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Question:


My son wants to start his own concrete business. He is an expert with concrete, but not with the business end of it. We know he needs business cards, licenses, insurance and perhaps even bonding. Where does he start?
-happyheart53


Answer:


Business cards, licenses and so forth are accoutrements of business but not key elements of it. Your son will have to ask himself why he thinks his concrete business will be successful. Unlike killer apps for smart phones, concrete isn’t going to be the next big thing. What competitive advantage will his expertise give him? Does he have some manufacturing process that will allow him to produce a better type of concrete or else the usual stuff at lower cost?
 
He should come up with a business plan articulating what he wants to do – the materials he wants to make, the uses for them, the target markets – and then figure out what he will need to accomplish it. How much factory space and equipment will he need and how many employees? How much money will it take to acquire and keep them, while leaving enough for working capital until revenue starts coming in? How much of this startup capital does your son have and how does he plan to get the rest?
 
That’s one side of the ledger. He has to come up with a realistic appraisal of his revenue and earnings prospects. How much in sales is he likely to generate in the first year? Will it be enough to cover salaries for his employees, including himself; the cost of materials; operating expenses and debt payments?
 
As for where to get this knowledge, your son could talk to the same people that helped him gain his expertise in concrete. This may be tricky, as some of them may be potential rivals in the marketplace. He could also talk to a banker, if he has a good relationship with one. Banks make business loans (although not so many these days), so they must have enough knowledge of the commercial and financial facts of life to know how much to lend and what the prospects are of getting the money back.
 
Your son could also seek the help of business owners who offer advice as volunteers of organizations like the Service Corps of Retired Executives. SCORE, an affiliate of the U.S. Small Business Administration, has an excellent website – http://www.score.org/index.html – that deals with many of these basic startup issues and provides opportunities to speak to advisors online, by phone or in person. Assuming all goes well, your son could check back with them later on for their advice on how established businesses can keep growing.
-Conrad de Aenlle



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