Starting a new business: How to start a small business!
New business start up plan!
Owning your own business in the past was something that many of our grandparents considered to be a dream. If one had a store of their own then they were looked upon as a steady person, maybe not well off but okay etc. That business owner became a corner stone of the village or township and even though they had to put in long hours and hard work they were a somebody.
For the last few decades that dream of becoming a store or
business owner has become a reachable goal for more people than our
grandparents could have ever thought possible. Unfortunately it seems
that for every ten new ventures being started at least eight go out of
business before their third anniversary. There is more to it than just finding a spot, coming up with the first and last, buying equipment and some stock.
With the way the economy sits at the moment jobs are being lost daily worldwide. And with such a high unemployment rate everywhere being a business or store owner has become more than just a dream. It is one of the main reasons why more people then ever are considering becoming self-employed and why they are ready to jump into entrepreneurship with two feet and devil may care attitudes. This sometimes desperation for work is what makes so many willing to plop all they possess, all they can beg and borrow into a venture that unfortunately seems to end in disaster more often then not.
There is more to it than just finding a spot, coming up with the first and last, buying equipment and some stock. Although those are the bare bones there is a long list of important factors to consider and mull over. You will have to conduct extensive research and set up a real in debt business plan. In this business plan you will have to answer these questions:
- Is there a need for what you want to offer?
- Is there more similar types of businesses in the area?
- Can the town sustain another similar business.
- Can you do better, undercut, offer more then the already existing stores?
- How easy will it be for you to get supplies? (if you want to open an export/import gift shop make sure you know where you will be able to get those gifts at reasonable prices)
- What licences will you need to get?
- Know the township by-laws. (if the town prohibits 24 hour businesses then an around the clock variety store will not be possible)
- If the township has a by-law about exotic animals a pet store catering to tarantula and snake lovers might not work out downtown but check maybe at the edge of town it will be possible.
- A canoe and boat showroom might have problems selling any type of water craft if the location is in the middle of the dessert and the nearest lake, river or ocean is a ten hour drive away.
- If you want to open a bread baking shop can you lift the 80 lbs flour bags? If not will you be able to hire someone that can?
- Most importantly can you get the fundings for the business you would like to start?
- Can you live off your savings until the business starts to roll in some dough?
- Can you reinvest funds into the business without having to drain it to live off of it too soon?
- Are you sure you can set aside the rest of your life for a few years until the business is running? (after having opened a business it will be quite a while till you can taketime away to go on holidays, to take hunting or fishing trips etc.)
- Is the spouse and the kids on-board with the idea of a store or new business? Things will sail way smoother if you have the co-operation of your loved ones.
- Are you opening a dream business that the spouse and kids can help with? (you might need help occasionally if it gets too busy but not busy enough to hire an employee yet. ) Remember that if the spouse or kids are grossed out about worms you will probably have a hard time getting them to help weigh the slimy buggers for shipping.
There are hundreds of more similar questions that you need answers to before you jump into the middle of a venture that might have expensive consequences if you and/or your loved ones are not willing to co-operate. Make sure you look at every aspect of the business then go for it.
What makes the difference of one business being a success and the other one being doomed from the get-go?
Well, that really is a loaded question. Having owned and worked small businesses (tailor shops) for over thirty years I have a few observations that I would like to share. There really is no guarantee, the only thing for certain when opening a shop/store or business of any type is to know thy business and to be as well informed about everything as possible.
Obviously everyone's situation and type of business is different but the success no-matter of what kind of store/shop or business all comes down to building a good reputation. Good workmanship and honest fair pricing is the key to a service type of business or if its retail then good quality items again at honest and fair prices. Accommodating hours and friendly service are also important.
Unfortunately even putting ones whole life and soul into a business venture can not guarantee success.
Tips of how to go about stating a new business!
1. The most important aspect of entrepreneurship is to understand the business: If you're interested in opening a store that sells just guitars you better know the hows the whats and everything else about guitars. The minute a customer comes in and realizes that you have no knowledge about the different types of guitars your credibility goes out the door along with the customer who needed info. Same if you have no clue about being a plumber you might not be the right person to start a plumbing business unless you hire good and reliable plumbers to do the work for you. With other words you will have to look after the traffic and delegate the work but you will have to be able to pay out good wages for your trades people. This fleet type of business might work out in a large town, city or a location where many subdivisions are being set up but you will definitely run out of funds fast if you're thinking of setting up shop in a small town of 300 homes where you might or might not get a call daily.You will need to do your homework and research the needs. Even if it means sitting in front of your prospective store counting and watching the traffic of potential customers at different times of day.
2. Just as important as knowing the business is to find out if there is a need for your type of business: If the town of 3000 already has two flower shops then maybe it's time to rethink and maybe think of opening a garden center instead. Same goes if if the same small town already has a Tim Hortons coffee and doughnut shop, an independent coffee and dessert lounge might not do too well. Unless you are able to cater to a totally different clientele such as maybe offer space for large birthday parties and weddings etc.
3. Location, location, location again just as important as knowing your business and knowing that there is a need for your type of services. You might be able to get a real great deal on the rent for your business downtown "smalltownmainstreet" but will you get the traffic you need? Honestly if the main street has six store fronts boarded up on either side of the cheap rental place it might not be the right location for a sewing and alterations shop. An older clientele might possibly not want to frequent a location like that. So no matter how cheap the rent, it is too expensive if you can't get customers to stop by.
