Question about starting a small business?
I am in Virginia and my hubby and I are looking to start a small retail business. We are working on our business plan now, but I am a little confused as to how we go about finding capital.
We don't have much money ourselves, so we are looking into getting a small business loan, but the whole opening a business deal is new to us. Since our actually going through with the business at this time is reliant on us getting a loan, which comes first?
I know we need to incorporate (we are going to do an LLC) first with the state, but what comes next? Do we then try to secure the loan, then apply for the local business license? We have a specific location we want to be in, and we might not want to go ahead if we were unable to secure the location, but will the leasing office talk to us if we don't officially have funding yet? Further, business plans include hard data on financials, so should we be contacting vendors and the leasing places before going to the bank?
Luckily my husband is already in the business and has some relationships with vendors, but I really want to move forward; it's just that no one is really telling us which step to go in first?
Any advice would be much appreciated.
- BobLv 59 years agoFavorite Answer
OK - I have a good bit of experience with this. Understand in this economy all retail businesses are really taking a beating. If you have something cool and unique you will have a much better chance of survival. All the license stuff, permits, etc are super simple and are done in one day.
$$$ is the key, what ever you figure it is going to cost you, double it. You have many, many start up costs, here are a few: retail space build-out or modification - landlord may do this for you if the store has been empty for a while, this is very negotiable. Signage on the store/building - my last lighted channel letter sign was $4500 installed. Don't forget window vinyls. Interior fixtures - simple type are not too expensive like cantilever type but if you need something really modern or super nice they get very expensive. Be sure you get absolute guaranteed prices for the fixtures you need. Buy used fixtures whenever possible. Don't forget to add seating, sales counter, etc., etc. Flooring - also an expense you must pay. If the landlord does the build-out he MAY do the flooring. Deposit on rent - 3 months up front but you may get several free months as an incentive to move in. Utilities - expect to pay deposits on utilities. Security sys - can be reasonably priced or expensive based on your needs. Nice lighting - your expense. Advertising - unless you have had a retail operation in the past YOU WILL MAKE ADVERTISING ERRORS. Everyone that came to see me had the best program available, this mag., that mag, this paper, that paper, yellow pages (skip them completely) and on and on. Bottom line on this, find exactly where you most successful competitor is advertising and do the exact same thing. Don't forget to add the cost of business cards, fliers, web site creation, hosting, plus the computer itself. Inventory - keep it as low as possible, arrange terms with vendors but unless you are tight with them expect to have pay up front. Also - insurance: landlord will require liability insurance and glass insurance, then you need to consider insurance on contents.
The above is just a partial list but you 2 sit down and add every little thing regardless of cost. Now total it all up, grab your plan and go shopping for money - fair warning, don't expect it to come easily, new retail businesses have a high failure rate and the people with the money know that.
Your lease - unless you have done this before several times, have someone negotiate the lease with your landlord, DO NOT DO IT YOURSELF, the few bucks you pay them will be saved several times over. You will be shocked what is included in a commercial (especially retail) lease.
If you need to borrow most of the money do that first, don't spend anything but some time. In your plan you will need to know how much the space will cost so go talk to the rental agent. Remember, it is negotiable but you need a starting point.
Hope this helps a bit - good luckSource(s): Been there, done that, have the wounds
- ScharriLv 44 years ago
I will suggest you to plan an advertisement strategy for your business. Today starting a new business is not that big challenge but actual challenge is to advertise that business in a better way. Start a business which has scope in your area. Whenever someone thinks to start new business first he/she should consider area (country, state and target customers) then make a proper strategy for new business.
- HenryLv 79 years ago
Go to http://www.score.org/mentors and enter your zip code. On the next screen, you will get information on the nearest SCORE chapter. Call them and arrange for a free meeting with a volunteer SCORE counselor. They will guide you through the process.
SCORE is a nonprofit association dedicated to entrepreneur education and the formation, growth and success of small business nationwide and is a resource partner with the U.S. Small Business Administration (SBA).
SCORE has 350 chapters in locations throughout the United States and its territories, with 13,000 volunteers nationwide. Both working and retired executives and business owners donate time and expertise as business counselors.