how trading business is different from other business

smartcat

Active Member
#11
Well said but disagree on point highlighted in blue.
I could be wrong, but there is no way of saying for sure. ;)

We don't have forums on the internet for people running restaurants, vegetable shops, software companies - where they could discuss their successes and failures. But we have such forums for trading, and hence we have an idea about failures.

We don't even have much anecdotal evidence about failures rates of other businesses. But to get an idea, just look around your neighborhood. You will see that new shops keep opening up, and previous tenants keep closing. This is especially true in upcoming areas.

The difference between trading & other businesses failures is the gestation time. A normal brick and mortar business won't fail in 3 months (unlike stock market traders) - but it might fail after 1 year or 2 years or more.

What is true across India is that hundreds or thousands of people start a new business everyday, but only a small percentage of them will be able to sustain the business after a few years.
 

whisky

Well-Known Member
#12
I could be wrong, but there is no way of saying for sure. ;)

We don't have forums on the internet for people running restaurants, vegetable shops, software companies - where they could discuss their successes and failures. But we have such forums for trading, and hence we have an idea about failures.

We don't even have much anecdotal evidence about failures rates of other businesses. But to get an idea, just look around your neighborhood. You will see that new shops keep opening up, and previous tenants keep closing. This is especially true in upcoming areas.

The difference between trading & other businesses failures is the gestation time. A normal brick and mortar business won't fail in 3 months (unlike stock market traders) - but it might fail after 1 year or 2 years or more.

What is true across India is that hundreds or thousands of people start a new business everyday, but only a small percentage of them will be able to sustain the business after a few years.
But we can discuss other business here to understand this. Let's start with yours if you don't mind.
 

smartcat

Active Member
#13
But we can discuss other business here to understand this. Let's start with yours if you don't mind.
Sure!

My business: Internet advertising company
Started: 2002
Ended: 2011
Survived for 9 years, but 2009 US recession eventually killed my business

My friend's business: Fast food restaurant (Sandwiches etc)
Started: 2005
Ended: 2006
Very high rentals, bank loan interest killed the business

My dad's friend's business: Computer coaching classes
Started: 2001
Ended: 2003
Demand for computer coaching classes vanished, high rentals & operating costs (salary)

My mom's business: computer printing, basic computers teaching
Started: 1997
Ended: 2001
Rentals & operating costs (salary) was always more than income.
 

whisky

Well-Known Member
#14
Sure!

My business: Internet advertising company
Started: 2002
Ended: 2011
Survived for 9 years, but 2009 US recession eventually killed my business

My friend's business: Fast food restaurant (Sandwiches etc)
Started: 2005
Ended: 2006
Very high rentals, bank loan interest killed the business

My dad's friend's business: Computer coaching classes
Started: 2001
Ended: 2003
Demand for computer coaching classes vanished, high rentals & operating costs (salary)

My mom's business: computer printing, basic computers teaching
Started: 1997
Ended: 2001
Rentals & operating costs (salary) was always more than income.

Thanks for sharing, if you see in most of the above you mentioned the reason was high rentals/loan interest operating cost except yours which got impacted by US recession. I would say business risks were not planned in all of these, it's my view don't mind. Will discuss after market in detail.
 

smartcat

Active Member
#15
Thanks for sharing, if you see in most of the above you mentioned the reason was high rentals/loan interest operating cost except yours which got impacted by US recession. I would say business risks were not planned in all of these, it's my view don't mind. Will discuss after market in detail.
You could say that I guess.

Basically, all businesses carry risk, and rentals are one of the biggest. You can't account for that in a business plan.

Because there is a big paradox here -

If rentals are low, then it means it is a new developing area or that location is not that good. You won't find too many customers.

If rentals are high, then it means the location is good. But you will have to find enough customers to not only take care of rentals but also recover initial investment, salary costs, inventory costs etc.

Finding the right balance is key. And lots of businesses are unable to do that.
 
#16
Catering business has good potential. Recently witnessed success of 2 different formats in this business :

1) A friend has started a catering business , mainly catering to small groups, gatherings, functions of 10-50 people. He has small staff plus a Maruti Van and utncils, plates etc as assets. He is doing very well. He has now got contracts from few schools for breakfast of the school children every day. Main challenge in his business is absenteeism and job hopping.

2) A shop was started in the locality giving full lunch packets and chapatis and subji, as cash and carry format though they have small dining hall too. During lunch/dinner time you have to wait atleast 45 min to get your stuff handed over to you. His challenge is high rent, absenteeism.

Margins in catering business are good. Quality and customer relations should be high to succeed in this business.

Smart_trade
 

whisky

Well-Known Member
#17
Catering business has good potential. Recently witnessed success of 2 different formats in this business :

1) A friend has started a catering business , mainly catering to small groups, gatherings, functions of 10-50 people. He has small staff plus a Maruti Van and utncils, plates etc as assets. He is doing very well. He has now got contracts from few schools for breakfast of the school children every day. Main challenge in his business is absenteeism and job hopping.

2) A shop was started in the locality giving full lunch packets and chapatis and subji, as cash and carry format though they have small dining hall too. During lunch/dinner time you have to wait atleast 45 min to get your stuff handed over to you. His challenge is high rent, absenteeism.

Margins in catering business are good. Quality and customer relations should be high to succeed in this business.

Smart_trade
Thanks Sir, sharing this, I have something similar to share, will do that after market hours.
 

looser89

Active Member
#18
but there are many vegetables vendors, autorickshaw wala,tea stall vendors which makes daily earnings from their business and most of them are uneducated having no business degree ànd on other hand their are many highly educated mba degree person fails in their businesses. is it means former business is easier than later business. is it means there is two types of business
1.simple having no business knowledge high sucess ratio
2. tough business which require high knowledge and have low success ratio
 

Klewtar

Well-Known Member
#19
Trading is more tough because there are less mentors. A successful trader is not likely to pass on their trading process but a successful business man tends to pass on business process to team members.

Business success is more easier when there is a mentor to help someone start or grow their business.

Business is also a team game. The stronger the team or network, the more chance of the business growing.

I wager that a successful trader can easily run a business if he was as dedicated to the business (a business can pivot/change its goals) as he was to trading. Within 3 years as a trader, I tried over a dozen different trading systems but previous 3 years trying to have a successful business, I pivoted only 3-5 times before a close online connection introduced me to trading and taught me how to use TA tools. The plus point of a trader is that it is easier to change trading strategies/processes than to pivot a business.

It is less likely for a moderately successful businessman to be a moderately successful trader. Despite that, a business leader (very successful businessman worth billions) would probably be a successful trader if he was focused on trading instead of investing his time in solving problems. The intellect required to make crores of rupees as a trader is more than the intellect required to make crores of rupees as a businessman (businessmen have helpers whereas a trader tends to be a lone star).

It may be nice for traderji members to list out their business skills and have an informal business network.

I have previous experience coding themes for websites (I free lanced to bloggers and programmers) and while on a break from learning trading, started trying to produce a website/app where a food outlet's visitor can use their mobile phone to discover what food items in the food outlet may be most to their liking (the long term goals of the concept is similar to Kevin Rose's attempt at Oink).
 
Last edited:

Similar threads

Broker Special Offers

Intraday Higher Leverage

Save up to 90% in brokerage and get higher leverage for intraday trades.

Name:Phone:
Email:City:
State:
Are you a day trader?