Setting up Seed Money and Business Budget
Now that we have our “Back Yard” in line, it’s time to look at our dream.
There is no 1-2-3-4 way of looking at the start of a business. You have to think of it as a pot that you will be tossing ingredients into and coming up with a dish that has a distinct flavor that will ultimately be called Yours!
Your Business budget should be set up in two steps. First your “Seed Money” needed to start operations and then your actual “Operating Budget”. Let’s Start:
Think of the Product or Service you want to offer. How do you want that product presented? Keep this in mind as you scout out a location. Here are some suggestions you have to consider.
Rent. This is very important but remember that by getting a cheaper location you might feel you are saving let’s say 500 a month (6,000 a year) you might be losing out on a steady stream of shoppers that you might have to spend more on your advertising budget to get them in the door. This effort to market yourself is not only going to cost you in terms of dollars and cents but also in other resources such as your time and your creativity used to come up with ads and ad campaigns. It will also take more time to reach the level of sales you need in order to come up profits. This means more expenditures such as rents, utilities, labor, stock etc. making the climb steeper and which can ultimately use up your capital reserves. This is a time to coordinate your budget along with a schedule…. I’ll discuss more on that later.
Location set up. So Ok, you have a great location and now let’s look at how much you are going to need to set it up.
What is going to be your “format”, your “look”? Do you have it in mind or do you have the capital to get a designer to prepare it for you? I would think you are going “barebones” on this so let’s think of the minimal essentials, I like this approach because it makes you think of what’s the most important part of your business, it should be the product. Everything else is trimming so let’s make the most of the “trimming”.
Pick out a good interior color for your business and do a good paint job.
Clean the place up!
Get your fixtures, shop for them. My first fixtures were purchased from a store that closed down at a cost of 150 dollars. I refurbished these fixtures for a cost of 60 dollars. I build my own window fixtures for a total cost of 150 dollars each using solid wood, sliding glass doors, halogen lights and most important stain and varnish. I worked on these fixtures on the sidewalk in front of my store after 6 o’clock every night. I’ve had these fixtures for 11 years and recently replaced my interior fixtures by purchasing used fixtures from a luxury store that closed down for a total of 2,400 dollars. When I got an estimate to make three matching window fixtures I was quoted by the manufacturer 12,000 dollars for three! This was at the beginning of this year and as you know, this year has not been one of the strongest for retail. I’m sure getting a lot more done with those 12,000.00. I also realized that although the fixtures I had purchased were made of solid Cherry wood and are very elegant, the Miami sun fades the varnish of these fixtures and the window fixtures were sure to need work within a few years. I decided to forego the idea of renovating my fixtures for at least another 2 years. By then I hope to replace the entire set with fashionable Formica for about 3,500-6,000 for all. Keep this in mind, you should buy fixtures that you will use for 3-5 years because by then you might want to revamp your entire store.
Take your time and shop around. There are a number of businesses that specialize in used fixtures in South Florida and anywhere you might live at. Check them out.
As far as flooring, compare prices for new tiles, commercial rugs and area rugs. See which will fit your budget and enhance your décor.
And the Signs Says….
Look at the cost of a good sign. This is more important than your interior! In Coral Gables it is an absolute nightmare to have a sign done. Call the department that handles this and get the instructions/guidelines issued by them. The city might request architectural plans. Get a price from an architect/engineer, look up plans filed by the business that was there before, look into buying a Cad Style program that will produce plans once you input the measurements and figure on purchasing a tape measure, ladder, drafting paper and draw out the plans yourself and of course schedule a day to take the measurements and write them up or enter them. I can’t suggest a program because I did my own design and plans by hand. When inspectors came to check out the work I canned the ego and attitude and asked for their help in expediting my inspections. I let them know that I was on a limited budget and wanted to do things correctly the first time. Many merchants around here label them as hard-noses but they were more than helpful. Remember you don’t have the capital to fight city hall. Before going to City Hall try to get a recommendation from someone that has dealt with that certain individual. As you can see planning and scheduling is becoming a key issue in all this.
Help! I need somebody
You might realize at this point that all this is going on simultaneously. During a recent conversation with a person who closed his own business he stated he had closed because as he put it “I’m tired of constantly having to wear different hats”. Yes, you are the ONE that has to get it all done. You are the ONE where the buck ends. Remind yourself that you are there because you want to be there and as long as it is a Challenge and not a Burden it will always be a Dream that you are living.
Not only do you have to maintain a budget but you also have to maintain a schedule as well. This is where you have to start learning to delegate chores to whoever is helping you, family member or friend. Delegation is an art. You may send someone to do a job for you and they will either out-perform you or make a total disaster of it. This can be avoided by getting that person as much excited about your project as you are. Once you get them going or once you both figure out what needs to be done, chances are the job is going to be accomplished thoroughly. Management is not about control, it is about planning, preparation/teaching, execution, follow-up and reward. Reward, gratification whatever you want to call it comes in different forms. It could be the feeling of accomplishment, it could be a bonus check, a pat on the back and it could be a simple “Thank You, I couldn’t have done it without you”.
By this time I think you need a little help and I think you should consider this next step/phase, but before this let me give you a bit of the “Here and Now”.
“The Here and Now”
Today is May 24, 2008. As the months go by the economic situation will worsen. All you have to do is read the news to confirm it. This Memorial Day weekend I was planning a road trip to Washington DC. It’s about an 2200 mile round trip, I drive a KIA Sportage that gives me about 260 miles per tank full, about 50 dollars per tank to fill, figure I would be spending about 450 dollars on gas alone along with food and lounging. My girlfriend worked 16 years as a dispatcher for the Florida Highway Patrol and warned me that Memorial Day Weekend scores as much or more fatalities than New Year’s Day. Forget the road trip, I’m staying home and getting a number of things in order.
Don’t be alarmed by what seems to be bleak economic times. As an entrepreneur you must look at this as a time for opportunities. Store rents/leases can be negotiated easier. Vendors can be squeezed for best prices and favorable credit terms. Private investors might be easier to convince to give you their money to work with. And remember that just because we are in a recession it doesn’t mean the consumer isn’t looking for a deal or has a need.
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