Starting a new business...
Discussion
A friend and I have identified a gap in the market within a couple of local towns - wealthy, affluent, young population - for a high-quality fashion retailer, and given that both of us have lots of experience, skills and contacts condusive to the venture, are seriously considering opening up a shop of our own. I'm even considering that I may have to sell my car to be able to do it - that's how serious i am!!! 
I'm going to make an appointment to see the local BusinessLink adviser as a first point of reference, but was just wondering if anyone else on here might have any advice or info about it. I think our main problem will be planning for costs, seeing as neither of us has run a business before, so I have a few questions, if I may...
1 - How much of a deposit/advance payment on rent is usually required? I know this will vary, but is there a typical standard ie 3 month's up front or something?
2 - How much should we pay ourselves at the outset? My friend and I will both be running the place and we won't need any other employees, but we obviously both need to pay ourselves!
3 - In order to accept credit cards we will need to pay a service charge. Is this monthly, per transaction, or a one-off payment? And how much is it likely to be?
As always the wealth of experience on PistonHeads will be invaluable in this venture, and I'll probably come back with more questions at various stages. So I thank you all in advance for your kind help.
Gaz
I'm going to make an appointment to see the local BusinessLink adviser as a first point of reference, but was just wondering if anyone else on here might have any advice or info about it. I think our main problem will be planning for costs, seeing as neither of us has run a business before, so I have a few questions, if I may...
1 - How much of a deposit/advance payment on rent is usually required? I know this will vary, but is there a typical standard ie 3 month's up front or something?
2 - How much should we pay ourselves at the outset? My friend and I will both be running the place and we won't need any other employees, but we obviously both need to pay ourselves!
3 - In order to accept credit cards we will need to pay a service charge. Is this monthly, per transaction, or a one-off payment? And how much is it likely to be?
As always the wealth of experience on PistonHeads will be invaluable in this venture, and I'll probably come back with more questions at various stages. So I thank you all in advance for your kind help.
Gaz
Good luck on your new venture Gaz.
PetrolTed is absolutely right about your wages take the minimum you can. ie bills for as long as you can. If you have a partner then it might be worth showing bills and comining up with a payment which both get equal which covers the highest bills.
Credit cards. You have to become a merchant. the costs depend on how much your projected sales are. Yes I know I asked "how the F*** do I know" (only more politely
) I asked about selling on-line but from what I can gather the principal/costs are the same but you have a machine instead. The details I got was below £10k expected: registration is £250 each credit card is 3.5% and debit card 40p. However there is a minimum charge of £25 per month.
With you being a shop that shouldn't be too much of a problem but hopefully this info will help.
>> Edited by smeagol on Monday 16th June 12:16
PetrolTed is absolutely right about your wages take the minimum you can. ie bills for as long as you can. If you have a partner then it might be worth showing bills and comining up with a payment which both get equal which covers the highest bills.
Credit cards. You have to become a merchant. the costs depend on how much your projected sales are. Yes I know I asked "how the F*** do I know" (only more politely
) I asked about selling on-line but from what I can gather the principal/costs are the same but you have a machine instead. The details I got was below £10k expected: registration is £250 each credit card is 3.5% and debit card 40p. However there is a minimum charge of £25 per month. With you being a shop that shouldn't be too much of a problem but hopefully this info will help.
>> Edited by smeagol on Monday 16th June 12:16
Regarding wages, it isn't always a good idea to keep them as low as possible. Whilst there are some benefits in keeping working capital in the business this shouldn't be at the expenses of being up against your personal overdraft limit and worrying how you pay the Gas Bill at home.
Most banks (who you may be approaching for finance) will want a pragmatic approach to salaries, they do not want someone worrying about their domestic bills and troubleshooting an early startup company. They would prefer that you concentrated on worrying about the business (the one you are borrowing their money from) and not about your home finances.
There is obviously a tightrope to be walked, I would suggest that you are prudent and think very carefully about it.