It is important to know how many people will be going by your potential location. Even if it means sitting in front of your prospective store counting and watching the traffic of potential customers at different times of day, different days of the week etc. If there is very little foot traffic going by daily that does not mean that the location for your store is not right it just means that you will have to do different types of promotions and also a lot more advertisement.
For example if you are a destination store, for example a sewing shop, people will have to plan to come to you with their alterations or their fabric. So if people are parking in front of your potential shop whenever they're going to the bank next door your location will be marked in their minds and next time their jacket zipper needs to be replaced they automatically will know where to take it. To receive that same type of 'location acknowledgment' you will need a mega flashing sign if your shop is in the back forties of a humongous industrial mall and you will have to resign to the facts that you will need to do a lot more advertisement and promotions.
4. Are you willing to put in the work? Unfortunately for a new business to become successful a 9 to 5 situation usually is not enough. So only working 40 hours a week in most cases is an out of the question deal. Working extra long hours will also mean that you will make less money per hour than if you were employed by someone else. And by the time you have your shop/store/business open the extra hours (open earlier & stay later then your competition) you still need to take the extra time to do your daily accounting, get change, make bank deposits, calculate wages, set up schedules etc.
Running your own business is a huge commitment. It requires long hours, the ability to control, oversee and handle every type of situation on a daily basis. If you're a very private person who doesn't like talking and who gets irritated with people you might not be the right person to run a bed and breakfast unless you have someone who will front the business and run interference for you.
As a Business Owner here are some of the traits you will need to have or acquire:
- You must have Business sense as mentioned in point 1. You need to feel what could become the next new flair.
- You must have the ability to stay cool calm and collected under pressure...with other words you must have tolerance with customers and employees alike.
- You must be flexible: in a business things can change from one second to the next. You must be able to rethink and readjust while on your feet. At the same time you have to be able to jump in to do the work needed at the drop of that proverbial hat.
- Naturally you must be creative... how you promote your business really depends on how well you think creatively (if you lack in this then you must accept that you will need to hire a creative thinker and hand over these duties to him or her).
- You must have lots and lots of positive energy. Customers respond better to positive people than a negative sour-puss. (having a sense of humor is also very helpful)
- If you have employees you must be able to change your hats on a constant basis, it's not enough to be just the boss... you have to be a leader, a babysitter, a mediator, a parent, a marriage counselor. You must be able to approach every situation fairly, consistently and treat everyone with respect.
- A business owner must have a certain degree of schmooze-ability. The old adage of sugar being better than vinegar in treating customers will never change.
- You as the business owner must have a passion for what you do. If you just can't stand sewing... an alteration shop might not be the best type of business for you.
- You have to be there at the store or business as much as possible. You should be the first to arrive and the last to leave. An 'absentee boss' will not be able see the problems arising, will not be able to correct them immediately. Because only you are as serious about your business as can be. No-one else will care for it as much as you. It is a job for your employees, for you it becomes a way of life, much more than just a career.
As an entrepreneur especially if you need to borrow money from the bank you will need to have a business plan in place, you will need to have licences and permits in place. Unless you're really good in accounting get yourself an accountant who can set up the books for you, right from the get go, because an accountant can help oversee and point out if there are financial problems or find tax breaks etc.. An accountant is well worth the money as they can save a business in the long run.
Advertising and promotion is another one of those important factors that most business owners want to ignore. It usually is also the first thing that gets dropped when the business runs into tight situations. It should be the opposite...every business should carry a few ads especially when things are tight. People love promotions and coupons. Make coupons short term though, as you want to bring customers in fast. If you give clients too long they will procrastinate and not bring in their work until the eleventh hour...
Lastly, again and again the most important fact to opening, operating a new business, store or shop is to be well informed, honest and willing to work hard. Very few get rich quick schemes work... as far as I know... none will work without an honest days work.
If you have a dream of owning and operating your own shop, store or business do your homework well and then go for it... there really is very little else that can give you the confidence and satisfaction then when you are planning your fifth anniversary sale and promotion.
AN IMPORTANT FINAL PIECE OF ADVICE!
I almost forgot to mention
no matter what type, where, why, when or how you start up your business the most important advice I can give you is that you have to make sure you have appropriate insurance coverage.
Insurance premiums can be costly but make sure you build it into your start up costs. And do remember that if you get new equipment as the business grows to add it onto your list at the insurance company.
I know your going to say that your insurance broker should look after raising the insurance policies regularly but you should always remember that ultimately you are the one that will lose out if its not done.
I learned the hard way when the building that housed my tailor-shop burned to the ground taking with it equipment, stock etc that took me thirty + years to accumulate plus the three fabulous new industrial machine that I had just bought (and still had not totally finished paying for I might add) My broker did not raise the value of my policies even though he knew as he also was a regular customer who at the time of the new purchase had admired my new acquisitions. By the time I paid the customers for the clothes that they had at my store there was very little left to re-start a new business.
I added this bit here because I want to point out of how important accurate insurance can be. My first comment to my insurance broker was when I first took out the insurance on the shop was that I do not do insurance for a living, I sew, you tell me what I will need and then set it up and let me know what the payments are going to be... obviously I was wrong in assuming someone else was going to look out for my interests...DO NOT let this happen to you...
photos found on www.morguefile.com