Starting a small business - The Story of 'The Chocolate Bar'
Starting a Small Business The long and winding road to success
Setting up a small business - getting started
In 2004, two friends, my partner and myself decided there had to be more to life than just working for the boss, and we decided to start our own business. Actually, it wasn't quite as smiple as that. We had many, many meetings together over many bottles of wine to decide what we could do. Eventually after several ideas we came up with the idea of opening our own continental cafe and chocolate shop about a mile from the location you see in the photo. Easy no? We had a lot of skills between us, but were small business virgins so to speak and had to do a bit more thinking. We called our business The Chocolate Bar.
We set our business up from scratch, pooling our knowledge and resources and began expanding the business straight away. The Chocolate Bar paid my partner a salary and myself a small part-time salary. Our two friends remained in their other employment, but worked in the business part-time. They chose to take their money after selling up, which we did at the end of two years (with a decent profit for each of us), when the business was looking very solid and we were turning over in excess of £100,000pa. That's a lot of little chocolates and this is the story of how we did it.
If we can do it you can too, just think what your town needs, there will be as niche in the market somewhere.
Business planning - the right direction
We put our heads together and contacted Business Link, the Government organization specifically designed to help small businesses get started. They helped us to put a plan together. We decided to open the Chocolate Shop first, as this was the most straightforward. We wouldn't need much in the way of equipment and could begin trading (and hence earning) quickly. The second phase of the business would be the Continental Cafe; opened once equipment was in place. Once these were running well we planned to open an online chocolate shop - and from there on to world domination!
Business finance - getting serious
With Business Link's help reviewing our plans and some tight budgeting, we realised we could start our business without a bank loan. Using our savings was a risk, but it felt like less of a risk than having a big bank loan to pay off (I'd feel even more uncomfortable about a bank loan in todfay's economic climate, but need must sometimes). The four of us pooled our monies, thus spreading the risk, which felt safer. However, this also spread the profits, but this still felt better for us as we had mortgages, kids etc., and we trusted each other to work hard.
We visited several banks regarding business banking, and went for one of the big four. It really pays to shop around as some charge much more than others.
Many people don't realise that banks charge their business customers for every single item that they pay in, from the smallest cheque upwards. Most of the big banks don't like handling cash either, so they push you towards using cards, but the charge rates vary widely. However, there are some good deals to be had. Some banks will offer new small business start-ups twelve or eighteen months free banking, which is what we went for.
We also ordered a card machine from the same bank. One problem which slowed us down was that British Telecom were very slow putting the phone line in. Hopefully things have improved four years on, but who knows.!
Location, location - every time!
We were setting up our little empire in a small town not a mile from Empingham Reservoir, which meant that we would not only have passing traffic from local people, but also traffic from tourists, including coach parties. Oh how we loved those coach parties - 40 pensioners all at once needing a pee (we only had one toilet), cup of tea and a scone! But, they brought in revenue and often bought chocolates etc for the Kids, Grandkids on the way out of the shop, and just to ensure they kept coming we always gave the coach driver free food and drink.
I digress. We visited a local Estate Agent to find the premises and signed the lease on a Grade Two listed building, some 200 years old. For those of you not in the UK, this translates to a huge headache, a listed building means that every little detail which you wish to change must be submitted to a planning Committee and be passed before you can touch anything. The Planning Dept are a busy office and not to be rushed, so any application can take months.
It's best not to have your blood pressure checked during this time!
If you take any good piece of advice from this article it should be this - when setting up a small business do not go for a listed building! The reason we did was because it was a high street location, so we took a risk on taking a little longer to get the cafe up and running against having more passing customers. It was a risk, and could have cost us thousands of pounds.
It was the cafe part of the business which neccesitated most alterations, so we could open and sell chocolates right away. All the while promoting our soon to open cafe.
Buying or Leasing?
In a small town there may not be the choice of whether you buy or lease your premises, which was the case for us, also your finances might not stretch to buying. There are pros and cons for both. We chose to lease.
All the advice we had was not to take on a 'fully repairing' lease. This is a lease where you are responsible for all the repairs on the building. However, this was the only option offered to us on this particular building, and high street locations do not crop up very often, so we took another big risk. In fact it could have been a huge risk, the building was a shade over 200 years old and not in great repair in places. It also had a Collyweston slate roof, these cost around £1000 per square yard to replace.
Our solicitor was dead against us taking on this lease and began dragging his heels. In the end we reached a compromise. We had a survery done and videoed all the areas of poor repair and agreed with the landlady to exclude these from our lease, as she was a very fair person she agreed to all this without quibbling.
All this took some time and delayed our opening date. It's important when business planning that you factor in a financial buffer, so that these setbacks don't destroy all your hard work.
Running a small business
OK, so now you've openend your business. Phew! Well done you, big pat on the back and celebratory glass of wine. Now all you have to do is promote it, run it and make a profit.
I'm not going to go into marketing your business here, that's a whole article on it's own - let's just say that in the end I would turn up to the opening of an envelope if it would benefit the business!
There are other considerations along the way. Will you want to play music? Then you need an entertainment license. Are you handling food? Then you need someone to hold a food handling certificate. Research your business thoroughly and know what your legal implications are, again, Business Link are very helpful here.
Will your business be regularly inspected by government organizations? If so, seek them out first and ask their advice, then you're less likely to make expensive mistakes and it's a way of building good relationships with your inspector, which always helps.
Really Useful Advice!
Stick with it. Be consistent. Be open when you say you will be, even when your business is having really flat spells and you have only had one customer all day and they only wanted to use the toilet. Smile sweetly, be helpful. Customers need to know that they can rely on you to be open when you say you will be. If you say you will be open until 5.30 and they turn up at 5.25 and you are closed, they will not come back. Also, they may tell their friends, and you want good press, not bad!
To limit or not?
When forming a business partnership all the advice tells you to have a proper legal contract drawn up, but first you need to decide whether you will be a sole trader (for an individual working on their own), business partnership, or a Limited company.
We chose to Limit our company. This means you register the company with Companies House and divide the business into shares. You can decide whether one person has more shares than another (maybe they put in more money or have expert knowledge) and hence has more control. We split our company into equal shares, which meant we were all equal Directors.
Having a Limited company also adds another safety net, because if the company folds with debt you cannot be made bankrupt and your house is safe!
Limited companies have to submit accounts to Companies House annually.