if it's section 8 dwellings or not, there is always going to be costs for repairs. Even big expenses that might not be accounted for. Such as appliances, plumbing, wiring, ect.

Let's your charging 700 in rent, and your mortgage is 550. That's 150 in profit. Let's take for example, your tenant finds mold in the house. This is not something you can do on your own. So not only are you having to pay for the repairs, you have the risk of losing your tenants and that months payment, or you could put up the money to put them in a hotel until the repairs are finished. Which could be thousands of dollars.

I'd rather be go under for trying to start a business than ruining my credit because I had a property. Then there's the risk of foreclosure, so not only will you ruin your credit, but still owe all that amount left on the house.

To me, 35,000 in profit, is HUGE. Huge profits come with huge risks.

 

[oc_civic]

Doesn't matter if it's section 8 dwellings or not, there is always going to be costs for repairs. Even big expenses that might not be accounted for. Such as appliances, plumbing, wiring, ect.

Let's your charging 700 in rent, and your mortgage is 550. That's 150 in profit. Let's take for example, your tenant finds mold in the house. This is not something you can do on your own. So not only are you having to pay for the repairs, you have the risk of losing your tenants and that months payment, or you could put up the money to put them in a hotel until the repairs are finished. Which could be thousands of dollars.

I'd rather be go under for trying to start a business than ruining my credit because I had a property. Then there's the risk of foreclosure, so not only will you ruin your credit, but still owe all that amount left on the house.

To me, 35,000 in profit, is HUGE. Huge profits come with huge risks.

mold is something you check for before buying.. so is rodent or insect infestations... the things that WOULD break are really not that hard to deal with on your own if you are good with your hands and tools..

again I am NOT suggesting he run out and buy a rental property.. but what I am saying is a rental property would be FAR more secure than bubble tea..

if a rental property gets too be too much you SELL it.. its just as easy as selling a home.. the buyer may live there.. OR rent it out.. get in over your head in a business and it is kind of hard to recoup the money.. finding a buyer for your 6 month old failing bubble tea business will be substantially harder than finding a buyer for a 2 bedroom apartment..

 

[lethal6]

A strip club, Deja Vu the only one in town now(that I know of). I'll be the interviewer, don't gotta pay me a dime

Foxes(?) on pac ave.

they have 2 deja vu's by my school in michigan lol. same owner?

Same owner, most likely no. Same chain, yes. They are nation wide from what I can find.

how much tea do you really have to sell to stay in business? to keep it afloat? to support you.. AND your girl.. AND a kid..
home cost + utilities + home owners + vehicle cost + food + supplies for business + payroll (if any) + business insurance + business utilities + mortgage or rent + business loan (if any)..
when you think about ALL those bills.. how many bubble teas do you need to sell PER day just to break even and stay afloat.. how many to actually get somewhere and advance yourself in life? if you go for it.. good luck.. but i think it is a risky proposition..

We have to clear $20k a MONTH on the low end just to pay business expenses, business bills, and personal bills. Anything lower than $20k a month and we are losing money.

I have to disagree. Opening a business in this economy is a good idea. If you are able to stay afloat until the economy picks back up, you'll have an established business with customers, you'll have built a reputation. Then again, I'm in an industry that hasn't really seen that big of a drop in business

It is getting started and staying profitable in this economy that is the kicker. We have been going for 8 years now and were well established before the economy tanked. 75% of our customer base is NOT spending right now and it is killing us.

Doesn't matter if it's section 8 dwellings or not, there is always going to be costs for repairs. Even big expenses that might not be accounted for. Such as appliances, plumbing, wiring, ect.

Let's your charging 700 in rent, and your mortgage is 550. That's 150 in profit. Let's take for example, your tenant finds mold in the house. This is not something you can do on your own. So not only are you having to pay for the repairs, you have the risk of losing your tenants and that months payment, or you could put up the money to put them in a hotel until the repairs are finished. Which could be thousands of dollars.

Everything you just said is what insurance is for. That is why you insure the house you are renting out.

A good friend of mine was a small contractor that used to build around 5 houses a year and sell them to fund future builds. He has now turned to buying foreclosures, fixing them up, and renting them. He is doing VERY well.

You have to realize that MOST people can't get house loans now so they are forced to rent. Renting doesn't take a loan. A TON of people that would otherwise be getting a house loan have turned to renting. House rentals are a very good business right now.

I'd rather be go under for trying to start a business than ruining my credit because I had a property. Then there's the risk of foreclosure, so not only will you ruin your credit, but still owe all that amount left on the house.

