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
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