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Thread: Starting a small business ...

  1. #1
    Featured Member krys's Avatar
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    Default Starting a small business ...

    Who's done it? Any advice or insights to share?

    I am looking at opening a small scale space for private yoga lessons and general health/fitness coaching. I am teaching classes at other locations so this will be just a smaller more personal space for private consultations.

    Just working on the buisness plan and thinking of start up costs and other such things. Pulling my ideas together.

    One thing I read awhile ago is that it won't happen as soon as you expect. I am learning this now! LOL

    Any other tips or things I should be mindful of?

    (Keeping in ming I am in New Zealand so tax laws etc may differ)

    k xo

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    Banned Melonie's Avatar
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    Default Re: Starting a small business ...

    Not knowing anything about NZ particulars, I'll confine my comments to general areas.

    Starting a new business is essentially an exercise in 'pump priming' ... with the flow consisting of money rather than water. If your business has a product or service which the general public wants and is willing to spend money on, then the major tasks are to communicate the fact that your business exists to the general public, and to 'survive' until the volume of money starts flowing at a level sufficient for you to turn a profit. To accomplish this, any new business venture MUST have enough financial resources for both initial advertising, and also to cover fixed costs such as rent and staff paychecks, for a long enough period for the volume of business/money flow to be allowed grow to sufficient levels that the business at least becomes self-sustaining (i.e. operating in the black).

    Many otherwise promising new business ventures fail because they could not/did not secure sufficient initial financial resources to keep the business operating at a loss for the three to six months necessary to sufficiently 'prime the pump'. This seems to be particularly true of businesses in which significant initial capital investments are necessary to purchase specialized equipment for example. Such businesses often purchase this capital equipment with borrowed money, and of course those monthly payments start immediately. Having insufficient initial cash reserves to keep covering those monthly payments on top of rent and paychecks until business levels could grow to 'critical mass' has resulted in a large number of forced bankruptcies.

    In the case of your own business proposal, it really doesn't sound like you will need much in the way of initial investment or financing. If you advertise sufficiently, and if you already have a good general reputation in the local fitness community plus a 'ready made' base of customers i.e. people who have attended your classes at other locations, you should do fine !

    The only area of your specific proposal which might be a 'yellow flag' is the potential for physical injury lawsuits. One successful injury claim could wipe out an entire year's worth of business profits ! Therefore I would pay particular attention to this area, seeking good legal advice in regard to 'corporate veil' safeguarding of your personal assets and limiting professional liability, seeking good legal advice in regard to including appropriate 'disclaimers' in your membership agreements, seeking affordable insurance coverage etc. These areas were probably not an issue for you in the past when you were operating under the 'corporate veil' and insurance coverage of some other business which 'subcontracted' your services as an instructor, but they will fall squarely in your own lap when you start operating as an independent business in an independent location.

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    Senior Member DanMorris95156's Avatar
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    Default Re: Starting a small business ...

    Melonie has certainly provided great points for consideration. My experience of over 20 years of assisting small and privately held business start and succeed has repeatedly demonstrated that initial capitalization is the most commong mistake.

    A business plan is great and the graphs and Excell sheets all look promising. The greatest challenge will be for you to determine when to change your initial plans and create a new business model because your actual experience differs from your projected.

    Advertising alone won't creat the demand that you need. A well developed marketing plan and reason for people to investigate your shop will be necessary.

    Fortunately, you are in NZ and the liability risk, although something that you sould insure against, is probaly a lot less then in CA - mostly because of the general nature of New Zealanders.

    I do have some contacts with the NZ Chartered Accountants that would certainly be worth considering depending upon your location.

    A great advisory board (either virtual or physical) is also a great plan - in that you will need to seek out the advice of others that whose judgement you trust.

    There is a great 5 page Harvard Business Review article on writing business plans. It is on their website www.hbspublishing.com (I believe) you would have to search for HBR articles and business plans, it is about 5-10 years old but it is the best example of what is important in business plans.

    Best of luck and let me know if you would like more information.

    Regards,

    Dan Morris
    [email protected]
    Daniel D. Morris, CPA
    [email protected]

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    Featured Member krys's Avatar
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    Default Re: Starting a small business ...

    Thanks Mel, Dan thats helpful advice.

    I couldn't find the biz plan article you mentioned Dan, however I do have a workbook that I obtained from the biz info centre here in NZ.

    It is confusing because I think I have most of the knowledge I need and start up costs are going to be very low (a few yoga props and room rental either weekly or daily). I have to look into the insurance thing and I will need some standard stationary and some kind of float money.

    I feel I can do it all at a low cost, and because it is only me I do not have to worry about all the other hassles that come with staff.

