Business Investment

[Frezzinghot]

Hi,

Looking for some advice on my future.

Will give you a background of my current financial situation then my employment career to give some sort of numbers/career that I currently have. Ultimately I am looking to set up a a franchise business in the food industry, I have my eye on a up and coming location within Auckland which should see good population growth in the coming years.

My current financial situation and assets looks like this:

PPOR: $860k (MV) $390k (mort)

IPs: x 3 - $980k (MV) 30% LVR (All 3 positive/nuetral cashflow)

IP goal is to have 10 and reduce to 5 to pay off all mortgages, live of rental income. Slowly working towards this and happy with where I am at at present.

Main problem I have now is that I have lost all passion for my day job, finding it real hard to motivate myself to go to work each day, mainly over being told what to do and I work in a corporate environment for semi large firm. Only way I see out of this is to work for myself, I am the boss of me and my results. Have been wanting to do this for some time but never really got off my backside to do anything about it. So here I am looking for some advice on any pitfalls to look out for.

Initially my wife will keep working at her job as some security should this not turn out, but with an eye to join me in the business should we expand to another franchise.

Any advice on this would be much appreciated!!

FH

[speights boy]

Buy a couple of Rock Dogs from Steve and ask to chat.

Hot dog van offers hope for homeless man

Coppard admits to doing it tough himself at times.

The Auckland solo dad said he left a 20-year career as a "high-flying" IT sales executive after he had "a bit of a meltdown".

"I haven't always been happy and fortunate myself you know."
So helping out Brad was "sort of part of my own healing process."


However, Rock Dogs had been working with council organisations and private landowners to make sure he and Brad were able to sell their hotdogs around the city.

Coppard plans to license and sell mobile hotdog carts to aspiring vendors nationally.

http://www.stuff.co.nz/auckland/70153262/hot-dog-van-offers-hope-for-homeless-man

[Rosco]

Hi FH,

Most cafe's don't make much money! They make a poor wage for their owner when you really look at the figures in most cases and no business profits. Most cafe's are kind of like property investment, cash poor, but if done well a good capital gain at the end. If you are looking at a cafe, this might not be the right kind of business to mix with property investment!

Being a business owner is extremely hard work, and most fail in the first 5 years. I have seen many people get into trouble and go broke because of a business. I had a client buy a food franchise after I told them not to touch it with a barge pool, but they were offered $50k off a well known franchise so jumped at it anyway. Ended up losing over $100k a year for 2-3 years, and only just got out with the shirt on their back (also capital loss!).

So at the moment I see you as have little risk, and kind of cruising to your goals. Do you need to take the risk into business?

Ross

[donna]

Do what you love and you have the best chance of success. The hardest part is working out what it is that you love to do. Forget where you want to do it for now and focus on identifying the skill you have and enjoy using which is transferrable across different industries.

You're obviously good at what you do and you're using skills you enjoy using but there are other components of the role you dislike (like being managed etc). I have over the years worked my way into a role I love within my own business. The hardest part is identifying what it is you enjoy doing and ensuring that you get to do it within your own business. So the starting point is to forget the industry for now just focus on identifying the skills you like to use - then look at where you want to apply them.

You can own a business and have it managed by someone else while you have a role in it doing what you love to do. This is where a lot end up.

Let us know how you get on - exciting times ahead for you.

cheers,

Donna

[Frezzinghot]

Hi FH,

Most cafe's don't make much money! They make a poor wage for their owner when you really look at the figures in most cases and no business profits. Most cafe's are kind of like property investment, cash poor, but if done well a good capital gain at the end. If you are looking at a cafe, this might not be the right kind of business to mix with property investment!

Being a business owner is extremely hard work, and most fail in the first 5 years. I have seen many people get into trouble and go broke because of a business. I had a client buy a food franchise after I told them not to touch it with a barge pool, but they were offered $50k off a well known franchise so jumped at it anyway. Ended up losing over $100k a year for 2-3 years, and only just got out with the shirt on their back (also capital loss!).

So at the moment I see you as have little risk, and kind of cruising to your goals. Do you need to take the risk into business?

Ross

Hi Rosco

Without going into detail about the specific food channel I am looking to invest, I understand the pitfalls and the standard 5 year failure rate. But can you tell me the success rate of the businesses that succeed in that 5 year period, as my expectations are that I only want to succeed not fail, I can only see the glass half full as my alternative is being miserable working for a corporate!