To me, 35,000 in profit, is HUGE. Huge profits come with huge risks.

I don't know where you are getting the information, but you can lose just as much and ruin your credit just as bad by having your business go under. What do you think happens to all of the money that you owe in business expenses? Same thing as if you lose your house, in fact you can (and many, many people do) lose your house by losing your business.

It isn't just "hmm, I think I will try to start a business", then having it fail and just walking away. People tie EVERYTHING they have into starting businesses. When the business fails you lose everything you have built and more.

OP, I just reread what you said in the beginning. It is going to cost a hell of a LOT more than $10k to start a business. To start our business, we had well over $100k in loans and saved money. There is a LOT that goes into it. When you run your own business even the little things cost money and it adds up fast. Plus business insurance is expensive as hell.

 

[2slo4u]

good debate and i see the sides of both
the areas that I have actually went to see are areas that i live by or used to live by and am very familiar with the people that come and go and the stores around.
with the $10,000 i plan on using either some of it or all of it to get a loan.
i dont expect this or any business to be a instant wonder because i know from my dad owning our Subway that me and him have had to do CRAZY CRAZY hours without having any other employee's just to stay alive. My job now is selling Pre Paid Legal Insurance, sure i get money from it and i have residual income as well but i don't want to do that for ever, i rather own a box and build off that whether its bubble tea, crepes or anything. i have plenty of homework i need to do before investing my money ( my car basically ) into anything,.
i've thought about doing foreclosure, i've taken business classes and have read books on foreclosure as well so thats been on my mind as well..
my parents own 3 houses, the one we live in now, and two other ones that we rent out to family, and i've seen the value of each go up and down in todays time so now we are just waiting for the market to go back up so while we wait i wanted to get a house going too, but we'll see what happens.
i've been thinking about "what do the people in this area need"..from past living experience in the area, the kids like to have a "hang out spot"..the baskin robins there is filled with kids just sitting down eating ice cream all day so maybe i can take their customers?

 

[Mr. Jollypants]

It is getting started and staying profitable in this economy that is the kicker. We have been going for 8 years now and were well established before the economy tanked. 75% of our customer base is NOT spending right now and it is killing us.

Sounds like it's the industry you're in. From the people I've talked to, business has gone up in this economy. Then again, everyone I talk to is in the IT business.

Everything you just said is what insurance is for. That is why you insure the house you are renting out.

I don't trust insurance companies. They'll find anyway they can to get out of having to pay for something.

Most won't cover damages in a house that's been vacant for over 30 days. So let's say, you're rental property has been vacant for 2 months, and some little hoodrats decide to break in, smash walls, glass, ect. You will be liable for those costs.

A good friend of mine was a small contractor that used to build around 5 houses a year and sell them to fund future builds. He has now turned to buying foreclosures, fixing them up, and renting them. He is doing VERY well.

He probably had a good amount of money saved up before then to finance certain things that most normal people couldn't afford.

From my experience, in my area, rental is not a good business. I see rentals sitting vacant for MONTHS. Do some insurance companies cover this? Sure, but in the end, it's going to cost you more because your insurance is going to be going up.

You have to realize that MOST people can't get house loans now so they are forced to rent. Renting doesn't take a loan. A TON of people that would otherwise be getting a house loan have turned to renting. House rentals are a very good business right now.

Still too risky for my own taste. You'd be suprised how many people ARE getting loans right now. The biggest purchasers in our area are early to mid 20 year olds.

I don't know where you are getting the information, but you can lose just as much and ruin your credit just as bad by having your business go under.

Not true. I get the information from my own experience. I have NO loans on my business. NONE. I took one out for start up costs and it was enough to build my business credit. I no longer have that debt. Everything I pay for it is cash, I don't do checks or loans.

What do you think happens to all of the money that you owe in business expenses? Same thing as if you lose your house, in fact you can (and many, many people do) lose your house by losing your business.

I don't owe any money in expenses. They lose their house because most of them will put their house as collateral for loans.

It isn't just "hmm, I think I will try to start a business", then having it fail and just walking away. People tie EVERYTHING they have into starting businesses. When the business fails you lose everything you have built and more.

Mine is. I did that exact thing, I couldn't find a job, so I started a business. I could if I wanted to, just get up and walk away. I don't have everything tied in my business. Most of my money? Yeah, but I don't have anything that I worry about losing.

OP, I just reread what you said in the beginning. It is going to cost a hell of a LOT more than $10k to start a business. To start our business, we had well over $100k in loans and saved money. There is a LOT that goes into it. When you run your own business even the little things cost money and it adds up fast. Plus business insurance is expensive as hell.

