Hey everyone!!

Who here has successfully started a small business in Kunming or around Yunnan? What advice or pointers would you give to someone who wants to start their own?

I don't know the first thing about starting or running a business, but I really want to learn! I am very serious about wanting to prepare myself. What can I do?

any thoughts or advice are welcome!

1. learn accounting - so you can do some financial modeling and forecasting. Figure out when your venture will reach break-even operating costs.
2. go work in the industry so you're familiar with things that cause problems. Things rarely go smoothly - so go learn and get paid while you're on the job.
3. partners - starting a biz by yourself is incredibly stressful. Try to find a partner or two (or three) to share some of the load. You all should have good temperaments as the stress level will be very high.
4. Revenue models - study how businesses make money. Start thinking about cash flow, costs, etc - wherever you go - taxis, restaurants, movie theaters, governments - everything you see operates on cash flow. Think about it, try to model it. The big things will take care of themselves - it's the details that will kill you - from embezzling employees to extortionist business tactics of your suppliers - ALWAYS have backup plans and multiple sources for critical resources.
5. Partners - the darks side - can also just be financial drains. Be very very very careful whom you chose to partner with. Famous case in Beijing - restaurant founded by a foreigner, nicknamed Kro and a chinese partner. The restaurant was called Kro's Nest and was quite successful. The Chinese partner eventually took over the business and kicked the founding partner out - as they had no formal agreement - so the foreigner had no rights. Money corrupts - it depends on the people you're dealing with - some go crazy for small money, others for large...always have an exit strategy.

Good luck and not to puncture your balloon - but statistically 98% of all startups fail from lack of proper planning.

90% of JVs in China fail in the first year.

Don't tell people, "I don't know the first thing about starting or running a business, but I really want to learn!". You might just as well lift your shirt and bend over now.

Understand that business philosophy here is different. Most people start a business for what they can take out of it, not about 'you get out what you put in'. Bear that in mind, otherwise your Chinese partners and you will have an inequitable relationship. Don't assume that you are on the same page, even if you are in with excellent partners.

Make sure you have enough cash, not just the minimum registered capital. I would suggest you see how much cash you think you will need to shell out (wages, bills, rents, etc) for 6 months, and use this as a starting figure.

There is some general advice here www.echinacities.com/[...] the article is about F&B but much is applicable to most businesses.

I forgot the most important thing (it's actually number 1) - sales sales sales or to quote my mentor - profit profit profit. Before you launch your biz - depending on the market - get your pre-sales agreements locked up if possible. That's how Steve Jobs did it (the first time) and it worked out pretty well for him.

If you're not sure how to do this - look at all the different markets and companies around you - see how they do pre-sales (from RE companies to the corner shoe cleaning store).

And - as @Dazzer implies - beware the fraud. That's why you must understand accounting - so you can see the balance sheets etc all the time - cash flow is the pulse of your venture's body. Expenses and Liabilities the excrement. Watch your body carefully, lest you be bent over....

If you don't know what you are doing, don't.

The market here is brutal and full of sharks. Business culture here is very aggressive. You need to be a shark, or think like one, to survive. Business really is dog eat dog, cut throat world here.

Hi,
I have learned a lot from this post. I have studied also your effective advice. I have also found some effective information here www.dragonbn.com/ on starting a new business in China.

Also remember that you can never be successful in business in China unless you can drink heavily. Not joking.

@bgkmg
what im seeing is a foreigner that doesnt know anything about business but wants to start one and compete with i dont know how many locals that could possibly been around here for god knows how long and not to mention their experience. I doubt it the local businesses would like that and not to mention your a foreigner, i believe you have a surprisingly great chance of getting closed down the first week of your grand opening.

however i could be wrong about this,you could get lucky :)

bottom line, do it and see what happens!
peace

Since this blog was Lazarus'd - I forgot to mention one of the most critical failures for business startups - cash flow - whatever you do - try to include techniques to generate fast cash flow. This will help your startup slow the massive cash bleed that inevitably murders most startups.

Just trying to take a step back a little here. I've met a few people who have wanted to start businesses, and all this business advice is great.

But, much more fundamentally I'd recommend you to find the reason why you want to start a business. Are you really interested? Sure? Then sleep on it and see if you're still interested. Then sleep on it some more and check again. Then do your research and planning. On the other hand, if you see a market opening explore it more. Never get trapped in a certain mind set. The market is volatile, but minds like to think singularly — this leads to a dangerous path of many challenges and failure.

Btw laotou, your use of hyphens is quite interesting. Quite abstract to read.