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Message: <blockquote data-quote="Janx" data-source="post: 6169494" data-attributes="member: 8835">There's a lot of factors to small business failure anyway.  Per the statistics, most small businesses fail in their first five years.  The general advice was to have enough funding to last the 5 years to build up a customer base that supports you.That means having 5 years of your own 'current' salary saved up, plus money for the business's rent, merchandise, etc.  Just so you can maintain some semblance of your current lifestyle so your wife doesn't divorce you for losing the house and sleeping on a cot in the back room of the store because you didn't draw a salary and had to eat ramen noodles until the store succeeds.A really crappy strip mall will charge $1 per square foot (price probably higher now).  You'll need about 1000 square feet.  So that's $1000/month (which is more than my mortgage w/taxes combined).  Electricity (for AC) in my area will probably cost $200/month.So that's $1200/month you need.So, to pay your basic bills to keep the shop open, you need $1200.But wait, there's you.  Let's assume you are a middle aged adult, not living at home, worthy of making middle class income of at least $40K (versus being a teacher or a cop, which starts off around there).$40,000 divided by 12 months = $3,333/month.Dang.  You cost more than the rent for the shop in the crap-hole stripmall.So now we need $4,533/month to run this thing's expenses.Mark up on product is x2 in most industries, so if MSRP on a PH is $30, you paid $15 to pre-order that.  Which is why in your going out of business sale, you can let it go for 40% off.So we pay $15 to order a PH, and we'll make that money back plus $15 when we sell it.  Remember, we have to order it first, so that's money out of us, before we get to pay our other bills.Let's see if I do this right...Since it's times 2 markup, and we know we need $4,533, it's as simple as ordering $4,533 of product, to "make" our main rent (assuming they sell.So that means we need to spend $4,533x2=$9066 in order to make $9066 dollars (assuming it sells).  Just to break even as a business, and pay you a decent wage in your small business.Now with review, I can probably fine tune some things and fix some mistakes.  But I just whipped that up.How many Americans can break down the cost of doing business like I just did?The ones who can't, probably should not be running a business.  I help run my company, so I have developed the skill for breaking down cost of business so we can set prices and determine project viability.This exercise also shows that a lot of money is needed to keep a business floating until it stabilizes that most folks don't have.It's not just lack of skill, but total drain on resources starting your own business has.  What if you don't have lots of money saved up?  What if you don't pay yourself very well at all?That last is important, because there's all sorts of threads on here where somebody suggests "you don't need to do that, skip it and save money" like not having Cable TV.  For a single guy, that might fly.  For a middle aged guy with a family to keep happy who's also more likely to be stable enough to attempt a new business, there are expectations of quality of life that have to be maintained.This is why it is so hard to do a small business.  Even with the skills needed.  The resource drain and level of work to put in is very hard.</blockquote>

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