If you are new to this blog, you might want to grab a coffee and start at the beginning . . . on October 14, 2008. If you are returning for an update, welcome!

December 29th, 2008 2:00 pm

How many times have you heard, “find that one thing that you love to do and do it”? Are you the type of person that can focus on one thing and do it over and over, day in and day out? Or, are you the type of person that needs a little more stimulation than that? I, personally, am easily bored with repetition. I always have been. I knew that starting a business would be a challenge for me - one that I was eagerly anticipating. I knew that juggling my fulltime career and the responsibilities of running my own business would likely have me riding that fine line between enough and too much but I also knew that I just wouldn’t be able to afford to walk away a guaranteed pay cheque in the beginning.

Herein lays the dilemma . . . how many hours a week do you plan to spend in your business versus the hours that you might have to spend doing those things that will generate income until your business is sustainable? How much energy will you be able to put into growing your business if the majority of your energy each day is being spent during “prime time” or between 9:00 am and 5:00 pm working for someone else?

There are only so many hours in the day, what is your day going to look like once you start your business? For example, I love people . . . I love meeting new people, catching up with people I haven’t seen in a long time and keeping in touch with the people that I see regularly. I had a vision of my day and my shop in which people would come to have a cup of tea and visit with each other and with me. I had never worked in retail, I didn’t have any idea what a typical day would look like and in my “dream” day I hadn’t given any thought to the types of activities that would sustain my business.

The thoughts and notes that you have made to date in your journal that describe your business idea are the beginnings of a business model. Your description of your “dream” day factors into that model, in my case, whether that that "dream" day is realistic or not.

Wikipedia does a nice job of explaining what a business model consists of - in theory and practise the term business model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.

1. In your journal, jot down the primary activities that relate to your business idea – where do you think that you will you spend your time any given day or week? For example, I knew that I would have to spend a significant amount of time sourcing items to resell in my shop. An antique shop is not like a regular retail store in which I would be able to pick up the phone and call a supplier when my inventory was running low. I knew I had an eye for a treasure but I also knew that finding those treasures was time consuming and I would have to invest that time scouring second hand stores and garage sales in order to keep my inventory up.

2. Flip back in your journal to where you identified your team. Are there any strategic alliances that could be formed that may be mutually beneficial from a financial perspective? This is the process of diversifying your business model. For example, my cousin makes body lotions and bath gels, if I were to offer her products for sale in my shop the arrangement could be beneficial to both of us.

3. Are there any other products or services that complement your business idea that either you personally can offer, or another business can offer, that will add value for your potential customers?

Useful Links:

Canada Business Services For Entrepreneurs - Developing Your Ideas

Ottawa Centre for Research and Innovation - Business Tutorials

NOTE:  OCRI is an invaluable resource for the business start up and the business owner looking to expand their venture.  Each tutorial contains a video, slides to accompany the speaker, and supporting resources.  In addition, the Tools and Resources page of their site contains a comprehensive list of links that are well worth spending the time to explore.

If you are new to this blog, you might want to grab a coffee and start at the beginning . . . on October 14, 2008. If you are returning for an update, welcome!


December 16th, 2008 8:00 pm

Confession: I like numbers about as much as I like dusting! That being said, I knew that my next step was to put some numbers down on paper - what would my monthly expenses be, what was my earning potential, what annual expenses would I incur? Before I could risk telling my family what I was thinking about doing I needed to see some rough numbers. I needed to know that I could make money with my idea, but where to start . . .

My first question was: do antique shops make money? I turned to my local library for assistance and was pleased to learn that there was a Business Librarian on site. However, I was also overwhelmed by the information that was available - from sample business plans to print and electronic resources to access to federal and provincial databases that would give me the information that I was looking for in terms of earning potential - there were literally hundreds of places where I could choose to start my research. I left the library empty handed because I decided to take the first crack at breaking down the numbers on my own.

From my conversation with the first Local Business Owner I knew that rental rates were about $1.20/square foot in Small Town. I figured that this was as good a place as any to start. I also knew from touring the shops in the Big City that I was looking for about 450 square feet so I grabbed some graph paper and sketched out my shop. I sketched my desk, my entry, my shelving and my key display areas. Then I took my best guess at how much stuff I could fit on the shelves (this was my future inventory). The task of "visioning" my space, even though I didn't actually have a space, helped to make the shop more REAL to me. With my sketch complete I tackled my monthly expense projections:

lease $500
utilities $150
wages $700
telephone $75
insurance $50

For some of you, at this point in your journey you may already recognize that my initial expense projections were naive at best . . . just wait until you see how I approached earning potential!