This also depends on your industry. One business isn't going to be the same as others. Unless you've owned and operated a business similar to his, I don't think you can positively say "This is how much it's going to cost."

 

[Mr. Jollypants]

the areas that I have actually went to see are areas that i live by or used to live by and am very familiar with the people that come and go and the stores around.

Use it to your advantage. Especially if you know people who know a lot of people.

with the $10,000 i plan on using either some of it or all of it to get a loan.

I'd suggest using as little of it as possible if you plan on getting a loan. Keep some of it for a cushion because surprise expenses will always happen. It's always nice to have a small amount of cash to pay for the expense.

i dont expect this or any business to be a instant wonder because i know from my dad owning our Subway that me and him have had to do CRAZY CRAZY hours without having any other employee's just to stay alive.

I'd pick his brain, or if you were a big part of it, try to remember the expenses that were needed.

i've thought about doing foreclosure, i've taken business classes and have read books on foreclosure as well so thats been on my mind as well.

I always thought about doing foreclosed home maintenance for banks. It's a great business and very low expense to start.

i've been thinking about "what do the people in this area need"..from past living experience in the area, the kids like to have a "hang out spot"..the baskin robins there is filled with kids just sitting down eating ice cream all day so maybe i can take their customers?

Young adults are going to be your best bet. They spend mom and dads money, and are going to be your best repeat customers. 90% of my repeat customers are 16-23 years old. Older people are ones that tend to do repeat business but shop around and try to haggle your price, younger adults won't haggle and just pony up the cash.

 

[Bheims]

its safe to say a franchise restaurant (jimmy johns, chipotle, baskin robbins, etc) can have a startup cost of around 100k, depending on the space you choose the cost could drop significantly. Health, safety, and food requirements will all have a lot of paperwork (sounds like your dad can help here), although finances are the toughest to put together, a master budget and cash flow statement will really give you a good idea on how realistic this venture is.

If your trying to get kids to "hang out" there what will draw them in besides something cold to drink? I would like to have as many customers as possible, older couples are not going to want to buy something at the "local kids hangout".

Id determine what age group you are trying to target with your bubble tea. A local hangout sounds like a great thing to attract kids/teens, but not young professionals/couples.

quick question - out of all the business ideas you could've chosen, why did you choose Bubble Tea? Not being negative Im simply wondering.

 

[2slo4u]

The bubble tea places in my area are rarely seen. There is one that just* does bubble tea and the next ones that sell bubble tea are like at pho restaurants or stores that don't focus on bubble tea. I thought about going forth with bubble tea and crepes because I know alot of people who want bubble tea and want a place they can just sit and chill. That's what I use to do when I was younger, just get a bunch of cousins together and meet eachother there and have drinks and just talk. I'm always going around shops evaluating as, if I owned this I'd do this or that and now I want to put my ideas together and open a place of my own whether it be bubble tea or not. The young people in the are all go to that one bubble tea shop so I figure if I open one closer to them, try to make the drinks better, and even charge the same price as the other shop...I'll be taking customers away from the other shop and they can pass the word along as well.

 

[253eg]

Hey, f**k Bubble Island, with their puke green walls and trendy ass furniture.

 

[oc_civic]

Not true. I get the information from my own experience. I have NO loans on my business. NONE. I took one out for start up costs and it was enough to build my business credit. I no longer have that debt. Everything I pay for it is cash, I don't do checks or loans.

with all due respect... don't you run a fairly modest business out of your home? you can honestly not even relate to the initial start up cost of a full retail business.. you need EVERYTHING.. fixtures.. computers.. credit card machines.. utilities turned on.. cash register.. employees.. insurance.. security deposit money.. not to mention the cost of STOCKING an ENTIRE store.. I am NOT saying your business sucks or anything like that.. it is a great idea.. and a good one to do without a full retail location.. but with that said.. apples and oranges..

 

[2slo4u]

Hey, f**k Bubble Island, with their puke green walls and trendy ass furniture.

haha true true
we went there one day
hours said it opened till like 9 ..we were there at 8 and it was closed

 

[Mr. Jollypants]

with all due respect... don't you run a fairly modest business out of your home? you can honestly not even relate to the initial start up cost of a full retail business.. you need EVERYTHING.. fixtures.. computers.. credit card machines.. utilities turned on.. cash register.. employees.. insurance.. security deposit money.. not to mention the cost of STOCKING an ENTIRE store.. I am NOT saying your business sucks or anything like that.. it is a great idea.. and a good one to do without a full retail location.. but with that said.. apples and oranges..

