Saturday, November 19, 2011



As an old man, who has started numerous businesses, you sort of understand and factor in some of the things, you experience over many decades of successes and failures. It was mentoring Robeto Ayala, from Benque Viejo, who contacted me about starting a hammock exporting business, that refreshed in my memory, watching this young man´s needs, aspirations and ways of going about, what for him, is a dream and goal in life. What he needs is a job, while he builds a business over some years.
The things I never think about, because they are experienced instincts and understandings, came to a fore, and I´ve been forced to reflect and philosophize about a young entrepreneur wanting to start out in a business of his own in Belize. After reading course materials of the local bureaucracy offering such entrepreneurial training, listening to bureaucrats and other salaried people on TALK TV SHOWS in Belize, I am beginning to understand at least, some of the things THEY the teachers do not seem to grasp and understand. Being salaried workers themselves.
There are probably many facets involved, but the TWO most striking elements in an entrepreneurial business, is not so much a Business Plan, or starting up and finding the loan money to get going. The bureaucrats recommend borrowing loans, an idiotic lesson as I can believe, for a first time startup. Might work with someone who has gone through the mill a few times and failed. These two things seem to be missing, from the comprehension, from what I read and hear on TALK SHOWS about people in the bureaucracy supposedly teaching "would be" anxious entrepreneurs, wanting to become independent. Most fisherman could teach these lessons.
The first item is the value of "SWEAT EQUITY". YOUR personal sweat equity. The second item, is the realistic anticipation of building the new business to the point of actually producing some money, you can take out, to live off, rather than re-invest it in materials and equipment. This second ITEM is the "TIME NEEDED". A person who builds businesses, thinks in terms of TIME needed. For example this hammock export making business, in my mind, and undeclared is a 1 1/2 year, to two year project, BEFORE you could expect to subtract some earnings out of the venture. I guess my children, who went into real estate development, learned that lesson, because we talked about it often and also they saw DAD doing it. In their field we talked about 5 to 7 years, before being able to sell a finished house and lot, say for example bought from DFC at auction, totally vandalized. There are the unexpected costs, not only of hiring labor and buying materials, but you need to acquire $10,000 to $15,000 just to go through paying the government to get the lease recognized and then switching the lease to a FREE TITLE. Roughly $5000 for each of the two steps and about two or three years of waiting on the LANDS BUREAUCRACY slow performance. Once you sell your first house, or business venture, you have lump sum capital to do it properly, the second and third times in repetition, if you budget wisely and save appropriately.
The thing is, an entrepreneur needs a salaried job, or an existing small business enterprise to provide cash flow to live off, and save something to invest in the materials, or equipment needed to build the new entrepreneurial business. Loans will ruin and destroy the first time entrepreneur. There are so many things can go wrong. Ideas, business plans, expectations, hope, all these things have to run the destructive gamut of the UNEXPECTED, UNPLANNED FOR THINGS that crop up. Experimentation and pilot projects must be paid for in CASH. Not from loans, no matter how rosy your expectations and projected business plan. Most first time ventures FAIL and PILOT PROJECTS fail, when they meet the unexpected. If you borrowed to do these, you are FINISHED, for most of the rest of your life and condemned to being a salaried worker.
What I am seeing and re-learning instinctive knowledge as a mentor, is that a young person has needs for CASH FLOW. The new entrepreneurial business may not meet those needs, and unlikely to do so, for a few years. Understanding this basic premise is basic to a successful business builder.
When I was young, I built my own boats. These I used to earn money, commercially, either fishing and eventually carrying tourists. The first boat was tough, small as it was, a small 12 foot speed boat. I taught school for the cash flow and my wife worked as well teaching. A boat takes about two years to build, with dribs and drabs of $3 or $5 worth of lumber every month at the beginning. Most of the investment was in the labor I saved by doing it myself. What I call SWEAT EQUITY. With the first boat, a second boat followed, which was a multi-purpose 24 foot cabin cruiser. This also, which was used to earn money to live with, from fishing and tourism. So it went in steps, over 5 years, then ten years and so on. Along the way, a person who is honest and capable will attract willing people who will invest in things for new business ideas. Then you learn to form a company and issue stock. Stock investment is not a LOAN, you do not have to pay it back in CASH, but you can pay it off other ways. With tourists, I paid with free vacations, which is what I did. From then on, I NEVER used loans, but sold STOCK. Which paid a dividend of some sort, usually in vacations, but not in cash, and tight buddy, friendship, relationships, sharing holidays and adventure as the product of the life long relationships.

"SWEAT EQUITY" AND THE "TIME NEEDED", to turn an entrepreneurial venture into a life long success are the lessons, seemingly not being taught to would be young entrepreneurs, here in Belize. They have their head filled by borrowing LOANS, for instant success and instant GRATIFICATION. RARELY works that way. Sorry to say! They need to be thinking in 15 year TIME FRAMES, in progressively small steps on a pay as you go basis, until you become established and experienced enough, to handle a business loan. Just my opinion. Things rarely work out like a business plan prospective idealizes.

1 comment:

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