    There may be a room avaliable at one of the gyms I teach at, I am unsure if I will be covered by insurance or if I will have to get my own....

    Bu then I read some material, or a post or a friend will say something and I begin to think, shit, maybe I need more money ... more knowledge...

    The biz will only be part time for now and I have a few other things on the go to make ends meet. So I think I will be ok opening on bare minimum? (in a VERY wise way of course!)

    I think I will be ok once I have done the background research (tax, insurance, waiver forms, location, marketing...) to opne on a small budget. What do you guys think?

    Thanks

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    Veteran Member infra-red's Avatar
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    Default Re: Starting a small business ...

    I have a small business where I sell very form fitting spag-straps and other types of shirts with a logo I designed on the front, embroidered. I buy the shirts from Amercan Apparel for $5 each and it costs me $4 each for the embroidery. Every time I have a batch done(20 to 30 shirts), I put the box in my trunk and forget about them till I see some girls out and about. I show them the design, talk some small talk, then sell them for $14 each. I always sell out. It keeps me in gas money and Diet Coke!LOL!
    Devilution Imaging!

    "Sexy...sexy as hell"

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    Banned Melonie's Avatar
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    Default Re: Starting a small business ...

    It keeps me in gas money and Diet Coke!LOL!
    Yes it does ... providing that the IRS never gets wind of your car trunk based business activities ! If you were ever charged the income and self-employment tax due on your business enterprise, you'd be lucky to break even.

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    Default Re: Starting a small business ...

    I earn my crust as a manager in metallurgy in the UK, so my business experience is very different from what you'll need. However, here are some maxims which i've learnt are only too true over the years.

    * It'll cost twice as much and it'll take twice as long as your first estimate.

    * Nothing is fool proof, because fools are very ingenious.

    * When a business grows, it grows warts and all. What is a small wart at the start may become a very big wart later.

    * When you have a problem ask "why" five times. When you've answered your fifth "why", you might be getting towards the answer.

    * There are never enough hours in the day to do everything you need to keep your business running efficiently.

    More seriously, it helps to get expert advice. In the UK there are government sponsored organisations that give free or low cost advice to people starting up small businesses. I see you've already contacted the NZ equivilent - have you found out what consultancy and advice is available?

    Business plans are fine, but don't get too hung up on them. Just because it looks nice on paper don't mean it's going to happen that way. Use a business plan as a guide, but don't rely too heavily on things turning out as predicted - be prepared to change if needed.

    It's also best to prepare three business plans. Best case, expected case, worst case. In the worst case look at what'll happen if you get less customers than you expect - how many go you need to pay your outgoing costs? In the best case - do you have enough money to cope wuith the extra costs?

    Be very careful in checking out what competition you actually have. The amount of customers you can get will depend on who and what you are competing against. Some may honestly prefer going to larger established gyms. Be very careful in finding out if you're competing against other instructors working like you are - there may be more than you expect and their customers may well be very loyal and stay with what they ahve.

    Time will be your problem. One of the best bits of advice I can give is work on one thing at a time. Pick up a problem or a job, and finish it before moving onto the next. If you have six or ten things going at once, you'll never get any of them finished.

    Good luck...

    Phil.

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    Senior Member Luke34's Avatar
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    Default Re: Starting a small business ...

    Hi Krys

    If it is anything like Australia, which it should be, here are some pointers.

    1. Register your business and business name early. The reason is that, as you get on with your business and decide to expand/ borrow money, the length of time your business was in operation is important. The nominal time frame for banks/ leases is two years.

    2. If you are planning on start up you could look at renting a home office. BY this you rent a space to live and a space to conduct your classes. This way you have a break up of your rental as a legitimate business expense.

    3. If you are looking for someone to take a financial risk on your business, there are a number of things which you should include in a business plan. These include a wage for yourself on the hours you intend to spend on setting up the business or at least there should be some allocation of share to you in lieu of time spent during set up. More often than not people get uncomfortable when you offer to do things for free during start up.

    4. If you are getting someone to invest in the set up costs. Break these up into digestable chucks with predetermined targets you should reach in the business and this gives them the oppotunity to punt small amounts of money and see where it goes and also the opportunity to pull out and cut their losses if the targets are not achieved.

    5. Most businesses take about 18 months to get on track and people expect businesses to run at a loss or generate minimal profit in the first year. If you prepare a business plan which has a very high rate of return people and banks tend to disbelieve your business acumen. 12- 15 % is a good rule of thumb after the first 18 months. If you believe you can achieve more ...do it, just keep it out of your initial business plan.

    Hope this helps.

    Luke

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