How do you do it to a family member who is making a bad decision? One of my relatives is about to blow his portion of an inheritance on a "business decision" which he is being coerced into making. He thinks this is his chance to catch a break, but what he does, he just is not good at it. He's trying to get into video production and well he's buying into an operation with this guy who he met when he was going to a local school. It stinks of rip off but he won't hear it. I don't want him having to end up crashing here because he sunk a bunch of money into this idea and supporting himself while it fails.

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You don't necessarily have to be great or even good at something (product wise) to succeed in a particular business. McDonald's comes to mind. As food goes, it's not all that great, but they are the number one restaurant chain. Ray Croc wasn't a chef, he was a salesman and a damn good one. That's what he brought to the table.

The biggest mistake people make when starting a new business is entering into it blind. This is indeed a recipe for disaster. Maybe some of the comments below will give you some ammunition to dissuade your family member from taking the leap. If not, it will at least give him some things to think about prior to taking the plunge and hopefully increase his chance of success.

Does he have a detailed business plan? This is of paramount importance. He needs to be told that ithout it, he may as well take his money to the Greektown Casino. Some of the things included in the plan should be:

Who will your target demographic be?
What benefit will you bring to this demographic that others aren't?
What will be you method of acquiring clients?
What will be done to maintain client relationships?
What is you profit margin expectation?
What will be the total operating costs on a month to month basis?
And a host of other things.

Once a business plan is in place, a business model should be done too. This is a bit easier, but can be eye opening. How much a month does he want to earn? What will monthly sales need to be to generate that number after operating costs and expenses? How many clients per month will be needed to generate the needed sales and at what dollar amount from each. etc. etc.

Lastly, he really needs to look at the money he is planning on investing in this new venture as a loan that needs to be paid back on a schedule and include it in his operating costs. If invested elsewhere this money would generate interest and he needs to look at himself as a banker.

This stuff is pretty rudimentary, but you'd be surprised at how many people don't take the time to sit down and look at hard numbers (much to their chagrin) before jumping into something.
Not sure if you can use any of this in a conversation with him, or if it will talk him out of it, but at the very least, he will be better prepared.

Regards,

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~POSTURING LIBERALS ARE ONE THEORY SHORT OF A THOUGHT~

From what I gather in the conversations I have observed, even as recent as this afternoon, there appears to be no real plan in place, and when I questioned things such as what leads this guy has and what the focus will be (i.e. are they doing entertainment or personal service, like weddings), this guy was very vague. He wants to pool together a large amount of money to invest in equipment when they appear to have adequate equipment already. I could be wrong about that but from what I see the stuff looks professional grade. My relative has a big heavy camera that's supposed to be HD, also has some professional, very expensive editing software. I've seen his work from a few music videos he's done and it seems very amateurish. He did my sister-in-laws wedding and man oh man was it bad. How someone thinks an obstructed view is a good idea for a wedding video I have no clue. Hate my in-law so I'm not mad about it, but the point is that if I were looking for someone to go into business with I would first, as you said, have a plan, at the very least a broad strategy and an idea of how to implement it and deploy prospective resources. I do not believe my relative has anywhere near the skill to be going into business with someone, especially one where such a H*** capital outlay exists. Something smells VERY funny here.

And he can't be looking for my relative to be an administrator or manager or a source of business contacts or anything. He has none of that to offer. He asks me stuff about it and I try to nudge him away from it but he got pissed at me today an told me he can spend his money how he wants. Well yeah he can, but I know what will happen if he does and I don't want to share space in a house I am trying to get ready to sell.

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Bryce gave very good advice, but even those with great plans can still fail terribly.

I know a guy that was a project manager in his day job and had the best business plan I've ever seen, in bound 500 page book.

He lost his shirt on it.

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Both Democrats and Republicans are "liberals"! The Republican ideology is classical liberalism, while the Democrats is welfare liberalism.

Oh I agree whole-heartedly. And yeah Audio, it happens. Risk is inherent in any enterprise.

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Tell him to sit tight and not jump into anything. Good points have been made here. Frankly, video production is getting more generic since people who own a smart phone think they can be Scorcese. I was in that biz for a bit, and unless you are doing some TV prod. on a regular basis and able to secure grants for larger projects....doing weddings and dance recitals won't make ny money...'cause a smart phone is just as good to some.

I would make it clear you think its a bad idea and discourage him as best you can. Which it seems you've done. Then I would tell him if he insists anyway you wish him well.....but.... since you think its likely doomed to failure your not going to be there on the other side to bail him out of what you see as a bad decision.

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Thanks for the suggestions, gentlemen. All quite valid. This didn't quite go the direction I thought it would, but that's a good thing.

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