- Original Poster
- #1
Ok guys, well after seeing a few people asking for advice on certain areas of business I thought I would put together a little document to answer some simple question and provide hopefully some advice. This is stemming from the opening of my shisha, ice cream & internet lounge Houkara in Bristol that I have just opened and includes some of the problems that we had along the way. Ill try and draw on personal experience as much as possible and use examples to better illustrate points. No doubt people will all have opinions on best ways to do things and that is the great thing about business, there usually in no one best way as things are always changing. Ill also try and veer away from the generic work that appears in business text books, after reading loads for the last 10 years most are utter crap and irrelevant in the real world
Start up and conception
The first step for most businesses is finalising their product and in turn building a business plan around this. What are you selling? Who to? How? Where? (The marketing mix is a good one give it a Google, it essentially is a later stage of this and looks at price, product, place, promotion, and was later expanded on to add people, process and physical evidene
So, for example using Houkara as an example
What? Shisha, Ice cream, Internet services and Milkshakes. What can you purchase them for? What can you sell them for (profit magins).
Who? the ethnic community (Asians, Somalis), students, families, children. (there is such thing as a consumer demographic classification which takes this slightly further: http://www.businessballs.com/demographicsclassifications.htm
however if you are going in to business, I generally scrap this as it doesnt mean that much IMO to small businesses providing you know YOUR target audience.
How? can you sell via the internet? over the phone? door to door? From a shop? Warehouse? As Houkara was selling a physical product we needed a shop. I also included financing in this which I will go in to a tad later
Where? this is usually the big one. Its clichéd but location is usually the difference between success and failure. Is there accessibility for you and your customers needs? What is the foot fall (how many people walk past), how many competitors are nearby? (this isnt always a bad thing as well!), how expensive is the rent, rates, etc and more. This will form a BIG part of this guide. For Houkara we needed somewhere that had primarily a good garden area, one with low rent & rates, with a good student population and a growing ethnic community. If anyone knows Bristol there are actually very few areas that hit all of our requirements. Clifton was too expensive, Easton was too ethnic and had poor student links, Fishponds / Kingswood was too out of the way for students, St George didnt have enough of the target market. In the end we decided to set up on the Gloucester Road. While we are at the top end where it is quite quiet the nature of the products mean people will travel to it. There is also little competition in Bristol as a whole, let alone just on the Gloucester Road and there is a good footfall on a Saturday as we are not far from the Bristol Rovers ground.
Ok, so you have looked in to the above 4 factors and have a good product, a good location that hits your target markets requirements, then you need to look at financial viability in depth
Once you know the product or service you are selling you can apply the relevant mark-ups to make yourself profit. There is plenty of finance books about which I would suggest having a read over however one piece of advice I would say to all businesses (and this should really go without saying) is look out for your overheads! Break them down to yearly; monthly, weekly and daily so you have a better idea of what is needed. Complete a monthly cash flow forecast beforehand (this can be hard as you dont know sales figures!) to give you an idea of what you need to turn a profit! Things like wages, utilities, rent, and rates, can add up very quickly, particularly if you have 3 or 4 days bad trade if you have low profit margins it can put a lot of pressure on the business
This also ties in with financing and this is another core aspect which can affect the success of the business. I am not saying you need to be rich to start, in fact many make their riches from nothing. However with physical products there is often the need to purchase stock etc (along with the obligatory insurance, rent, rates etc)
Do you have the cash yourself to invest? Do you need a loan? Are you going in as a partnership? Are you registering as a company? There are many variables. Houkara is a 3 way partnership (not a LLP) which basically means we are responsible for all debts that the business incurs. However it means we do not have to register with companies house and tax etc is far easier. Again I would advise getting a good accountant as they will save you far more than they cost, you then need to look at VAT issues etc (although you dont have to register straight away as you only pay VAT once your TURNOVER exceeds £67k)
Again with financing you will need to choose an option that is tailored to you. We had a nightmare with the business loan we went to get from a very reputable high street bank (I wont name names but I would recommend Barclays and NatWest over them from others experiences). They will need to see a business plan with cash flows, marketing plans, previous experience, a need etc. It is quite tough at the moment, even with 3 people all working full time, the bank still would not give us the required capital we needed and gave us little support so get researching, and the plan should not only be about the business, but about you as well.