I have been involved in a couple of business startups (and subsequent refinancing) and the bank showed concern about my home finances (and even suggested that I increased my salary at one point).
But watch out if you get used to locking your own money into working capital/loans etc, it can be difficult to put your salaries up!!
If you are bankrolling the venture yourselves then the risk is entirely with you and as a one man band Ted has taken the right approach (cut down on pints and pies), however I would always suggest that if the venture is large enough then get some external finance in (SFLGS for instance). If nothing else you get some free reviews of your business plan!!
davidy
Most banks (who you may be approaching for finance) will want a pragmatic approach to salaries, they do not want someone worrying about their domestic bills and troubleshooting an early startup company. They would prefer that you concentrated on worrying about the business (the one you are borrowing their money from) and not about your home finances.
There is obviously a tightrope to be walked, I would suggest that you are prudent and think very carefully about it.
I have been involved in a couple of business startups (and subsequent refinancing) and the bank showed concern about my home finances (and even suggested that I increased my salary at one point).
But watch out if you get used to locking your own money into working capital/loans etc, it can be difficult to put your salaries up!!
If you are bankrolling the venture yourselves then the risk is entirely with you and as a one man band Ted has taken the right approach (cut down on pints and pies), however I would always suggest that if the venture is large enough then get some external finance in (SFLGS for instance). If nothing else you get some free reviews of your business plan!!
davidy
Decide on the format under which you are going to run the business. As there are two of you, it looks like a toss up between a "Partnership" or possibly a "Limited Company". You need to decide which way to go fairly quickly as the Inland Revenue gives very little time within which you need to notify them that you have started trading (3 months for partnerships and sole traders).
And - even more importantly, get yourselves a decent accountant.
And - even more importantly, get yourselves a decent accountant.
I looked into this (very briefly) and found that you had to have a well established shop, name and customer base before any of the major labels would touch you (to protect their brands).
There also seemed to be a bit of a monopolistic position between the manufacturers and key retailers (House of Frasier maybe)
Have you already checked that they will deal with you?
If it goes ahead then good luck son. I'll pop in and spend a wedge once I lose the love handles!
There also seemed to be a bit of a monopolistic position between the manufacturers and key retailers (House of Frasier maybe)
Have you already checked that they will deal with you?
If it goes ahead then good luck son. I'll pop in and spend a wedge once I lose the love handles!
Good luck with your venture...
Just a few things to bear in mind...
1) You may be eligable for grants etc. Free money is always a good thing.
2) Retail locations. Do your homework on the locations you are considering. Can people get to you easily, are there other locations that can give substantially discounted rent etc?
3) Money. Bank it and don't spend it. The most important thing about a business is being paid. Bounced cheques don't cut it. Neither does forged cash. Think about how people rip others off and guard against it. Is 96% of RRP better than 0% of 100% of RRP?
4) Stock. Look at parallel traders for brands if you can't get them by normal means.
5) Sale or return. Why gamble your money on something when some other mug can. Full shelves where the cost of goods is higher is better than an empty store you bought at a rock bottom price.
Just a few things to bear in mind...
1) You may be eligable for grants etc. Free money is always a good thing.
2) Retail locations. Do your homework on the locations you are considering. Can people get to you easily, are there other locations that can give substantially discounted rent etc?
3) Money. Bank it and don't spend it. The most important thing about a business is being paid. Bounced cheques don't cut it. Neither does forged cash. Think about how people rip others off and guard against it. Is 96% of RRP better than 0% of 100% of RRP?
4) Stock. Look at parallel traders for brands if you can't get them by normal means.
5) Sale or return. Why gamble your money on something when some other mug can. Full shelves where the cost of goods is higher is better than an empty store you bought at a rock bottom price.
Think carefully about the brand and brand name. This will be with you - hopefully - forever so it needs to be right from the outset. Don't think a brand is simply a logo either. It's the whole deal - what you look like, what the shop will look like, how you do things, etc..
I have written a small book on this. Send me a mail through the profile and I'll send you a copy.
