Where to start your new business and why
My wife loves to watch the real estate shows on TV. It’s one of her passions. Thank God she loves to watch as opposed to buying, renovating and flipping. Just at this moment single family housing speculation is a terrible place to be. Today’s Wall Street Journal shows that the single family inventory in the top 18 housing markets around the US are up an average of 3% January over December. Several places are up over 6%. Some people are going to loose big money.
A year, eighteen months ago residential real estate was a great place to be, but times change. Follow the advice of the stock brokers. “No tree grows to the sky” and “Never chase a market.” Everyone is looking for the bottom so they can catch the turn on the market. They hope it will come in maybe another year or eighteen months. They wait in vain. The bottom does not come until all the hope a turn is wrung out of the market. When everyone stops looking for the bottom that’s when it comes.
Still, if you are going to be in business you have to be in some market or other. They all have their ups and downs. Which one do you pick? It’s very important.
At the end of WW2 GE ran a research project every year to determine what made businesses successful. The tested hundreds of variables: education of management, location, technology, and on and on. Every year they came up with the same reason why some companies were successful and others flopped: the market in which each company operated.
My personal example is a company named Allis-Chalmers. Until the mid-80’s they ran a gigantic operation outside of Milwaukee. More than 70% of their business was building tractors for the small family farm. The family farm disappeared as the economies of scale in agriculture disappeared. The company which had been around for nearly a hundred years and employed thousands of people disappeared in 24 months.
Pick some place good to stand. Booming markets bust. Pick a market with a steady growth. Your business is not a get rich quick scheme. Your business is a vehicle for your income and success. If you are looking to get rich quick buy a lottery ticket. As part of you due diligence examine the local, national and international market for your enterprise. If you are in the right spot market growth will cover small to medium mistakes you make.
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