Family Enterprise

Our shows went well this week. My own family business is called “Threads n’ Things” and can be seen here: www.threadsnthings.org. It is a tailoring and tuxedo rental business. Both of these are somewhat declining industries, and both of them had relatively low barriers to entry. We chose these two businesses because they both represented under-served segments of our community. Essentially, there is no competition because nobody wants to do these things here. This lack of competition has allowed us to make some mistakes along the way without completely sinking the boat as we’ve learned to manage the business. It is our first business, and we’ve learned a lot from it. We don’t get rich from it, but we are rich in time. We spend a relatively small amount of time earning enough to pay our basic bills, and we have time left over for raising our children and training them in Biblical principles and also in worldly wisdom. It also leaves me enough time to work on websites and this blog.

I recommend starting a first business in a market where there is little or no competition, so you can learn your way through the process with as little risk as possible. Keep costs low (zero is ideal) and work to promote until revenues are high (well above the poverty line). Read as many business and economics textbooks as you can. Here are some that I have found valuable for a start: (You can also see these books in our Store).

BOOKLIST:

Economics: Public and Private Choice, 9th edition (Gwartney, Stroup, and Sobel). This is a great foundational book for macro- and micro-economics.

Economics of Public Issues (Miller). This was an anecdotal book applying economic principles to about 30 public issues.

Managerial Economics: Applications, Strategy, and Tactics, 8th edition (McGuigan, Moyer, and Harris). This is a mathematical approach, using algebra and calculus, to maximizing profits. Hint: More revenue, more sales, or higher prices don’t necessarily mean more profit.

Modern Labor Economics: Theory and Public Policy, 7th edition (Ehrenberg, Smith). This book taught me how the labor market works, and the reasons for employment and unemployment.

Marketing: The Core (Kerin, Hartley, and Rudelius). This foundational book on marketing is solely responsible for the successes that we have had in generating revenues.

Services Marketing: Integrating Customer Focus Across the Firm, 2nd edition (Zeithaml, Bitner). This is a great book that distinguishes between the marketing strategies of goods and that of services.

Primal Leadership: Realizing the Power of Emotional Intelligence (Goleman, Boyatzis, and McKee). Great management textbook for emotional handling of employees and subordinates, and training emotionally intelligent managers.

Launching New Ventures: An Entrepreneurial Approach, 3rd edition (Allen). This book explains how to develop a business concept and write a complete business plan.

The Strategy and Tactics of Pricing, 2nd edition (Nagle, Holden). This is the book that convinced me we could charge $30 per hour for alterations instead of $15. The retiring seamstress had charged $12! We lost an incredible amount of money before that, trying to pay sewers $10 an hour and billing the customer $15.

Strategic Electronic Marketing, 2nd edition (Kleindl). This book explains how internet marketing is different from traditional marketing.

New Products Management, 6th edition (Crawford, Benedetto). I read this book around the same time as Strategy and Tactics of Pricing. Together, they showed me that if I expanded our offerings to include cheaper versions of the same alterations services, we could charge more for the labor-intensive jobs and less for the easier versions, and offer a meaningful service to everyone.

Human Resource Management, 5th edition (Fisher, Shoenfeldt, and Shaw). This book was not as immediately helpful as I had hoped. It dealt with managing managers rather than menial labor. In another business in another life, I will certainly use the knowledge… but probably not this year.

Compensation Decision Making, 3rd edition (Bergmann, Scarpello, and Hills). After one chapter in this book I realized that I was paying too high a wage and expecting the employees to do too much that they weren’t able to do, or interested in enough to care about. I let all the employees go after reading that chapter. I discovered from this book exactly why businesses hire menial laborers for dead-end jobs at low wages. I little disillusioning, but very enlightening.

Economic Development in the Third World, 2nd edition (Todaro). This book details efforts to relieve the abject poverty of third world countries. I felt, correctly, that I would learn some principles that would be applicable to a family with six children living in a state of abject poverty.

Conclusion

I may post more information about the history of our business at a later time. Being in business takes stamina and being comfortable with uncertainty. Your first business will probably fail. People who succeed in business are not supermen or people who knew right away how to do it. They are people who persevered and kept trying until they produced successful results. Failing at first can greatly lower your standard of living, but succeeding later will have its own rewards which will be greatly appreciated if the first experience is one of failure. Really, learning business is like exercising any other muscle, especially “mental muscles.” The more you do it, the better you get at it.

Happy Entrepreneuring!

David Fister