I must admit to being slightly sceptical about Business Link. Any advice is worthwhile but one does have to ask if the advisers are so clued up - why aren't they doing it?? It might be worth getting involved with your local chambers of commerce. There, you will meet other business people who ARE doing it.
Either way - good luck!
I have written a small book on this. Send me a mail through the profile and I'll send you a copy.
I must admit to being slightly sceptical about Business Link. Any advice is worthwhile but one does have to ask if the advisers are so clued up - why aren't they doing it?? It might be worth getting involved with your local chambers of commerce. There, you will meet other business people who ARE doing it.
Either way - good luck!
re last post. I went to see the local enterprise agency trust (as it was called when i set up). the guys i met were retired businessmen putting a bit back into the community and were really good - they were ex partners of very serious accountants and consultancy firms and had VERY good advice formed in the real world. Business Link is wortha whirl.
Cheers LMM
Cheers LMM
lemansman said:
re last post. I went to see the local enterprise agency trust (as it was called when i set up). the guys i met were retired businessmen putting a bit back into the community and were really good - they were ex partners of very serious accountants and consultancy firms and had VERY good advice formed in the real world. Business Link is wortha whirl.
Cheers LMM
My view of Business Link is somewhat tainted by personal experience but I do know there are many good people out there as you say, with real world experience. The quality of Business Links change from region to region and are graded by the DTI.
R business link - We are on a scheme with Essex business link called 'evelve elite' we get a chap in for an afternoon every few weeks and it costs a few hundred a year. The guy is an ex director of Thorn EMI and Raleigh bikes, fits us and a few others in between rounds of golf.
It is hard to quantify the value he brings but it is worthwhile, he hassles us to do things like get proper letter heads, re write the business plan, get some marketing help, pay this bill, hold back on that one etc, basically he makes us think...
I think the best advice I can give is to be positive, keep spending to a minimum until you have been runnig for a while and know the real cost of things.
DO NOT think you can do everything yourself, there are people on PH who will do you a very good deal on artwork, printing, websites and technology, HR advice etc, etc.
And get a very good accountant..
Good luck
D.
It is hard to quantify the value he brings but it is worthwhile, he hassles us to do things like get proper letter heads, re write the business plan, get some marketing help, pay this bill, hold back on that one etc, basically he makes us think...
I think the best advice I can give is to be positive, keep spending to a minimum until you have been runnig for a while and know the real cost of things.
DO NOT think you can do everything yourself, there are people on PH who will do you a very good deal on artwork, printing, websites and technology, HR advice etc, etc.
And get a very good accountant..
Good luck
D.
two links that may be of some help.
and remember that the banks are more than willing to throw cash at you, i think one of you needs to be a director and on e of you e secretery! if i remember correctly,
that way you work for th the company, and if it gose bust it will not take you down with it..
www.compactlaw.co.uk/
www.companieshouse.gov.uk/
and remember that the banks are more than willing to throw cash at you, i think one of you needs to be a director and on e of you e secretery! if i remember correctly,
that way you work for th the company, and if it gose bust it will not take you down with it..
www.compactlaw.co.uk/
www.companieshouse.gov.uk/
GAZ_3884 said:
3 - In order to accept credit cards we will need to pay a service charge. Is this monthly, per transaction, or a one-off payment? And how much is it likely to be?
Gaz
Depends who you use, but if you've a low t/o to start with then a credit card transaction can cost you anything from 2-5% per transaction. Debit cards are about in the region of 45-60p per transaction. There will be a one-off set up fee £250-£350 dependant on who you use. And then there's a monthly charge for the priviledge of having this service, usually about £20-25.
They might also charge you for a PDQ machine ( not sure about that one). What ever you decide to do don't go ahead without checking into it very closely as it could save you £000's a year! Have a look on the internet there's loads of suggestions on ther!
Good luck mate I'm just doing the same myself!
>> Edited by miss pj on Saturday 5th July 22:56
>> Edited by miss pj on Saturday 5th July 22:58
Gassing Station | Business | Top of Page | What's New | My Stuff