Start up and conception
The first step for most businesses is finalising their product and in turn building a business plan around this. What are you selling? Who to? How? Where? (The marketing mix is a good one give it a Google, it essentially is a later stage of this and looks at price, product, place, promotion, and was later expanded on to add people, process and physical evidene
So, for example using Houkara as an example
What? Shisha, Ice cream, Internet services and Milkshakes. What can you purchase them for? What can you sell them for (profit magins).
Who? the ethnic community (Asians, Somalis), students, families, children. (there is such thing as a consumer demographic classification which takes this slightly further: http://www.businessballs.com/demographicsclassifications.htm
however if you are going in to business, I generally scrap this as it doesnt mean that much IMO to small businesses providing you know YOUR target audience.
How? can you sell via the internet? over the phone? door to door? From a shop? Warehouse? As Houkara was selling a physical product we needed a shop. I also included financing in this which I will go in to a tad later
Where? this is usually the big one. Its clichéd but location is usually the difference between success and failure. Is there accessibility for you and your customers needs? What is the foot fall (how many people walk past), how many competitors are nearby? (this isnt always a bad thing as well!), how expensive is the rent, rates, etc and more. This will form a BIG part of this guide. For Houkara we needed somewhere that had primarily a good garden area, one with low rent & rates, with a good student population and a growing ethnic community. If anyone knows Bristol there are actually very few areas that hit all of our requirements. Clifton was too expensive, Easton was too ethnic and had poor student links, Fishponds / Kingswood was too out of the way for students, St George didnt have enough of the target market. In the end we decided to set up on the Gloucester Road. While we are at the top end where it is quite quiet the nature of the products mean people will travel to it. There is also little competition in Bristol as a whole, let alone just on the Gloucester Road and there is a good footfall on a Saturday as we are not far from the Bristol Rovers ground.
Ok, so you have looked in to the above 4 factors and have a good product, a good location that hits your target markets requirements, then you need to look at financial viability in depth
Once you know the product or service you are selling you can apply the relevant mark-ups to make yourself profit. There is plenty of finance books about which I would suggest having a read over however one piece of advice I would say to all businesses (and this should really go without saying) is look out for your overheads! Break them down to yearly; monthly, weekly and daily so you have a better idea of what is needed. Complete a monthly cash flow forecast beforehand (this can be hard as you dont know sales figures!) to give you an idea of what you need to turn a profit! Things like wages, utilities, rent, and rates, can add up very quickly, particularly if you have 3 or 4 days bad trade if you have low profit margins it can put a lot of pressure on the business
Financing
This also ties in with financing and this is another core aspect which can affect the success of the business. I am not saying you need to be rich to start, in fact many make their riches from nothing. However with physical products there is often the need to purchase stock etc (along with the obligatory insurance, rent, rates etc)
Do you have the cash yourself to invest? Do you need a loan? Are you going in as a partnership? Are you registering as a company? There are many variables. Houkara is a 3 way partnership (not a LLP) which basically means we are responsible for all debts that the business incurs. However it means we do not have to register with companies house and tax etc is far easier. Again I would advise getting a good accountant as they will save you far more than they cost, you then need to look at VAT issues etc (although you dont have to register straight away as you only pay VAT once your TURNOVER exceeds £67k)
Again with financing you will need to choose an option that is tailored to you. We had a nightmare with the business loan we went to get from a very reputable high street bank (I wont name names but I would recommend Barclays and NatWest over them from others experiences). They will need to see a business plan with cash flows, marketing plans, previous experience, a need etc. It is quite tough at the moment, even with 3 people all working full time, the bank still would not give us the required capital we needed and gave us little support so get researching, and the plan should not only be about the business, but about you as well.
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