Next, I felt that I needed to record some governing assumptions (forgive the terminology but I was really getting into this formal planning stuff). I decided that I would be open Thursdays from 1:00 to 8:00 pm; Fridays from 11:00 am to 6:00 pm ; and Saturdays from 10:00 am to 6:00 pm. I thought that I would continue to work at my fulltime job, Monday to Friday, and therefore, would have staff work two of the three days that I would be open. Based on this, I estimated my total monthly expenses to be $1600.

When I considered my earning potential, I considered a couple of different revenue streams. First, I wanted to develop an electronic newsletter for Small Town in which businesses would pay me to advertise. I developed a pricing structure for this advertising and determined that I could make $1,100/month from this activity. Revenue stream #2 involved selling consignment art. I felt that the average price of an art piece would be between $300 and $700 and that I would sell one each month at 30% commission for about $150/month from art sales.

Everything that I have outlined above, from the sketching my shop to calculating income from consignment art, took me about six hours. I put my pencil down, stretched and smiled to myself . . . the shop could almost run without ever selling an antique! Wait a minute, what was I thinking? I sat back down again and realized that I was still facing the same question: what was my earning potential from the things that I wanted to sell?

I went back to my inventory projections and determined that the items in my shop would range between $5 and $100. I also decided that 40% of my inventory would be under $15 (Category A average price $3); 50% of my inventory would be between $15 and $75 (Category B average price $45); and 10% of my inventory would be over $75 (Category C average price $87.50). I guessed that I would sell 23 items from Category A (or $69/week); 11 items from Category B (or $495/week); and 1 item from Category C (or $87.50/week) for a total of $2606/month. Holy cow! Maybe I should just quit my real job, save the wage expense and work in my own shop for 22 hours a week; it would be like semi-retirement at 41 years old!

TIP: if this line of reasoning makes sense to you, put down your pencil, raise your right hand about forehead level and give yourself a SMACK! Now get your journal and head to the library.

1. Talk to the Business Librarian and explain the type of business you are thinking about starting. Based on this discussion, and a visit to the Statistics Canada website, you and the the Librarian should be able to determine a NAICS code for a Performance Plus report that gives you the number of businesses in a certain geographical area; revenue; expenses and profitability. For example, the antique industry falls under NAICS code 453310 for Used Merchandise Stores. I wanted to see the data for the whole province and learned that there were 42 stores included in the report. I also learned that 48.4% of the industry was profitable and that annual profit ranged from $16,000 to $23,000.

2. Give some thought to where you think your customers will travel from - how many kilometres. Ask the Business Librarian to see PCensus data, consumer spending data, for the area in which you plan to open your business. In my case, I wanted to see data within a 50km radius of Small Town and I wanted to know what the average annual household spent on antiques. I learned that purchases of antiques represented only 2% of all money spent on Household Furnishings, whereas, works of art represented 6%. These two, antiques and works of art, translated into about $97 per household per year which doesn't sound like much until you factor in the number of households in this area at 83,282. Now we are talking an $8,078,354 industry.

3. Finally, you need to determine what piece of the pie that your business will represent. It would be unrealistic for me to think that as soon as I opened my doors that I would get all the dollars being spent in my industry. Ask the Business Librarian for a list of your competitors from Selectory. This database lists the contact information, number of employees, years established, annual sales and other information for each of your competitors. Record the answers to the following questions in your journal: Is there room for you in the industry? Have any of the businesses listed closed? If they have, what factored into their decision to close (if you can't locate the owner, ask their business neighbors as these people are usually willing to share their opinion on why the business closed).

Remember, your business idea is still in the "hypothetically speaking" stage, the time for determining a corporate structure, registering a business name, leasing a space, and applying for a loan will all come in due time. Before you do any of these things, before you start to write a business plan, you need to explore every aspect of your business idea by LISTENING to what others are saying, by ASKING the right questions, by RESEARCHING your industry and by pulling some realistic numbers together by which you can make an informed decision.

Useful Links:

Service Canada
Canada Business
Industry Canada
SME Benchmarking Tool

Upcoming posts: Finding That One Thing; Can I Make This Work?; Fail to Plan, Plan to Fail; Skin in the Game; I Am Woman Hear Me Roar or A Lesson in Dressing Properly for the Task At Hand

If you are new to this blog, you might want to grab a coffee and start at the beginning . . . on October 14, 2008. If you are returning for an update, welcome!

November 10th, 2008 8:30 am

Tell somebody, tell somebody, tell somebody;
I gotta play it don't you know;
Tell somebody, tell somebody, tell somebody.

