Asa Jay's weblog

It’s nice to know there are benefits to -not- rushing into things.

Today I spent over an hour with John Coleman at the SBA BIZStreet center downtown. The very first question as we sat down after introductions was “Have you purchased or leased any space yet?” To which I promptly replied “No, I’m just in a research phase to find out if my idea is viable.” John sat back and let out a sigh of relief and then praised me for my foresight. In the conversation that followed, John told me a little bit about what it takes to start a small business before you ever start thinking about money.

I had wanted to talk about market research with John, and perhaps broach a few other questions. As it was, I was exactly on the track John thought I should be on. Let me first talk about his thoughts on rent, and then move into some of his ideas for what I need to survey and think about.

You may remember that I’ve had one Realtor call me back and tell me the rent was nearly $5,000 per month on a five year lease. John told me that was typical, but do not under any circumstance accept it. Instead, negotiate the lease. John told me the riskiest time is in the first year, perhaps even in the first six months, so it doesn’t make sense to sign a five year lease. He then went on to say I need to think small to start with, using a “phased” approach to space and future expansion. “Don’t try to buy it all at once” he told me, instead try to figure out the core product or service you want to offer, then scale it down, open your storefront and let the customer drive the rest.

What sticks with me most, is how John told me about many people who have a “fantasy” idea of what their business should look like and then they go out and implement it, only to fail because they tried to do it all at once. He said the problem is the customer may not like everything, even if you do. So don’t do at all, do some market research to find out which pieces the public wants first, then as they come in and think about other services, they will let you know and you can expand the business offerings from there. If found this to be refreshing and enlightening. John’s delivery was positive and helpful; he didn’t want to see a person fail, so he made them feel at ease, even when he needed to break down the “fantasy” aspect of the idea.

We also talked about planning for failure. Too many people starting their own business don’t plan for failure, and then don’t know how to handle it when it comes; they are in too deep with the bank, or a lease agreement, or inventory, materials, etc. His highlighted points were:

• Know your business and the market you are in.
• What will you do if nobody comes in the first week you are open?
• What is the worst case scenario that spells failure, and what do you do if it happens?
• Think small at first and grow with your customers.
• Be careful about loans, they can trap you in a failed business and not let you out.
• Most importantly, do everything in such a way that allows you to sleep at night.

This last point was probably his biggest and really summed up everything else. If you go to bed fretting about the bills, or where the next customer is going to come from, you have a problem. The whole counceling session really was more about thinking ahead and trying to anticipate how the business would do, plan small and reduce failure opportunities.

When we discussed surveying the market, John suggested I find other businesses with the same or similar offering. Try to talk to the owners, find out what has worked and what hasn’t. He did mention if the idea hasn’t really been done before that I might have a good shot at it. Later we talked about surveying people in person, but that I probably wouldn’t get a lot of responses unless I could tie in some kind of incentive. In my case, he made the tentative suggestion I give away a computer to try and lure people into taking the survey. I didn’t think that was too bad of an idea and filed it away in my notes. Last, John asked how people will find the business, and suggested I use those methods to find others. Not only would this help me find other businesses I could look to or advice, but I would also learn a little about advertising. Interesting way to tie the two objectives together.
In summary, these are the things I need to do:

• Find out if anyone else is doing what I want to do.
• Create a phased plan of space and implementation.
• Use as little money from banks as possible.
• Don’t be afraid of seconds, used equipment or building things yourself.
• Use the customer to your advantage, to help determine the next step.

That hour went really fast and I would like to have talked to John even more, but I realize I have other work to do before I should go and see him again. I need to do more work on the market survey.

Asa Jay

A few days ago I was doing some Internet browsing to find the various Chambers of Commerce for the local town when I came across the West Plains Chamber of Commerce at www.westplainschamber.org. This Chamber covers Airway Heights, Medical Lake and Cheney. I contacted them by email and they responded, telling me they were sending me a packet of information by mail. Today I received the packet.

