Just because you and your friends/co-workers think it would be cool to start your own business doing (fill in the blank), because it sounds like fun, would make you rich overnight or allow you to leave your cubicle and boss forever, “it ain’t necessarily so!”

Maybe you have already looked in the Yellow Pages or searched the Internet for signs of someone else having done your idea. There are several reasons you might not find anything:

1. It’s been tried and failed.
2. There is no market for your product or service.
3. It’s a stupid idea.
4. You may just have hit upon a good idea.

Second, don’t spend a lot of money creating your company infrastructure, the logo, the packaging, the offices, the trappings of being in business, etc. until you have figured out what your product will cost, who will sell it, can it produce a profit at all levels of handling, and most importantly, who will buy it. There are market research firms that make a living doing this, and it costs money to find out.

I had at least one friend who thought he could not go wrong producing an “infomercial” on TV, the kind of show with a bogus audience that “ooh’s and aah’s” when the announcer and demonstrator tell about the wonderful features of the product “du jour”. He had a popular line of cookware, which he had sold successfully at county fairs with personal demonstrations, but he wanted to go “big time” with a TV presentation. By the time he factored in the cost of recovering the TV show production costs, the air-time and a professional MC/announcer, he could sell nothing. His price was then too high. His production costs had been essentially zero at the county fairs (cost of booth space), but TV proved to be his undoing.

He had gambled all his chips and lost. His wife left him and took all the furniture, before he could hock the rest of their belongings for another try.

The lesson is several-fold: know your market, don’t gamble more money than you can afford to lose, and certainly do not use money from friends and family.