Quick update on the progress-one distributor account is open, another application is in the works. All my licensing is complete, so it is just a matter of getting the shopping pages set up and usable. There will be used books, new books once I get everything set up with the distributors and get my orders placed, hand crocheted (by me) red hen stuffies, book marks, and book plates. Everything will be fairly small scale to start with until I can get some equity and inventory built up, and have something substantial to offer when asking for funding.
Anyone who knows me or has spoken with me recently knows that things can get hectic quickly for me with the website set-up and business planning(still waiting for the tech people to do their part in the shopping pages), the little chicks (one is in school, the other starts school this fall), my day job, my husband, my family members, and various other random bits and pieces of excitement popping up. Lately, my goal has been to stay organized-this is key just for navigating everyday life, especially when opening a business. There are forms and applications to be filled out and signed, payments to be made, people to contact, and accounts to be opened.
This brings me to my business-opening tip of the week: get organized, and find a way to stay organized. I am a bit of an organization freak, largely because I have so many eggs in the air I need to be able to keep track of them (we all know what happens when you drop an egg). I have a notebook that is largely for brainstorming and writing down sudden ideas or suggestions for the business (yes, I take suggestions; no, I am not going to follow every suggestion-I will thank you for the idea, though). I have a personal planner/calendar for writing down dates and meetings for myself and for the bookshop-as so often happens, when you own a small business, the entire family gets involved in some capacity. I have a journal that I use for noting what has been done, what books I have reviewed, what the posts have been written or will be written. Finally, I have a binder for all of the paperwork that I am accumulating, and which needs to be kept track of. Of course, not everyone would find the need for this much to keep everything organized; this is just what works for me. You should make a point of trying out a few different methods of organization, and keeping the one (or mixing a few together) that works best for you.
Last week, I told you about my progress with distributors, and that I had turned in an application with my bank to be evaluated for a loan. The loan was a negative, meaning the business is too new and too much of a risk for a bank to take on at this time-I have very little collateral to offer at this point to sweeten the deal for a tradition bank loan. This does not mean that I can’t open my distributor accounts-I have a business credit card that will be used to open one to two accounts at a time. I am waiting to receive my sales tax registration-I contacted the MoDOR, and have been told that the sales tax bond has been received, so I should be receiving that paperwork within the next week and getting the business licensing taken care of. At that point the e-commerce portion of the website will be live.
This week, the potential business owner’s “need to know” is one big thing: funding.
1 You need funding for everything. You need start up capital, and you should have a rough estimate of how much everything is going to cost-both for initial/short term costs and long term costs (and that should be detailed in a business plan). There are several ways to get funding:
1 Banks: Many banks are not going to take the risk of a brand new business. Banks are typically very risk averse, and a brand new business with little to no collateral and no financial history of profits and revenues is a very big risk to banks. According to the Small Business Administration, as many as 50% of all small businesses fail within the first year.
2 The Small Business Administration (SBA): The SBA is a federal administration designed to act as a liaison between small businesses and lenders. Getting an SBA loan can be a lengthy, complicated, and difficult process. A certain amount of collateral is typically required, detailed business plans and financial statements are required, and in general, there is a lot of paperwork with a relatively small chance of success for the very small business owner just starting out.
3 Micro Loans and Online Lending: There are a large number of online lenders that promise to approve small loans within days, and if you have been in business for six months or more, there is a good chance of success with them; larger loans typically come with additional requirements of a certain amount in revenues or a year or more in business. The big difficulty with online lenders is that, depending on the size of the loan and who the lender is, you may not have a long time to pay it back, so you could be facing hefty payments for a while.
4 Crowdfunding: Kickstarter, GoFundMe, and Indiegogo are all popular crowdfunding sites. With crowdfunding, you tell your story, ask people to contribute to your business or cause, and if all goes well, you can get a portion of your funding covered by people who aren’t expecting to be paid back. I have used Indiegogo to get the initial cost of setting up the website covered; while any crowdfunding platform is usable, each one has different pros and cons that each person needs to evaluate.
5 Credit Cards: Many small business owners (myself included) often need to resort to using credit cards to cover some or all of their start up costs. Again, each card has different pros and cons, and that is something each will need to decide which is the best for them. As always, be mindful when using credit cards. If you are going to carry your card balance more than a month, make sure that the monthly payments won’t be too much for your budget (include that in your business plan if possible).
First Friday progress update: things are getting stepped up. I heard back from the distributors I want to use, and in order to open an account I must make a minimum purchase. It wouldn’t be much for one, or two, in terms of books, but I have a list of mainstream and independent press distributors, as well as a stationery distributor, and that is quite a bit of inventory to purchase and find a place to store. So, in light of that, I started speaking with my bank about taking a loan to get into a physical location, and toured one building today. I have an agreement for a card reader and the accompanying details for the storefront once I am able to obtain a location, and that will all be tied in with the website so there is only one system needed to manage the whole shebang.
This brings me to a tip for anyone interested in opening a business (two, really):
1 Have a plan. Preferably a business plan. You will be asked for it, and it will come in very handy as you progress. A business plan, even a basic one, can be used as a supplement and a reference in your interactions with mentors, other businesses, and banks and lenders.
2 Make connections. Get to know people. This isn’t necessarily easy for me-I register as an INTJ on the Myers-Briggs type testing, which puts me in the class of eccentric loners like Steve Jobs. It can be done-I meet people one or two at a time, and it is easier for me to focus on them, and get my point across. Knowing people means you have that many more people who believe in your concept, who can vouch for you, and who can refer you to someone or refer someone to you for information or a service that you need, and it means that they have your name and will pass it on to their friends, who can be converted into customers when the time comes. My logo was designed by someone who was referred to me, the website was designed by a company I was referred to and who was introduced to me, and the wonderful staff at my bank gave me an introduction to the folks who handle merchant solutions and business accounts and loans at the bank-these people are, in turn, making sure that the systems they will be setting me up with will do what I need with a minimum of time invested.