Yes I am cruising to a destination but if I get there being down right miserable what is the point, I want to do what makes me happy and I need to find this sooner rather than later, I also want to set an example for my children about pursuing your dreams no matter the obstacles.

Please share some success stories of your clients that have succeeded, as these are the ones I wish to emulate.

My new motto is be the best you can be, be the boss of your own destiny!

That may be my new company statement.

FH

[Frezzinghot]

Do what you love and you have the best chance of success. The hardest part is working out what it is that you love to do. Forget where you want to do it for now and focus on identifying the skill you have and enjoy using which is transferrable across different industries.

You're obviously good at what you do and you're using skills you enjoy using but there are other components of the role you dislike (like being managed etc). I have over the years worked my way into a role I love within my own business. The hardest part is identifying what it is you enjoy doing and ensuring that you get to do it within your own business. So the starting point is to forget the industry for now just focus on identifying the skills you like to use - then look at where you want to apply them.

You can own a business and have it managed by someone else while you have a role in it doing what you love to do. This is where a lot end up.

Let us know how you get on - exciting times ahead for you.

cheers,

Donna

Thanks for the inspiration Donna, I wholeheartly agree with your comments. I am trying to get out of my own distorted paradigm, (no you cannot do this, its too risky, what if...) but if I listened to all the bad advise I was given I would have been in a worse place ATM.

I believe I can do the the transition into business, I have learnt from the best in the corporate environment, I just need to put things into prospective, I am risk averse by nature but have stepped outside this many times through property investment.

At times I may over analise situations but think this can be a good attribute to have going into a business venture. I like to ask questions of successfull people, what made them win/lose, what should I look out for.

I know there are many people out there that have done well and more to the point have been happy doing something they LOVE. I want to find out what that is. And it is not working for someone else. That is for sure.

FH

[Damap]

As RE is your passion why not do that full time instead. "If you gave it your full attention do you think you could find 2 deals a year that could net you 50K each?".

The answer should be yes so you can back yourself to make 100K a year and if you find those 2 good deals by February you can take 10 months off.

If the answer is no then I would stay NOT self employed as your fear factor is too high.

[Frezzinghot]

As RE is your passion why not do that full time instead. "If you gave it your full attention do you think you could find 2 deals a year that could net you 50K each?".

The answer should be yes so you can back yourself to make 100K a year and if you find those 2 good deals by February you can take 10 months off.

If the answer is no then I would stay NOT self employed as your fear factor is too high.

100k would be more than enough for me to pay my PPOR mort and have a decent level of lifestyle. I do like to trade, have learnt many lessons from the past as well. I guess this is the path of least resistance and some skill I know more about!

FH

[Frezzinghot]

Damap, any short term lending institutions that a friendly to traders? Or will the traditional banks be ok lending short term for trading.

[Damap]

Truckloads of money around for trading now, non banks and private money are back in a big way thanks to such low interest rates.

[Orkibi]

As RE is your passion why not do that full time instead. "If you gave it your full attention do you think you could find 2 deals a year that could net you 50K each?".

I second that and what Ross say. Forget running a coffee shop if you passion is real estate.
running an hospitality business is Very demanding and hard work. Don't think that having a full cafe or subway means that the owners pickets are full of money. --- the landlords pockets doing much better and passive income. I'm experiencing both sides right now.

I suggest you put more effort in to trading, it is totally possible to do what Demap say if you give it 120%..
but make sure you buy very well. It's easy but it's possible and at lest you do what you love and it keeps you in the market.

In reality you will be running at 200% if you still have a day job, but it's only temporary.... Until you can do property full time. (There is no free lunch)

My my webuyproperty business is growing with leads and I'm currently considering dumping it up further in AKL by having staff on the ground. If you decide to put 120% in to property then pm me and we can talk and see if we can work something out that would benefit both parties.

[Janshouse]

If you're going with a Cafe do really nice food as well. That way you can make money at night too - might as well generate some profit then too as your rent stays the same regardless what time you close.

[HattrickNZ]

have you looked at any of the books of any business in your area of setting up business to see what they look like? I would do this as a start even if it is not an identical business in gives you an idea.

Do what you love but do your homework before taking a big step, alternatively stick it all on red

[Janshouse]

Defiantly agree with doing your homework. If this is your first business a Cafe might be a good one. Low set up costs