I have got to tell you that I am a huge Sass Jordan fan and her song, Tell Somebody, seemed to be my anthem over the next month. After four weeks of playing "I've Got A Secret" with the idea of starting a collectibles shop in Small Town, I was bursting at the seams to tell somebody. Maybe it was the weather that day - freezing rain on my car over night had sealed it shut, ensuring that I would have the day to myself - or maybe I had just talked myself in circles with the should I/shouldn't I argument. In any case, by 10 am I had picked up the phone. By 10:01 am I hung it back up. By 10:10am I picked up the phone and dialled . . .

Me: Hey Local Business Owner, have you got a minute?
LBO: Sure, how are things?
Me: Great, stuck at home because I couldn't get into my car. Say, I have this idea and since you have opened your business in the last year, I just wanted to get your opinion on something.
LBO: OK, shoot.
Me: I was thinking of opening a collectibles shop, something quaint, cute, mostly collectibles and books, maybe some cookbooks, you know?

The conversation lasted over an hour. I listened to all of the LBO's ideas for my shop which were based on something that the LBO had thought of doing as well. It was so easy to get caught up in the LBO's vision that I didn't realize that I was starting to lose sight of my own. Through the course of the day I made five telephone calls - two to other Local Business Owners, two to friends and one to a complete stranger who I thought might have a line on a location for my shop. In each call I "bounced" my idea off the individual on the other end of the phone.

When I sat down at the end of the day I realized that the picture of my shop that I had so carefully nurtured and protected was getting a little fuzzy. Everyone was so supportive of the idea, even said it was perfect for me, but each and every individual had their own vision of what my shop should look like and the types of things that I should do with it, and even what I should call it. I also realized that I hadn't sought the opinions of the people who mattered most to me, namely, my family.

There is a risk in telling others about your idea. Some of the people that you choose to tell about your idea may try to talk you out of it, feeding the Pessimist in you. Others may praise your idea, and your personal suitability, feeding the Optimist in you, but they may also offer all kinds of unsolicited advice. The biggest risk is that someone will steal your idea.

TIP: If you have invented something, or you have a business model that can be easily replicated, be very careful about who you tell and in the case of a patent, seek the advice of a patent lawyer.

During the Business Exploration Phase, prior to Start-Up, it is important to Listen (yes, we are still listening) and record. For every reason why you shouldn't start a business that is presented to you, note that reason in your journal. Also note who presented the reason; whether they have owned a business before or not; how well they know you (strengths and weaknesses); what they know about the industry in which you want to start your business; what they know about the community in which you wish to start your business; and whether they can identify the economic, political and/or environmental forces which may influence the success of your business.

You are probably thinking, "ARE YOU KIDDING ME"? I can assure you that I am not. You have to have some method of valuing the various opinions that others will have of your business idea. The same exercise should be undertaken for everyone who supports your business idea. In my case, not one of the people that I told were in the collectibles industry, not one of them asked me if I had any experience with retail and they sure didn't ask me if I liked to dust!

TIP: Another way in which you might assess the people who offer their opinion to you, is to examine their value to you in terms of your team.

1. On a blank page in your journal, write the word, "Me" in the centre.

2. To the left of centre, list all the professionals that you will need to be involved in your business idea. For example, lawyer, bookkeeper, cleaning lady, etc.

3. To the right of centre, list your support group - friends, family, organizations - these are the people (or groups) that you can count on to give you the support that you need as you start your business and as you engage in the day-to-day operation of your business.

4. Across the top of the page make your "wish list" of people. These are the people that you feel will be able to advance your business in some way if you were to meet them. For example, I might list Taylor Swift on my wish list because she is young, famous and collects antiques. I might also have Verne Reese on my list because he is the most famous antique person I know (sorry Verne, I know you are not that old).

Should your idea turn into reality, and you start your business, the individuals that you have identified above may have a role to play in the success of your venture. Susan Ward writes in her article, Harness the Power of an Advisory Board: advisory boards are powerful management tools, "No business is too small to benefit from having an Advisory Board and an Advisory Board is such a powerful management tool that no small business should be without one. Think about the last time you met with other business people and had a open discussion, sharing your ideas and concerns. An Advisory Board is a formal version of this process . . . you can think of an Advisory Board as a management think tank. Your Advisory Board members will serve as a sounding board, a source of ideas and expertise - and give you honest advice".

