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I am planning to start a small business within the next year. I've never done this before, and I'm very nervous about investing money. I have 10K to start, which is more than I need, and although I don't want to lose it, it wouldn't kill me. I don't need to borrow, and I can go a year or so with no profit.
There are several other companies like it in my area, although I don't think the market is saturated (not that I know how to tell for sure). I do have something unique to offer and some experience in the area, but not running a business. I have a marketing plan, I have a target customer, I have fantastic customer service skills, and I have a small inventory.
I am most worried about the fact that I can't possibly compete with the larger companies' inventories, and I'm not sure my unique offering will appeal to enough people. So I'm sort of stuck between buying more inventory (more money) to make sure I can do a great job right off the bat and not turn business down, or holding out to see if I get business but risk having to tell people no. And on top of all that, I'm just kind of scared. Any advice?
As someone who has been self-employed for 27 years, I am absolutely encouraging of all people who want to make the leap. BUT, at the same time, I've seen a lot of people who go into the enterprise overly optimistic, thinking they are going to be an overnight success, or even a success in their first year. That very rarely happens. So here is my advice, designed to equip you for success:
First thing first. Design your business to be absolutely unique in your market AND make sure you design it by keeping in mind what the consumer wants to buy, not what you want to sell. If other do something similar, then you need to put a twist on it that makes you different. For example, if you are going up against an established company with more inventory, then you are going to have to take a distinctly service bent and offer products that you can't buy mass market. There's no middle ground here.
Second, invest in a good lawyer and accountant
Third, invest in a good website and marketing plan. And by that, know what it's really going to cost to market your business, not what you think it's going to take. After all, people aren't going to simply see your business and think, "Why, this is what I've been waiting for all my life" and rush in with money in hand, ready to buy. Instead, you're going to have to break their current buying pattern, which means you're going to have to work for their money.
Fourth, Prepare to go without significant revenue for a good year. You'll be writing a lot of checks before you start filling out a lot of deposit slips.
Fifth, do it on the side. If $10,000 is all you have to start and you quit your current job, you're going to starve
OK, I think I can check most of this off the list. Except for one thing - how do I know what customers want to buy for sure? I was a customer before this, and I couldn't find what I wanted and had to create it. Now I want to provide it to others, but I can't be absolutely sure they will want it. It would hardly be the first time other people's standards have been much lower than mine.
In fact, I attended a trade event today and was shocked by the low quality and lack of professionalism by about two thirds of the exhibitors. I think it may be because the business is traditionally low-paying - even a successful business of this type will probably not net the owner more than 100K a year. But I am currently busting my butt for someone else for a fraction of that, and my salary is not essential for my family anyway. I am planning to offer a higher end - but not more expensive - version of what is already out there, and one that caters to a niche market that is largely ignored (like, sellers don't even return our calls sometimes). But I worry that everyone else doesn't notice or care about the current low quality, and it's just me.
Quote:
Originally Posted by MinivanDriver
As someone who has been self-employed for 27 years, I am absolutely encouraging of all people who want to make the leap. BUT, at the same time, I've seen a lot of people who go into the enterprise overly optimistic, thinking they are going to be an overnight success, or even a success in their first year. That very rarely happens. So here is my advice, designed to equip you for success:
First thing first. Design your business to be absolutely unique in your market AND make sure you design it by keeping in mind what the consumer wants to buy, not what you want to sell. If other do something similar, then you need to put a twist on it that makes you different. For example, if you are going up against an established company with more inventory, then you are going to have to take a distinctly service bent and offer products that you can't buy mass market. There's no middle ground here.
Second, invest in a good lawyer and accountant
Third, invest in a good website and marketing plan. And by that, know what it's really going to cost to market your business, not what you think it's going to take. After all, people aren't going to simply see your business and think, "Why, this is what I've been waiting for all my life" and rush in with money in hand, ready to buy. Instead, you're going to have to break their current buying pattern, which means you're going to have to work for their money.
Fourth, Prepare to go without significant revenue for a good year. You'll be writing a lot of checks before you start filling out a lot of deposit slips.
Fifth, do it on the side. If $10,000 is all you have to start and you quit your current job, you're going to starve
OK, I think I can check most of this off the list. Except for one thing - how do I know what customers want to buy for sure? I was a customer before this, and I couldn't find what I wanted and had to create it. Now I want to provide it to others, but I can't be absolutely sure they will want it. It would hardly be the first time other people's standards have been much lower than mine.
In fact, I attended a trade event today and was shocked by the low quality and lack of professionalism by about two thirds of the exhibitors. I think it may be because the business is traditionally low-paying - even a successful business of this type will probably not net the owner more than 100K a year. But I am currently busting my butt for someone else for a fraction of that, and my salary is not essential for my family anyway. I am planning to offer a higher end - but not more expensive - version of what is already out there, and one that caters to a niche market that is largely ignored (like, sellers don't even return our calls sometimes). But I worry that everyone else doesn't notice or care about the current low quality, and it's just me.
By talking to a LOT of people beforehand. And when you do, develop an e-mail list. The bigger your list and the more you refine your digital marketing, the better off you'll be. Go ahead and start your Facebook page, too. Maybe even a Shopify or Etsy account. But do your market research beforehand with real discussion time, for the more you can show the dog food to the dogs, so to speak, the better off you are.
Don't limit yourself, by the way. You might be surprised how well you do if you're really smart about matters. Because as Thomas Friedman pointed out, the world is now flat. You can do business with anyone anywhere. And while you can devote 100% to your efforts to selling to consumers, consider selling to other businesses outside your immediate trading area. Work on the wholesale model with them, selling to them at 60% of what you'd sell to the public and hope for volume.