The envelope from the West Plains Chamber of Commerce contained several brochures to various business resources, many of which I’ve learned about through the SBA. In addition, there were three city information packets covering Airway Heights, Medical Lake and Cheney. I’m a little disappointed in the demographic information, in that it really doesn’t contain much about the people, and focuses more on simple city information. I was looking for more information on the percentages of different age groups and incomes. Here is what I did get:

• Airway Heights:

• Population = 5,000
• Median age = 34 years old
• Median income = $29,829

• Population = 4,350
• Median age = 36 years old
• Median income = $42,159

• Population = 10,070
• Median age = 23 years old
• Median income = $22,593

On the surface, Cheney had the most surprising results with the largest population but the lowest age and income. I imagine this takes into consideration what I would call the transient student population. This would of course cause the population figure to go up, and if the students were taken into account for income demographics, then the income would of course appear lower as well. This really doesn’t fit picture I would have liked for Cheney, but that’s okay since I’m really focusing on Airway Heights.

What I would really like to know is the percentage of people who are in different age groups, such as between 6 and 12, 13 to 17, 18 to 26, that sort of thing. I will most likely need to contact the city directly in order to get that kind of information.

Other items I did today:

One of the books I got from the SBA BIZStreet was provided by Key Bank. There was a web link listed to www.key.com/smallbiz which I browsed for quite some time. They have a lot of information to help small business, I’ll be revisiting this site in the future.

I spent time reading about market research in the Computer Learning Center guide, which I also brought home from the SBA

Time spent leaning today was about an hour.

Asa Jay

More accurately, I visited the Spokane Chamber of Commerce BIZStreet & PTAC office at 801 W. Riverside Ave. Suite 240 in Spokane WA, 509-459-4120 (www.bizstreetspokane.com). This was my first visit to the office. I really didn’t know what to expect; I was on a mission to mostly find out what the office could provide.

In addition to counselors, the office contains a small business oriented library where customers may check out up to three books for seven days. I spent part of the afternoon browsing books and doing a little reading. I had come to the conclusion that I need to focus more of my efforts on market research, so I tried to choose titles that would help in this regard.

Here are some of the notes I took:

www.circlelending.com. I found a pamphlet printed out from Circle Lending that talked about financing small businesses. After reading through it I came to a better understanding of where I should go for money resources first, family. I’d never thought about asking friends or family for small loans to start a business; however, from this pamphlet it would appear some very successful businesses got their start that way including Wal-Mart and Subway. So this has given me a new perspective on where I might look for some money. This pamphlet was so helpful, I downloaded it and printed it for myself once I got home. In addition, the web site also has other resources I’ll probably get back to at some point.

If approaching a bank, think like a bank. Keep these things in mind which they will look for or ask about:

• Management Expertise and Experience.
• Detailed Business Plan.
• Cash Injection, i.e. how much will I finance myself.
• Collateral, what will I hawk to back up the loan.
• Personal Character, I should think about references.
• Credit History, so far so good.
• Personal Financial Statement.
• Consider different loan types:

• Amortized
• Startup/Graduated
• Interest Only
• Seasonal

I certainly need to do more research and reading on this subject.

After some time reviewing financing ideas, I turned my attention to marketing. I found a loose-leaf book about starting a computer learning center. This was an idea very close to what I was thinking, so I began to page through it. I found some highlights and questions I need to ask myself regarding who I want to sell to, or rather, who I am targeting:

• Middle to upper class?
• Dual income families?
• Single Parent families?
• Parent(s) with a child under 6?
• Adults seeking training or retraining?
• Teachers looking for alternate learning centers for students after school?

From here, I now need to figure out a way to survey the market and see if there is a need or a desire for my Internet cafe’.

I made an appointment for next week, 9 August at 1pm with John Coleman, who is one of the councilors. I’m not sure what we’ll talk about but I’ll get a set of questions together. Lastly, I checked out some books before leaving, some of which I took the above notes from:

• Small Business Owners Manual, by Entrepreneur Magazine, ISBN: 1-891984-00-4
• Financing the small business, by Robert Sisson, ISBN: 1-58062-681-5
• Computer Learning Center, Entrepreneur Magazine Group Business Start-up Guide (No ISBN)

I spent just over two hours browsing books and taking notes on these key ideas.

