The Biggest Challenge I Faced When Starting a Business in the United States

The Biggest Challenge I Faced When Starting a Business in the United States

Hello, this is Suzuki from Eco Drive.

Today, I’d like to share the toughest hurdle I encountered during my first year of entrepreneurship in the U.S.

I was launching a Prius specialty shop, and that inaugural year was a whirlwind of challenges…

I hope this story will be helpful to anyone planning to start their own business.

Watch the video version here!

The videos embedded in this article are narrated in Japanese, but English subtitles are available.

The First Year of a Startup Is Tough in Many Ways

When you hear the word “startup,” do you instinctively picture something difficult?

The answer is yes—once you start a business, unexpected events and obstacles become everyday occurrences.

Within that reality, the very first year is often the most challenging for entrepreneurs, as all sorts of difficulties arise.

From my own experience, I can say that’s no exaggeration.

When I launched my Prius specialty shop in the United States, I started completely on my own with limited capital—just $30,000 (about ¥3 million).

The toughest part of starting under those conditions was sourcing inventory.

The Unexpected Challenge of Sourcing Inventory: Business Stalled

Sales and hiring employees went more or less as predicted—expected challenges—but the difficulty of sourcing cars caught me completely off guard.

The biggest struggle was the pace: I couldn’t turn over my time and capital efficiently enough.

Because sourcing inventory had been relatively easy in my previous job, I never anticipated this issue at all.

Sales progressed more smoothly than expected, but without reliable sourcing I couldn’t keep inventory on hand, which became a major headache.

The Time Challenges and Cash-Flow Strain of Sourcing Inventory

Sales and employee management are important, but if we can’t source quality products at the right price, this business simply can’t succeed.

The toughest aspects of sourcing boil down to time constraints and managing cash flow.

Time challenges refer to the process of tracking down good-quality cars and purchasing them at suitable prices. (It’s easy to say, but incredibly hard to do!)

On top of that, you have to consider cash flow to keep the business running.

When it comes to sourcing, you need a cycle in which you sell the cars you’ve bought and use the proceeds to fund the next round of purchasing. If this process falters, major cash-flow problems arise.

No purchase inquiries were coming in, so I turned to auctions—but…

If I can’t source cars, naturally I can’t boost sales.

Even after running ads, I still wasn’t getting any calls from people wanting to sell their cars, so I decided to try sourcing through car auctions instead.

But once I actually started using auctions, that proved challenging too.

Because I can’t commit to buying without seeing the vehicles firsthand, I have to inspect each car on site.

Driving to an auction venue often took two to three hours each way.

I was reminded of just how vast the United States is—getting up before dawn, making long drives, and timing my trips to avoid traffic every day.

This auction-based sourcing process ended up adding a significant time burden.

More Time Away at Auctions Left the Store Unattended

Going to auctions like this increased my time constraints, and I sometimes had to close the shop to source inventory.

I would leave a sign on the door that read “Out at the moment” and head out.

While I was away sourcing, if a customer happened to drop by, the shop was closed.

Even though visitor numbers were low right after the grand opening, some customers still came by.

Sometimes the sign would even blow away, and we received calls from customers who had made the trip only to find the store closed.

Spending All That Time Still Doesn’t Guarantee You’ll Get a Sellable Car

Even when I closed the shop and drove to the auction, there was no guarantee I’d come back with a car that could actually go on sale.

Of course, I can’t buy accident cars, so I have to pass on them no matter how cheap they are.

And even cars that aren’t accident vehicles sometimes have lots of scratches.

Because it’s an auction, if a good car does appear, I might still lose out if another dealer outbids me.

In practice, I could only purchase about 20–30 percent of the cars I went to inspect.

During the early days, I spent nearly all my time on this sourcing work.

Lack of Credibility Right After Launch Meant No Time-Saving Shortcuts

It’s a bit of a digression, but right after starting a company you often can’t use services that would normally be available because you haven’t yet built up enough creditworthiness.

For example, when a customer buys a new car through my shop, the supplying dealer would normally deliver the car to us and we would prepare the paperwork.

However, in the early days—when we had no credibility—we couldn’t get that service.

So what did we do? I had to go to the dealer with the customer to pick up the car.

After that, the dealer’s salesperson handled the documents directly with the customer while I simply stood by and watched.

Even though it was a brand-new car and should have had no issues, I still had to check everything, and the whole process often took more than half a day.

How Lack of Credit Affected Our Payments

This lack of credibility caused major payment headaches in our startup phase.

For instance, if you have solid credit at an auction, the seller will deliver the car first and let you pay later.

Because we had no credit right after launching, we had to pay upfront—and we had to pay by check.

The auction house would ship the car only after the check cleared, so it generally took three to four days before we actually received the vehicle.

When we buy cars from individuals today, we can take the car first and then wire the money, but in the early days that was nearly impossible.

That meant paying in advance, and since some sellers didn’t trust checks, cash was basically the only option.

In some cases, sellers even suspected counterfeit bills and wouldn’t release the car until we went to the bank together and deposited the cash.

Payment Delays When Purchasing High-Priced Vehicles from Individuals

Because our company still lacked credibility, sellers almost never agreed to the same prices they offered other dealers, so we almost always had to sweeten the deal financially.

When we finally reached a deal, another problem surfaced: the checks we received for high-priced cars often didn’t clear at the bank right away.

Our bank explained that, because our account was so new, we had little credit history, and the issuing bank was placing the check on hold.

As a result, it could take up to two weeks for the funds to be deposited, which delayed the next round of car purchases.

I clearly remember how nerve-racking it was to go two or even three weeks with no revenue coming in.

For more on the importance of “credit” in the U.S., watch this short video and read this article!

Challenges Unique to the Earliest Days of a Startup

As you’ve seen, a lack of credibility right after opening hinders sourcing and places a heavy burden on day-to-day operations.

These credit issues affect not only tasks directly tied to purchasing inventory, but also dealings with the bank, where cash flow can grind to a halt.

Without solid credit, even depositing a check can take an abnormally long time, which in turn triggers further cash-flow problems.

If you’re thinking of launching a business—or starting one in the United States in particular—it’s crucial to anticipate sourcing and credit-related hurdles like these.

I hope my experience proves useful to anyone preparing to take the plunge into entrepreneurship.

Watch the second half of the video here!