I’m in Mexico this week – each time I visit I’m impressed with how many people decided to start a business. For a country that doesn’t rate high on ease of doing business, there are certainly a lot of entrepreneurs. Each block seems to be filled with small shops or stands.
Start a Business: Earn Enough Money
There are a few things that I don’t understand, though. The first is if anyone is making enough money in their small businesses to make a living. I’ll share an example. My all time favorite shoe shine guy is here in Chihuahua. I’ll bring a pair of dress shoes even if I don’t plan on wearing them during my visit. My wife thinks it’s funny, but I’m always pleased with the attentiveness this guy pays to my shoes. Even better, I can leave them with him and come back in 15 minutes and not sit and wait in a chair. It had been a few years since I last visited. This time I saw a sign in an US airport for a $4 shine. That’s pretty cheap by my standards. I almost stopped but remained loyal to the guy I like. I dropped off my shoes yesterday and paid 25 pesos. The exchange rate is 14 pesos to the dollar – this cost somewhere around $1.40. You can work the math at six pairs of shoes per hour and see that one doesn’t get too far.
Start a Business: Protect Your Money
The second area that confuses me is how much inventory people have in their small businesses. By inventory, I mean the items that business owners are selling – corner store items to office supplies to piñatas. All of this inventory was bought by the owner and waits to be sold. Many stores don’t look like they have a lot of customers. This can mean each small businesses invests thousands of dollars in items to sell that are waiting for customers to buy. It underscores to me how critical it is to understand your customer and how you will meet their needs in a way that is unique.
If you are trying to figure out how to start a business, be sure to consider these two items: will you make enough money and how much money will you have to invest? They can have a huge impact on your satisfaction with your small business.