Simple Self-Employment

Key principles, presented in context.

Posted Jul 26, 2019

Armineaghayan, CC 4.0
Source: Armineaghayan, CC 4.0

I’ve written previously on simple self-employment, for example, Low-Risk, High-Payoff Self-Employment. But those articles were in standard form: an annotated list. Some people learn better when advice is embedded in a context, hence this composite story.

Sonya was one of the many burned-out physicians. She was tired of insurance companies and Medicare cutting payments to her and—adding insult to injury—requiring massive paperwork and effectively telling her how to practice. All that atop the seemingly growing percentage of patients that don’t show for appointments and of those who do, who fail to follow even urgent recommendations, for example, to take life-saving medications, let alone to stop overeating, smoking, or doing drugs.

Sonya considered a range of non-clinical MD options: from hospital administration to reviewing patient legal claims, but none sufficiently motivated her. She decided that she wanted out of medicine completely. 

Sonya's parents back in China happily ran a flower stand near a bus station, and she decided to maintain the family tradition by starting one or more in the U.S.

Realizing the importance of location, Sonya's first step was to learn about the government restrictions and regulations governing flower stands near bus and train terminals, places where, in the morning, many people are wanting to buy a thank-you for a coworker, and after work, wanting to be nice to their sweetie.

Sonya found that some jurisdictions prohibit anything other than government-owned enterprises. In other locales, the government gives preference to underrepresented minorities. But a few jurisdictions did not erect daunting roadblocks. Yes, there would be a long application and review process but Sonya felt that a prime location would be worth it. Knowing how long the process could be though, she didn’t quit her MD job until she got the permit for her first location.

Sonya knew that a business’s name has profit potential, so she didn’t squander it with a neutral name such as Sonya’s Flowers. She considered memorable names like Bloomers, In Bloom, Bloom Room, Flower Feast, Flirty Flowers, and Big Buds. She loved "Big Buds" but feared that even just one person who objected to that name’s non-floral allusions could mount a damaging social media campaign against her business. So Sonya ended up choosing Flower Tower. That was memorable and could tie in with a clever merchandising strategy:  Arrange the flower shelves on a pyramidal tower, with the highest-priced items at the top, which could increase profitability because people like to be at the top and because those high-priced items would be near eye-level.

Sonya had no carpentry skills so she hired someone to build the tower and used 99designs to have a contest for designing the logo and signage.

She decided that, especially with a highly perishable item like flowers, and especially at the business's beginning, when cash flow is critical and likely limited, she’d limit her inventory to the most popular flowers. She determined what those are using internet research, watching what’s selling at nearby flower stands and visiting the city’s wholesale flower market. There, she asked vendors for advice on which flowers yielded the most profitability per square foot, considering, of course, shelf life.

As a result, Sonya ended up deciding to sell just medium-stemmed red, pink, and yellow hybrid-tea roses and mixed bouquets comprised of popular flowers that are in-season, which thus could be bought inexpensively. Once having identified her product mix, she negotiated with vendors to get the best ratio of quality to price.

Although Sonya didn’t want a career at a flower stand, she knew that the best way to learn the business was to be hands-on for the first weeks until she felt she understood everything: customer preferences and problems, price objections, merchandising for maximum profit, efficient processes for creating bouquets, theft control, and the ideal hours, for example, 8 to 7 daily vs 8 AM to 10 AM and 4 to 7 PM, weekdays only.

Once Sonya felt she understood her business well enough, she recruited a trusted friend to run the flower stand. Choosing a trusted person is especially wise here because this is a significant cash business and, despite inventory control, there’s risk of theft. She picked someone who also is conventionally attractive in appearance and personality, which should increase sales. And of course, Sonya chose someone reliable: who’d show up on time, treat customers fairly even when they're rude, and keep the place attractive.

The friend she chose had no experience with flowers, let alone with flower arranging but Sonya realized those could be taught—She simply had her friend watch a few YouTube videos. practicing as she watched. Sonya paid her for that training time. On the job, Sonya paid her well, including profit sharing. She did that both for ethical reasons and to encourage employee loyalty and to decrease the risk of employee theft.

Sonya then turned her attention to securing an outstanding second location... and then her third... and then her fourth, which was in front of a busy hospital. She named that flower stand, FeelGood Flowers.

After establishing four successful locations, Sonya was clearing low six figures. At that point, she stopped expanding, knowing that additional expansion risked decreasing quality and certainly required yet more oversight—not fun. So at that point, she sold the business to another friend.

Sonya is now doing the research on starting another business: providing one-on-one and group coaching plus retreats for burned-out physicians.


Here are the major tips embedded in this story for starting a low-risk business :

Choose a product that isn’t subject to trend risk. Cigars were hot and then they were not. Frozen yogurt was cool until it wasn’t. Unless the economy so collapses that most people are buying only must-haves, demand for flowers will remain as long as birthdays occur, people need to apologize, and tokens of love are to be sent.

Location, location, location. As with real estate, perhaps the three most important factors for a bricks-and-mortar retailer are location, location, and location.

You must take governmental restrictions into account up-front.  Most jurisdictions have burdensome regulations and costs, but there can be significant variation across locales.

Your business’s name is an asset not to be squandered. Too many businesses decide to name their business after themselves or even some arcana they’re fond of. A business's name must be descriptive and memorable. These can help with memorability: brevity, rhyming, cleverness, and tie-in with the store’s distinctive feature. “Flower Tower” incorporated them all.

Be aware of threats. Of course, be aware of competitors—Sonya would have been foolish to open a flower stand near a Trader Joe’s, which sells flowers at low prices. But there are less obvious threats. For example, today’s social media gives people inordinate power. Even just one person could, without spending a penny, devastate a business. So if there’s even a small risk of offending anyone, discretion is often the better part of valor.

Don't delegate prematurely. To preserve cash flow and quality, in the beginning, do as much as you can by yourself. That also enables you to fully understand every aspect of the business. Then, as appropriate, delegate.

Cash is a business’s lifeblood. If your cash flow is poor, you can be out of business even if, in just a few more months, you could have been quite profitable—A business without “blood” has a short life-expectancy. That’s another reason that Sonya did as much as she could herself, why she, where possible hired by the hour or project, and why she didn’t take on a partner with whom she'd have to share half the profits and half of the control.

Pay honorably. Of course, once Sonya needed someone to run the stand(s), she hired and paid well. If she runs her business efficiently and is cognizant of how to meet government requirements without business-busting costs, there should be enough money left to pay honorably and leave her adequate compensation for all her work, ability, and risk-taking.

Hire wisely.  You must take the time to hire wisely. And because job seekers have tools—legal and extra-legal—to look better as applicants than they would be as employees, Sonya was wise to choose trusted friends as first hires.

In hiring, unless the job requires a skill that demands years to master (for example, computer programming), it's usually wise to hire on intelligence, integrity, and reliability.

Don’t be greedy. Recognize that after a certain point, whatever benefits derive from expanding the business are often outweighed by a decrease in the quality of the product or service and the owner's life. Know when enough money is enough.

A side benefit of growing only to the business’s point of diminishing returns is that it leaves plenty of money on the table for the buyer of the business, making it easier to sell, which frees you up for your next adventure.

I read this aloud on YouTube.