Things I learned:

• Think more than banks for financing: family, friends, etc.
• Prepare properly and thoroughly before approaching a bank.
• There are some great on-line resources for information about starting a small business, including forms as well as advice.
• I need to map my target audience, much like any other presentation, I need to know who I wish to serve.
• I really need to do a market survey to know if my target audience is interested.

Tasks to add:

• Prepare a market survey questionnaire.
• When I finally know my financial requirement to start up, break it down into smaller chunks and make a list for alternate financial approaches. (Make a list of people I might ask to borrow money from)
• Read more from the books, and make it to my appointment next week.

Asa Jay

I got a call back from Stephanie McCathren of McCathren Management.  The property they represent is the old Premier Video store on Hwy 2 in Airway Heights, located at . 12924 Hwy 2.  Her number is 232-5160 x106.  I was on the phone about 10 minutes asking questions, here are my notes:

• How much space?

• 3700 sq. ft.

• $13.50 triple net (common area maintenance).
• This works out to $49,950 per year.

• Five year lease at $4,162.50 per month.

• Heating and A/C
• Water and Sewer (restrooms are available)

• Phones
• Electric

I had to ask what triple net was, and I don’t know that I got a real good answer.  I believe it referred to the portion of common area maintenance that is charged, which Stephanie told me was about $2.50 of the $13.50 per square foot.  I was then told there was another party interested in the space, which began to sound like a typical used car sales tactic.  Since I’m in no hurry while doing investigations, I told her what I was up to and that I would get back to her if I was interested in the space.

I felt nearly $5,000 per month was a lot to rent space (Holy Cow!).  On a five year lease I would be out $250,000.  At that price I figure I could just about build my own space.  My wife mentioned how she had expected the space to be about that much since she used to work as an office manager in Spokane, so she’s more familiar with lease prices.  I’ll  have to see what the other spaces are going for.

What I learned:

• There’s a thing called Triple Net that may or may not be worked into the price and which I will have to be conscious of as I talk with other realtors.
• Leasing is spendy and they want a long lease term.

What I have to do:

• I need to get this information into a spreadsheet for comparisons.

That’s all for Today,
Asa Jay

Today I spent just a little time trying to contact Realtors who are listed against certain properties in the Airway Heights area.  I was not able to directly contact any of these but I did leave voice messages.  Hopefully they will call me back.

The properties I’m looking at are:

• Next to Dominos Pizza, 12622 W. Hwy 2, Space C & D

• Listed by Tomlinson Black Commercial, 623-1000, Earle Engle 622-3550 or Randy Jassman 622-3562

• Advantages:

• Newer construction
• Right next door to food

• Hardly any parking out front (two handicap spaces right in front taking up almost the entire storefront)

• Old Premier Video spot, W. 12924 Hwy 2

• Listed by Kevin McCathren 232-5160, www.mccathrenmanagement.com
• Advantages:

• Established space
• More parking (but still not a lot)

• Right across from the supermarket

• Older Space

• New construction at Hayford, housing Starbucks and Quiznos Subs

• Listec by Vandervelt 467-6654
• Advantages:

• Growing location
• Popular venues already established
• Plenty of parking (huge lot)
• 24 hour Taco Bell (works nice if I open my business as a 24/7)

• Will probably be expensive because it’s in new development

Here is a list of items I feel I need to talk about, hopefully I’ll think of more as I really talk to people and I’ll also ask if there is more I need to know.

• How much space?
• How much per square foot or basically the space in general?
• What are the lease terms?
• What Utilities are included?

• Phone?
• Electric?
• Water?
• Sewer or Septic?
• Are there restrooms already installed?

Since all I did was leave messages, I only spent about 15 minutes on this task so far.  I’ll make entries as I hear back from them.
Asa Jay