As of September 1st 2013, Brooke and I were officially small business owners and now were full-time managing UrbanXChange (UXC). The story behind how we got to that point is in the "About Me" page, if you haven't read it yet, give it a go. However, this post isn't about how it felt to be a new business owner. Instead, I'd like to jump into the nitty gritty details of what steps I should of taken before we jumped right in. This goes out to all of you thinking about starting your own business. Some of this information would have helped me, so I figure I can pass it along and hopefully save you a few steps or add a few more. Remember, I didn't go to school for business or had any experience in it whatsoever. So some of this might seem kind of "Business 101" sort of stuff. But not everyone will have that experience going into it. With that said, here we go:
1. First you have to ask yourself, or others, "Is there a need for my product or service? Is there a market for it in my community or online?".
Too many times do I see a business open up around town and I am sort of caught off guard. In the sense of, I look at it and see what the concept is and I say to myself: "Why?". That doesn't mean that the product is bad, but you have to know your market and your audience in your area. Your product might be stellar, but the customer who is most likely to purchase from you is 45 minutes up north in "Seattle". So make sure you plant yourself in a community where there is a need for your product or service. However, sometimes the product is bad and you just need a good friend to tell you that before you spend all this time and money and realize you set up shop in the wrong neighborhood.
Know your MARKET!
2. This is where you sit down and figure out the "Nitty Gritty" (I say that with a 'Nacho Libre' voice). ****Now this is a step that I should have focused on more when we took over the business, so listen up--might be helpful.
What's the "Nitty Gritty"? I like to think of the "Nitty Gritty" as the ABSOLUTE OVERHEAD COSTS (monthly). Oh and by no means am I using correct "business" terms ..remember the whole school thing. Basically you have to sit down before you ever open the doors to your business and calculate how much is it going to cost you to open those doors to your business. For instance:
- Payroll (if you have employees)
- Personal Salary
- Operating Costs (i.e. paper bags, pens, hangers, etc.)
- Taxes (based off your sales)
- Rent/Utilities (if you're a brick & mortar).
Now most people won't put payroll and personal salary in the same category as the rest of those, but I like to base my numbers on every dollar leaving my bank account that month compared to the number of dollars coming in. Again, this is just me. Once you've totaled that up, and let's say it comes to about $12k a month (expenses), well now you know that just to open the doors it's going to cost you $12k. That doesn't include marketing, travel, equipment, etc. The $12k is purely the number you have to make to survive. But if you'd like to start doing Facebook Ads, or Instagram Promos, or flyers, well then you have to have a budget for that which increases the $12k of expenses. If you can pull in $12k or more per month, then your on to something. Ideally, $15k-$20k will give you some solid profits at the end of the year. But in the end, if all bills are paid, all employees are paid, YOU are paid, and there's a few thousand (or $400) left over in your business account on the 31st, then it's been a good month.
Know the "Nitty Gritty" details of your business before you have to write a $15k check to the I.R.S at the end of the year...
3. Are you an accountant? No, so don't try to be one.
When we first took over, we didn't have an accountant right away. We figured, we'd find one and once we did, they could magically make everything better (QuickBooks wise). Well, we went through about 3 accountants in 2 years before we found the right one this past year (reach out to me if you need a referral). We also paid an unbelievable amount for the first 2 years because we didn't know better, but we also weren't seeing any results. Another thing to keep in mind, your accountant should never be doing your bookkeeping as well. That's like having your 8 year old create a spelling test for themselves and then asking them to grade it. He's most likely going to get a B+ or higher. Not that he's cheating, he just might miss a few uncrossed "T's" or undotted "i's" but with no one else checking, he's a genius. So have an accountant for your taxes and a bookkeeper to enter in your daily sales/expenses to QuickBooks.
With that said, interview numerous accountants/bookkeepers until you feel that you have found the one that understands YOUR business and that you personally like. There's nothing more personal than your business, so don't bring anyone close to it that you don't genuinely mind being around. Don't try to do it yourself unless your a fully qualified and confident and have the time to do it.
4. LOCATION, LOCATION, LOCATION
This won't take long.
Do not skip out on the better location just because it's cheaper. Do whatever it takes to get the best location. There's a reason why its the best location. Because people are there spending money. Money you need.
5. Create, Strategies, & Execute
Now this is the final step, however maybe the most important step. You see, you could have done the research and found that there is a market or a need for your business in the area. You could have sat down and figured out your "Nitty Gritty" details of your business and have a clear idea of what your "absolute overhead" looks like. You could have scored a great accounting team to help you with your books. And maybe you looked out and found the best location for your business. But now you have to perform. This is where the real BUILDING begins. You must create, strategize, & execute.
All this time you've had this vision of your business. You know what kind of napkins you want for your restaurant. You know you'd rather have wooden hangers instead of plastic hangers for your clothing store. You want your Spanish coffee shop to smell like Spain. All of these are visions and concepts, but nothing more until you actually create it. Put the tables in, hammer the shelves into the wall. Clean all the whiskey glasses and make sure the wine is ready for sipping. You have to build out your experience. You have to bring your vision to life. Be VERY particular with every inch of your business, because your customers will be EXTREMELY particular.
Now that your vision has come to life, you have to put in strategies to make sure your business operates efficiently. For example:
- How to operate the register
- How to greet customers
- How to deal with a split tender at payment
- How to best communicate with your team
- How to do scheduling
- How to deal with unruly customers
There are more "How to's", but I think you get my point. You have to give your business the tools to be successful if you want it to grow. Policies, procedures, routines, these are all great things to establish on day 1. It is best to be over prepared when you open those doors then to be surprised when your employees don't know how to accept a cash and debit transaction for a $225 sale. That would be a big sale to miss.
Put together strategies to make your team and yourself more confident operating the business on a daily basis.
Now this is my favorite part. This is when your coach just got done telling the entire locker room the most inspirational speech and he hands you the ball and says "Go get'em!". This is when Jordan laces his shoes up and steps on the floor with the flue. You've worked so hard to get to this point, NOTHING WILL STOP YOU. All of your nights creating this vision, and strategies to implement for your business, comes down to the execution. You could have the best bar in town, but if you just open the doors and sit and pray people will come in, well they won't. You have to stick to the plan. You have to execute all of the important procedures that you put in place. You have to tell EVERYONE about what you created! Tell people about the organic napkins you used, connect with the local newspaper and let them know your open, have a grand-opening to tell the world "WE'RE HERE!".
Just don't think all of your hard work is done just because you have a beautiful shop. The work is just getting started but the more you execute the plans and strategies that you put in place, the more likely your business will benefit from it.
I hope this post was helpful to you. Please, if you have any questions or additional ways one can be better prepared in starting a business, feel free to reach out to me! My number is in the contact page and you can send a message as well. I'd like to start a dialogue with these posts so that everyone involved, including myself, can continue to learn how to be a better entrepreneur. Now like I said, some of this might be "Business 101" stuff, but you'd be surprised how many "scholars" have closed their doors because their business was not prepared.
Now, lace up your shoes and "Go get'em!".