Wednesday, November 18, 2009

How Do You Start A New Small Business ....

This is not meant to be all inclusive advice for how to start a new small business .... but it will definitely get you pointed in the right direction with a practical roadmap to follow.

To illustrate the actions you need to commit to I'm going to use opening a new restaurant as an example. It's easier to relate to a real life tangible example than just a bunch of esoteric thoughts and "tips". You can glean the basic ideas from this real life example and adjust as necessary to fit your chosen specific business .......

First, understand how much money you have to invest .... and assume you are going to need twice as much or more--so aim lower in your initial investment expectations.

As you probably know, the restaurant business is in severe recession right now. Restaurants are closing their doors all over because dining out is considered a luxury and we are in a back-to-basics economy.

That said, how do you get started? Here's what I recommend.

1. With restaurants withering all over, there are many for sale right now. You can get a already running operation with all the equipment on the cheap right now. You might even get landlords to renegotiate rent rather than losing a tenant for 6 months to a year or more. Buying an existing operation gives the advantage of being able to get revenue right away and not spending 3-6+ months on build out, getting permits and licenses, etc. Also, there is existing staff. The downside? If they're failing, you need to fix stuff and grow. If you are buying an existing operation, it's a buyer's market--you are in the drivers seat; don't overpay.

2. Talk to a business broker about what's available in your area. Check businessesforsale.com or bizbuysell.com for listings. Commercial realtors may also have some listings. You might want to check the local classified section too.

3. Spend time with a commercial realtor checking out real estate locations to understand traffic, rent tiers, physical locations, structural design issues, etc.

4. Talk to your local city about licensing and permitting requirements. You may get quite an adventure if you intend to serve alcohol. I have seen restaurants take 6+ months to get occupational or health licenses before opening. That's a lot of rent to pay while waiting for the government.

5. Talk to your bankers and local restaurant supply store management. They can probably tell you who has restaurants with good potential/track record of success but are experiencing difficulty in the current economy.

6. As with any small business, controlling costs is vital to survival. Avoid fixed expenses as much as possible. Negotiate for deals on everything. There is plenty of used restaurant equipment and supplies out there--no need to buy new when you can get stuff for 10/20 cents on the dollar.

7. Read everything you can about marketing and promotion. When you are ready to open, you need to drag people in and let everyone know you're open. Read the articles "How to Advertise Your Small Business on the Internet," "How to Build a Really Good Website for Under $100," and "How to Write and Issue Press Releases for FREE" on smallbiz123.com.

You will also need to establish a compelling brand for your restaurant. Great Name, Logo, signage, business cards, menues, promotional flyers/ ads, website and markeking plan.

The most crucial part of starting a new business is creating an appropriate brand Identity that represents the desired attributes of your company's services .... and puts in play creative initiatives that will attract your target market.

Unfortunately, too many new business owners try to save money and make the mistake of trying to create their own brand ..... which in the end doesn't pay off.

Brand Identity is the foundation of any business or product, and it should always project a highly professional image. I strongly suggest you hire a professional to do it. This will ensure that your business is started the right way with a strong foundation.