There are all kinds of scenarios.
There is the need money now to take over an existing business with known amount of income that you have to buy some assets to take over, former owners ran it into the ground and bought new cars and houses instead of paying taxes on employees for 5 years.
There is the every year get $150,000 in private investor credit, pay a few people salaries all year long for super detailed build up every year paying back that money to investors and paying back a rather high percentage. Doing that every year and every year never actually producing enough to get out from under that investor platform. In the end, someone loses eventually, investors pull out, some factor like the location gets sold out from under them and can not be replaced over night or the core staff all proves to have been deviant somehow.
There is the type of business that pays $150,000 fully on advertising every year, reguardless of whether that is efficient or not it sounds really good like you are doing something successful.
There are the old timers that maintain never to start a business unless you have $150,000 in cash and never before because you will never get out from under credit or the credit game will change its rules over time and you didn't count on that so you lose out and have to come up with $150,000 in cash anyhow at some point and basically take over your own company if there is a possible second wind available.
There is the kind of business where the owner was such a go getter they had a heart attack and have $150,000 in doctor bills and only have use of half of their body and brain functioning and show up Thursday night at the Barbeque shack to share heart surgery stories.
There are the stories on Yahoo finance where America kind of all became big box stores and some old guy needs $150,000 because he spent all his retirement, sold two homes and got an equity loan on a third home to start a hardware store in an era when there are Home Depots and Lowes big box stores because it was his dream to have an old timey hardware store, now it is a sad story and how long will it take before Bill and his wife move in with their kids and sit around all depressed and shit because they thought it just took money to make money.
And then there is the build a business from the ground up, paying as you go that actually makes a meager profit that you can actually walk away from with cash in you pocket if a location or whole community doesn't work out for you. That can be done over and over where like in the days when there was nothing 100 years ago, you can drop that man in any town with maybe $1000 and in a year walk out with the next years full income.
Or there are the types of businesses where there are industry magazines and business plan demos you can possibly duplicate and reports of thousands of these types of businesses that all certainly must be doing so well and you can too if you just weasel your entire family for the fortune and credit they have amassed and it will all be grand somehow when you become part of the machine. Just do what someone in California has done in some backward little town in the wonderful world of America where you have the right to lose and go back and get a job and file for bankruptsy. So the question is, if you do lose, who wins? Well, 95% of start ups don't go past year 2 because no one really taught finance properly, not even the most supposedly advanced colleges in the country. SO don't lose, don't play the game. Don't have to be all 24/7 assholes and elbows because you were told by some 20 year old magazine writer that never actually did anything in their life that the facts are in.
So to truely be successful, you develop your own market, you don't buy one. You pay as you go, you don't over extend on credit especially in a situation where you might get hit with $40,000 in zoning issues and compliance problem half an hour before opening your business. You go in much smaller cycles that are proven to be successful to only your own yearly balance sheet. You can be super resourcefull and go years and years making money and really have only spent $10,000 where you might question if that was a necessary expense or you can go spend $150,000 and give a seminar and no one will really no what a dumbass you are because they haven't done that or probably won't get ahold of that much money but, it sounds good. If only I could get a shit load of money, what would I do with it, it would be great.
The key is the money comes from ticket buying customers whether it starts out at $2 a ticket or $20 a ticket, it doesn't come from Grandmas food stamps savings, some asshole loan officer that you agreed to hire his kid, Some fat assed investor group that wants 40% on the dollar every year and certainly thinks you should come on the yearly cruise too.
Where does all this money go? How fat are all these people? Do they really work or do they only really work their jaws? Sure you can get fronted $50,000 and all the ticket money goes to paying off that $50,000 plus a factor of times 1.5, then you have to run around pretending to be a go getter too until that money is satisified. Then if you haven't already killed your health, your family, your credit, your sanity you can do it again for yourself on the third cycle and it will be great!
Haunts are a seasonal business and I watch the big earners get behind different ways of marketing that costs lots of money and then 2 years later they will say that didn't work and isn't really what the business was about at it's core. And over and over and over I hear something like a billboard cost $30,000 or a bunch of props cost $30,000 or a machine that makes props and all the supplies cost $30,000 and it is the best thing they ever did in their life but all the actors and artists at a haunt all did everything for no pay at all and $30,000 could have been payroll for everyone! Why wasn't it? Who pays? Who loses? Is it a real business? It can be if the priorities are right.
Money comes from the customers. Then it pays everyone involved for real work performed and maybe there is some left over. Maybe there isn't some left over. If it was done on credit, it becomes a somebody somewhere loses somewhere scenario because that is the American way. Kind of an everyone that has never done this before sharing little secrets and rumors of how they think someone else actually makes lots of money when who they are talking about was just a blow hard that won't even admit to themselves they ripped everyone else off in their lives and it is all fronted on credit that could implode any day.
The right way is to pay cash for some tool. Either the sears craftman $139 home handy man set or the $13,000 I got a bunch of walls lets put on a show because it's a recession and I'm otherwise unemployable starter kit and go to work. There are tons of scenarios where people inherited money and spent it all regardless of how efficiently and got all this stuff you will never be able to afford. Or 5 people all got together and had money and it always seems 3 or 4 of them screwed away a decade of their life and will never get over that lesson.
You see all the pictures of the 20,000 SF haunts built just the way they wanted. All the fancy things. Is that really what the customer wanted? Isn't it some kind of odd spectacle like going to a monster truck show, makes no sense what so ever but people line up and go see it trying to figure it out? Or is it something the community really becomes a fan of and goes to every year because there might be nothing but some black walls and dummies and 5 guys with masks running around but it is real, it isn't like TV.
Then there is the reality not seen in any magazine where you drive around and just read the signs. They say air conditioning and taxedermy. Transmission specialist and Gunsmith. Arts and crafts and siding supply. Hardware and auto parts. Day care and limosine service. Or even in the haunt deal, people have a haunt but they also act at 2 others, make props for 5 haunts, sell stuff at 3 trade shows and work 6 other kinds of festivals and carnivals just to make a living. Still after taxes just a living.
Most succesful businesses discover down the road a few years that 80 percent of their customers are the biggest pain in the ass ever, expect the most and want to pay the least. There is 20% that alone actually support the business and buy in volumes and don't haggle for prices, they value their time and your time and things happen. So what if right off the bat you could figure out how to lower all the stress in your life and know your own pattern will work and you only cater to that 20% of good customers right off the bat, how sweet would that be?
Well, conversely you can get rid of 80% of the predatory lenders, the telemarketers and phone book solicitors, the false insurance over writers that need all in cash up front and pay a bigger company by the month and loan out your money, the banks and fees they like to come up with, the delays from all the crap in consumer society, the advertising staffs sitting around waiting to take your $4,000 call. Lets get rid of all the investors that want to talk about their health 3 times a week on the phone until 3AM because you might be their only freind that understands. Lets get rid of the assholes that think they pimped you out and really hooked you up somehow and now you owe them. Lets get rid of all the losers that need a cigarette from you and $30 a day and can you give them a ride to the probation office at noon today. Lets get rid of 80% of all the bullshit that really holds you back from day one.
The solution is in the next post.