Yeah, out of my home, don't need to pay rent. That's the only thing, other than that, I still have to pay bills, I still had to get equipment to run my business, pay for credit card processing PLUS the gateway for it, and insurance. Did I stock an entire store? No, because in my area, there's no point in stocking a store with 400,000 worth of product.

 

[vjf915]

I have to disagree. Rental property is not where you want to be during this time. Too many people losing money, too much risk on people not making payments or just completely wrecking your rental. Too much risk for me.

Just talking to my mom today....she owns a SMALL apartment building in upstate NY, essentially three apartments she can rent out......one is a decent size that she gets $500 for, and two smaller "economy" apartments she gets $300 a month for. The big apartment and one small apartment are pretty much always accounted for by the same people. The last small apartment is a living nightmare.....it started out with an old guy who wallpapered the walls with cereal boxes, and cooked dog food on the stove for dinner, then got a spanish hooker in there, then the last guy lived there for 4 months, paid 2 months rent ($600 total), and caused $4800 in damages that needed to be repaired. Nothing can be done though because the laws are on the side of the renter, not the owner. Renting property is good if you get lucky and get a good person, but its REALLY not that hard to get some scumbag lowlife....and its not easy to get rid of people. If nothing seriously goes wrong with the apartments, my mom just about breaks even on them every year. I would really not bank on $150k worth of rental property making you money.

 

[oc_civic]

Just talking to my mom today....she owns a SMALL apartment building in upstate NY, essentially three apartments she can rent out......one is a decent size that she gets $500 for, and two smaller "economy" apartments she gets $300 a month for. The big apartment and one small apartment are pretty much always accounted for by the same people. The last small apartment is a living nightmare.....it started out with an old guy who wallpapered the walls with cereal boxes, and cooked dog food on the stove for dinner, then got a spanish hooker in there, then the last guy lived there for 4 months, paid 2 months rent ($600 total), and caused $4800 in damages that needed to be repaired. Nothing can be done though because the laws are on the side of the renter, not the owner. Renting property is good if you get lucky and get a good person, but its REALLY not that hard to get some scumbag lowlife....and its not easy to get rid of people. If nothing seriously goes wrong with the apartments, my mom just about breaks even on them every year. I would really not bank on $150k worth of rental property making you money.

the idea is to buy low.. rent to cover mortgage... and sell as soon as you can get out while making a profit....

 

[vjf915]

I understand the idea, Im just saying that sometimes it can be hard. This is not the only time she has lost money on that place. Several lawyers to get out other tenants who were not paying rent. She has had to drop A LOT of money into this place....fortunately she inherited it.

 

[2slo4u]

she should have her own attorney, Pre Paid Legal
i never really have to deal with anything about the law, if i get a red light camera ticket or pulled over for some dumb reason like headlights too blue, send the ticket to my attorney, they go to court for me and fight it for me as long as i dont admit to fault, in her case instead of spending 3-500 bucks an hour for a lawyer, she'll have a lawyer 24/7 and can get legal advice and can have letters written on her behalf..my friend had PPL and he used it to get money from people that owed him money

 

[hooked_on4]

Lloyd: Nope. My friend Harry and I are saving up to open our own pet store.
Mary: That's nice.
Lloyd: I got worms!
Mary: I beg your pardon?
Lloyd: That's what we're gonna call it. "I Got Worms!" We're gonna specialize in selling worm farms. You know, like ant farms.

 

[lethal6]

with all due respect... don't you run a fairly modest business out of your home? you can honestly not even relate to the initial start up cost of a full retail business.. you need EVERYTHING.. fixtures.. computers.. credit card machines.. utilities turned on.. cash register.. employees.. insurance.. security deposit money.. not to mention the cost of STOCKING an ENTIRE store.. I am NOT saying your business sucks or anything like that.. it is a great idea.. and a good one to do without a full retail location.. but with that said.. apples and oranges..

Again, I agree.

When you own a retail store or run a distribution warehouse like myself, there are a LOT more charges and expenses that come out of it than that of running it out of your house. We used to put out $2800 a month in rent and triple net charges before we contracted to have our own place built so we don't have to rent our warehouse in a business complex. That is just the start of our expenses. Like I said, we HAVE to clear $20k a month or we are in the hole.

It's definitely apples to oranges.

Granted our business is definitely different than a Bubble tea business, but I am just trying to show that it depends on the business/market that you are getting into and some of them are extremely costly as far as monthly expenses goes.

For the record, the business is my dad and I partnered together and the office is run out of his house. Our warehouse is roughly 1500sqft and is off site.