Originally posted by: Cuda1447
Well I've had a LOT of ideas over the years. I always seem to find flaws in every one of them, but sure I'm game. I like being battered and beaten by the greats of ATOT.
First of we've all heard time and again that you should do something you enjoy. I (like most guys) love sports. I've always been around sports. I ref'd high school soccer games for a bit just out of enjoyment. I like being around sports etc...
Anyways, an idea that I thought had a lot of potential is a driving range. I'll briefly explain my vision...
Florida, good weather. I live near Tampa, lots of golfers around here. I have a few good areas in mind where there doesn't appear to be much competition whilst having a quickly growing population. In addition to the driving range I'd love to have a batting cage, a small sandwich shop (golf themed) and maybe even a mini-golf course. Maintenance for driving range/batting cages is low. Starting off its something I could run on my own, for the most part. I'd absolutely love to be around golf all day long. I have quite a few marketing ideas in mind, but thats not that important initially.
In terms of risks I figured this was a good idea. If I happened to not be successful, the land I purchased for this driving range would hold its value, if not go up. (Assuming the economy does pick up eventually). Sure I'd be out the time and equipment costs, but for something like that it wouldn't be insanely expensive. Failure is toward the back of my mind though. I realize its a possibility, but I like to think of myself as a determined individual with a knack for people and the ability to make sound business decisions (I realize I have a lot to learn though).
Ya, thats my idea in a nutshell. Big problems the. The biggest of which is the cost of land. For just a driving range I'd probably need a minimum of 6 acres, closer to 10 to really fit what I envision. Costs of something like that around here, probably around $500k minimum. Better areas will probably drive that cost WAAAY up.
Once I started researching and realizing how much it would cost I thought to my self "well, fuck that". How would I get that kind of money? SBA's site says they typically require 20-40% of the business cost to be financed by you. I guess they don't want to give me 500k if I don't have any of my own money at stake, makes sense. So what other options do you really have? You could build a business model and then pitch your idea to investors, but I don't know how realistic that is. Like I said, Ive got some learning/reading to do. Which reminds me, if anyone has any good business books to recommend - feel free.
So, I pretty much abandon that idea, even though it would be a dream come true. But I still want to do something... just what? I've got about a year to figure that out, running out of time.
As I noted above I'm a CPA, A lot of the consulting-type work I do involves helping start a business etc.
The most likley solution to your capital problem (the most common problem for new businesses) is to arrange the land acquisition as a lease with an option to purchase.
That way you don't need to tie up a bunch of capital right away with the land acquisition. You may be able to arrange it so that upon excercising the option to purchase, your lease payments will credited towards the purchase. If you do buy the land, you'll want to hold it either personally or in an LLC apart from the company/entity established to hold to driving range etc. This will provide you some tax and other benefits benefit. E.g., suppose someone is injured (hit in the head by another's golf club), if you are successfully sued you may lose the range, but not the land
I cannot emphasize how important it is to establish any new business with the lowest posiible capital burden. High monthly mortgage payment with an unknown revenue stream is highly undesirable. If, for whatever reason, the business doen't work out walking away from a lease (or assigning the lease to another) is much easier than walking away from a mortgage.
Don't just think you could flip the land. maybe you could, but many buyers will be aware of your plight even if you do not tell them. They will know that they can either negotiate directly with your bank, or purchase in forclosure cutting you out of the deal. It's a tough world, and "justice" from the courts is almost exclusively a luxury enjoyed by the "big players".
You may wish to start out with limited operations, then later expand out to the sandwich shop etc. It'll help keep your upfront captial investment minimized and allow you the ability to learn how to run a business with fewer complications.
Most people do not realize all the "roles" they are responsible for in starting a new business. You are: CEO, CFO, in charge of HR, IT, advertising, legal and accounting. You are the secretary and bookkeeper and must maintain all the files etc. Learning how to deal with all these responsibilities and day-to-day tasks when you are also sweating the cash flow can be difficult.
Your starting point is to create a budget of capital costs/investment required to get you to "Day 1" of operations.
Your next step is to, month by month, forcast operations etc for the 1st year. Then carry this out to year 3.
Do not forcast big sales only to find yourself short of capital/money in the first 3 - 5 years.
You must also budget for your personal needs (food, utlity rent/mortgage, health auto etc.)
The SBA (retired execs) will usually help you for free in compiling much of this info.
Only after you have this info can/should you proceed. You'll know if it's do-able, and how much money you need for start-up. Once you know how much, then you can work on how to get it.
There are many more issues, but that should suffice for now. The above generally applies to any business you may ultimately wish to start.
Fern
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