Questions to ask your self  BEFORE you get into the RETAIL business

Dreaming Big in the Retail Soapmaking Business

Dreaming Big in the Retail Soapmaking Business

Welcome to part 3 of the Opening a Retail Soapmaking Shop-

So this brings to me to the HARD QUESTIONS that you  need to ask yourself before you get into the RETAIL business.

Are you using the “DREAM” of owning a retail shop to cloud your judgment?  We’ve all been here before— that’s why we got into business in the first place.  We were all dreaming of owning a cool bath and body business like “XZY” down the street and dreamed of how happy you would be once you had it.  But don’t get sold on the “IDEA” of having business, do you research and find out what the day-to-day operations will be like.  It is HARD work and involves a lot of time.

Can you afford it? Do you have enough income to cover overhead just in case?   I had a backup plan that included sales from difference resources just in case I didn’t have  sales for that month. You will need enough to include your rent/lease/utilities/maintenance expenses. Money is scarce and it’s tough getting business credit. Credit cards helped me getting started with the basic start-up costs involved with opening a retail shop. Most of my income coming in my business got rolled back into the business for a few years.  A portion of it continues to get rolled back into the business today.

A few tips: In the beginning a landline phone is not necessary, you don’t need an  internet connection in your new place either or  pay for regularly scheduled picks from UPS and FEDEX.  Save those for later on when your business is established and making money.  Use the “Square”  for all your credit card transactions and your business cell phone as your regular line.

Do you have unlimited time to invest in your retail shop?  Post your  hours and  be present/open during those times.

Competition-  This should be included in your feasibility studies and it will give you a good opportunity to scout out the competition.  I would inquire discreetly how well they are doing. You could learn from them and adjust your ideas before you get started. You could also ask your small business rep to see if they know them; maybe they could give you insight on what to expect.

Conduct your own market feasibility study to see if your idea will be supported in your community.  {A feasibility study evaluates your project’s potential for success as it examines the marketability of your product}

Your SBA office should be able to help you gather the data to support it. Find out if your “DREAM” idea will bring in the money or send you into financial ruin.

Links for you to check out!

What Is Product Marketability?

31 Days to Build a Creative Business


Building Your Small Business Credit

Starting a business in a recession is never easy and most small soapmaking business owners fund all their purchases via personal credit.  It’s fine to do in the beginning but when revenues increase and you are making larger purchases you may need to look for new funding.  This is where your business comes in. You will need to first apply (if you have not done it already) for a EIN number with the IRS (this is an Employer Identification Number), Register your business with your local and state agencies and designate a legal entity for your business (sole proprietorship, LLC..etc).  

 Remember when you had to establish personal credit?  You applied for credit and used your credit to build a history which was then reported to the various credit bureaus.  Well in business the terminology is a little different and works like this: As a business you will try to establish trade credit and it is when another business issues your business credit= trade credit.

At that point a business trade credit file will then be established, which is then gather by various business credit bureaus:

Dun & Bradstreet
Experian Business
Equifax Business

But the bad thing is that other businesses are not required to send in your information and the credit bureaus may never receive the good credit information that you have established. It will be up to you to check this report and make sure that your business credit is being submitted.  It may not matter to you now but with luck someday you may need to expand and get a loan. Then you will need this credit history.

You can check to see if your business is on file for FREE at DUN & BRADSTREET-  and sign up for your DUNS number.  You can also pay to have your credit pulled from the above resources as well.

Some fine points to remember when establishing business credit:
1. Keep a business phone line separate from your personal line if your business is mobile. It sends up red     flags if you do not have one.
2. Update or create your business plan
3. Find businesses willing to extend you small credit and ask to see if they report to the agencies
4. Start at least 6- 8 months before you need the loan.

If you are intrested in starting your own soapmaking business join us for our 2 Day Weekend Workshop Jan 26-27, 2013.   Click Here For More Information!