Another thing, by the way, related to the website/digital end of things. The more sophisticated you are online, the better you are. I don't know what it is you sell, but if it's a product or series of product, it costs almost nothing to set up a Shopify account, and zero to set up a Facebook page. And it costs next to nothing to promote your Facebook page, as long as your smart about setting up your campaigns with appropriate keywords and the whatnot.
If your product is truly unique, talk to your attorney about if it's worth it to have intellectual property protection.
One last thing. KEEP YOUR OVERHEAD LOW. The only things you should spend your money on right now, aside from a lawyer and accountant to get you going, are marketing, product, marketing, marketing, and more marketing. No retail spaces if you can humanly avoid it.
What is your marketing plan? How are you planning on reaching potential customers?
Is this just something you're going to sell online or by direct calling? If so, I don't think you need an accountant or attorney at this point, millions of people sell things online every day. Your first steps would most likely be getting your reseller licenses and any any business permits required in your area.
Or are you opening a local store? When you mention that there are other competitors in the area, and you're selling a product with an inventory, that makes me think you will need a physical presence?
Or are you going to sell at some sort of trade shows, like you mentioned? Was that a trade show limited to those in the industry or something that the public could attend?
You mentioned small business owners making $100,000. That is probably high for most. Depending on what you sell, you'd probably need to gross $400,000 a year to net $100,000 after all expenses. That's $35,000 or so a month, is that something you think is possible?
What is your marketing plan? How are you planning on reaching potential customers?
Is this just something you're going to sell online or by direct calling? If so, I don't think you need an accountant or attorney at this point, millions of people sell things online every day. Your first steps would most likely be getting your reseller licenses and any any business permits required in your area.
Or are you opening a local store? When you mention that there are other competitors in the area, and you're selling a product with an inventory, that makes me think you will need a physical presence?
Or are you going to sell at some sort of trade shows, like you mentioned? Was that a trade show limited to those in the industry or something that the public could attend?
You mentioned small business owners making $100,000. That is probably high for most. Depending on what you sell, you'd probably need to gross $400,000 a year to net $100,000 after all expenses. That's $35,000 or so a month, is that something you think is possible?
I meant the owner nets 100K - the sucessfull businesses in my area gross anywhere from 500K-2 million, but most have been in business for decades and serve a larger market than I will be able to serve. I anticipate that if I have any success, I might gross 5-10K for the first year or two, and then the business will either grow or fail.
This is a home-based business, at least at first. There is no physical product to sell, but there is a service that requires equipment. I will not be selling anything at trade shows - more likely buying equipment and trying to learn something.
I have a marketing plan, but no idea if it will work. My biggest fear is that I get zero response, and my second biggest fear is that I get a response then screw everything up because I don't have enough experience.
By talking to a LOT of people beforehand. And when you do, develop an e-mail list. The bigger your list and the more you refine your digital marketing, the better off you'll be. Go ahead and start your Facebook page, too. Maybe even a Shopify or Etsy account. But do your market research beforehand with real discussion time, for the more you can show the dog food to the dogs, so to speak, the better off you are.
Don't limit yourself, by the way. You might be surprised how well you do if you're really smart about matters. Because as Thomas Friedman pointed out, the world is now flat. You can do business with anyone anywhere. And while you can devote 100% to your efforts to selling to consumers, consider selling to other businesses outside your immediate trading area. Work on the wholesale model with them, selling to them at 60% of what you'd sell to the public and hope for volume.
Another thing, by the way, related to the website/digital end of things. The more sophisticated you are online, the better you are. I don't know what it is you sell, but if it's a product or series of product, it costs almost nothing to set up a Shopify account, and zero to set up a Facebook page. And it costs next to nothing to promote your Facebook page, as long as your smart about setting up your campaigns with appropriate keywords and the whatnot.
If your product is truly unique, talk to your attorney about if it's worth it to have intellectual property protection.
One last thing. KEEP YOUR OVERHEAD LOW. The only things you should spend your money on right now, aside from a lawyer and accountant to get you going, are marketing, product, marketing, marketing, and more marketing. No retail spaces if you can humanly avoid it.
Unfortunately, this is a community-based business that has to be local, short of becoming a franchise or something. I have a plan to create a facebook page and blog (it's a popular blog and pinterest topic), but don't know if anyone will notice, and if they do, if they'll be in my area and a potential customer. So I don't want to spend too much time on it. I do plan to purchase a professional website.
I do have very low overhead. The only thing I need to purchase is equipment and marketing materials. And I will eventually need some part-time help.
You need to do more market research. Ask more people if they would pay for the product and/or service that you plan to offer. Don't be afraid of getting too many sales too fast- that rarely happens. You need to make sure that other people will pay for what you intend to offer. Certain products and services lend them selves to being "commodities" where people don't care about quality as much as cost, and the lower cost will always win.
My sister and her husband bought a liquor store. They thought they could make a go of it. They soon realized that liquor was a commodity and there were many stores to make a purchase. This limited the markup on the product. The other way to make money was to purchase larger quantities of inventory for larger discounts, which the bigger stores could do. They soon realized that unless they pumped more of their own money into the store inventory, they were not going to get the profit out of it that they wanted, or at least needed so they didn't have to work 7 days a week. Luckily, because they cleaned the place up and made it look a lot better, someone came in and made an offer to buy it. The took the money and ran and even made a small profit on the sale. They had the store less than 10 months.
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