Useful Links:

National Post article, How Do I Build A Good Advisory Board
Entrepreneur.com Advisory Boards

Upcoming posts: Rough Numbers or Numbers in the Rough; Finding That One Thing; Can I Make This Work?; Skin in the Game; I Am Woman Hear Me Roar or A Lesson in Dressing Properly for the Task At Hand

October 14th, 2008 3:00 am

"That is a ridiculous idea"! I had startled myself from slumber with that phrase on my lips. What had I been dreaming about? What idea? Who was I talking to and why was the idea ridiculous? As I lay there, bits and pieces began to emerge . . . a collectibles shop, something small and quaint where I could sell all of the boxes of stuff that hadn't been unpacked after downsizing. A home for my treasures! And books, I could sell books and serve tea and . . . my mind was racing! Forget going back to sleep now, I had to plan. Somewhere between putting on my slippers and putting on the kettle two perspectives began a debate in my head:

Pessimist: You can't start a business, you work fulltime.
Optimist: But I work for an organization that supports women through business start-up. I have access to the assistance that I need to make this work.

Pessimist: The community is too small, you won't have any customers.
Optimist: But my target market is in my backyard so to speak, in the Big City just 20 minutes away.

Pessimist: Antique shops are junk shops, nobody will come.
Optimist: I'll have something different, it won't be junky and I'll have books and cookbooks. Everyone buys cookbooks.

Pessimist: What do you know about retail? I thought the plan was to open a bed & breakfast someday.
Optimist: I love treasure hunting - garage sales, second hand stores. It will be something I can do with my girlfriends, we'll be the Junk Girls!

Pessimist: But what do you know about retail?
Optimist: I'll learn, I'll be a shop keeper and people will come to visit my shop just to chat with me and have a cup of tea.

Pessimist: What about sales?
Optimist: If I have a really cute place I'll sell stuff.

Pessimist: It is a recession!
Optimist: So!

Forms of this conversation went on for days but it served a very important purpose. I was tuned in! Over the next several weeks I paid attention to what business owners were saying, how they talked about their lifestyle and their businesses. I started to jot down business resources that other people mentioned and ones that I discovered myself. I listened to how the members of the community talked about the community. I talked to the local business owners about their experience operating a business in a small town, I asked about their customers and about the potential of the community to become a destination experience. I wandered the antique shops of the Big City and thought about how my shop would be different. I started to compile a list of what types of advertising they were doing - where and at what cost. I started to research the industry and more specifically what impact the recession was having on the industry. RECESSION had become my stop button word - whenever I heard it I stopped what I was doing to listen. What was being said? Who was saying it? Were they credible?

If you are thinking about starting a business, before you "bounce" your idea off of someone else, take the time to LISTEN. Once you start to tell people about your idea they will offer their own opinions about whether they think you should or should not. We all want to hear, "that's a great idea" but we rarely question whether that individual has any idea about our industry of interest or about what it takes to run a business.

TIP: Before you tell anyone about your idea, before you start to research your business idea in a formal way, get a journal and work through the following on your own:

1. Listen to both the Pessimist and the Optimist. Write down all the personal benefits of starting a business and all the obstacles that you think you might encounter. Write down all the financial benefits and obstacles that you can think of. Write down the reasons why you think your business will succeed and what factors you think could affect your chances of success.

2. Write a paragraph or two that describes your lifestyle TODAY. When you are done, make a list of how you think your lifestyle will be different after your business is started (we will talk about the period of start-up in future posts - this is the calm before the storm so enjoy it).

3. Write down your personal priorities (not your business goals). You must ask yourself the question, "what am I unwilling to sacrifice for my business"? For example, my husband and I had moved to a smaller community seeking a lifestyle change - a slow down in the pace of our everyday lives. Our vision was one of walks with our dogs in the hills, sunsets and quiet. I was unwilling to sacrifice the "pace" of our lives if I started a business.

4. Take a strengths and weaknesses inventory. Are you suited to the type of business that you want to run? The Optimist in me danced around the "retail experience" issue for months.

A word of caution about strengths - just because you can do something doesn't mean that it is a strength. I can dust but I hate dusting so, like most people, I tend to put off the things that I don't like to do. I would be fooling myself if I thought that just because I owned a business I would suddenly enjoy dusting because I was dusting in my shop. I knew that in reality dusting was a task that I would likely put it off in my business just like I do at home.

When you take the time to identify obstacles and weaknesses you give yourself an opportunity to think about the problems you may face. The solution to those problems may be more than you can solve on your own but at least you have identified an area that needs to be addressed. In the "dusting" example above, my solution was to find out if my mother would work for me. I knew, that although she may not love dusting, I could trust her to do a good job. I didn't approach her at the time, I simply noted in my journal that she may be the solution to my problem or obstacle. You have to write these things down because your brain simply cannot retain all the things that you will have to think about during the start-up process and there is so much to remember - people, telephone numbers, websites, and so much more.

Useful Links:

Women Entrepreneurs of Saskatchewan (or a similar organization)
BDC Entrepreneurial Self Assessment

Upcoming posts: Tell Somebody; Rough Numbers or Numbers in the Rough; Finding That One Thing; Can I Make This Work?; Skin in the Game