Financing my start-up: not sure what to do right now!

Posted on: Thu, 11/08/2005 - 21:45
Financing my start-up: not sure what to do right now!

I've got an idea for a retail business that combines existing products and services in a new way. The idea is big, even at start-up, and has enormous growth potential.

However, whilst I have a lot of relevant experience (I currently manage a retail outlet and have spent many years working in retail and in the industries from which my idea draws its concepts from), I need to learn a huge amount about actually owning and running business.

I do not have much experience with forecasts, accounting, legistlation, etc. Ideally, I could hire an accountant and a solicitor, heck, even go for one of these consultancy firms, but I haven't got the money to do that. This will have to be a self-made project.

Recently, I have hit upon a way in which I could start *a* business... something that relates; that could become a component of the bigger idea, but something I could start as a bit of a cottage industry.

There will be no premises - my office, workshop and everything else will just have to fit in to my studio flat. I will be selling products via fairs, events and via my website.

I am working my way through the Week by Week book (although I've already done bits from here and there in a non-chronological order because I bought the book recently, but have been planning this business for quite some time).

And now to the burning question: should I attempt to go with a totally self-made, totally self-financed mini-project, or should I try to get finance at this stage? My larger idea definitely needs finance. This smaller one... I really don't know. I have very little in terms of assets: I own my own property, but it has no equity yet and I have overdrafts that are already in use, rather than available 100% and I am currently not getting paid enormous amounts.

So far, I've spent approximately £200 on research, raw materials and enough to be able to produce a "mock product".

I've reached a point where I now don't quite know exactly how much the legal costs and product manufacturing costs would be (and whether I would have to just forget about the cottage industry-bit and try to look at sub-contracting the manufacturing process.. and if so, how much would THAT cost?).

I've looked at the kind of people on this site and it seems that there is an absolute wealth of experience here. If any of you could spare some time to give me a few pointers, some advice, any help whatsoever - or if any of your pilot's logs cover similar situations, please let me know!

I would be very grateful!

http://www.nukapai.net
(Coming soon: http://www.madebypia.co.uk)


Posted on: Thu, 08/09/2005 - 22:14 #1
Go For It

Hi Nukapai, Come from similar background to you. Don't really see the reason for you needing experience of a business, there is a wealth of expertise here and this site is growing all the time, in about a year I expect it to be a substantial site in it's on right!! (Steve's say" It is NOW!!") Why don't you just work through the Week by Week book and apply your big business to it and do the exercises in relation to that. Hopefully you should find out all you need to know over the 26 weeks. And if all else fails this message will bring you question to the top of the pile again and someone with more business asccumen than me will be able to answer your original question.

Good luck and keep in touch with us

Posted on: Thu, 29/12/2005 - 19:53 #2
Cash is king

The idea is an early step - in my experience, you'll need a lot more in place for an investor to be interested. Investors are typically a "one chance only" brigade.

Where will your cash come from? If you sort your cash flow forecast out for, say, 6 months then you will understand whether you can collect from your customers before paying your suppliers. Even better, get customers to pay before shipping the goods (much of the travel industry operates this way, for example). Perhaps you will need to earn two incomes, as now, while this one gets off the ground?

With regards to the 'professionals', have you considered outsourcing all of the issues? Even my bank was talking about outsourcing HR to them last year. In terms of managing the outsourcing, how about writing it down? I personally like to start with a flow diagram (process flow chart to the professionals) that starts with, say, raw materials and ends with a customer having used the product / service. You'll end up with lots of squiggles on the paper to begin with but it does document the entire supply chain and also focuses the mind on where you need help. My favourite words for managing operations are 'process, systems, people and facilities' (in that order). In English, that's the flow diagrams, the computers, who does what when and the physical buildings/desks/car you need. Be warned - don't employ until you have professional advice - the job termination etc. area is a minefield. Instead I recommend "casual labour" or taking on a contractor until you can afford the professional advice. Oustourcing the manufacturing again is fine - can you get paid before you have to pay them?

Do you start small or start bigger? What's the competition? If they will see you start small then copy and knock you back, start bigger. If there is a niche that can be developed, small is fine. A big advantage of starting small is that you can put as much or as little of you into it as required - starting with someone else's money is a 100% commitment. Also what's in it for the investor? If you can't answer immediately, take a look at the BBC's Dragons Den programme where the five business angels rip any idea to shreds. They are looking at risk versus return - do you offer all risk and no return (yes = bye bye)? Do you take a salary out of the investment (yes = bye bye)? They are also looking for your commitment and ability - if you've answered the week by week questions, you're likely to be covered.

You haven't mentioned brand yet. I recommend that you create one or more "customer journeys" i.e. what are all of the touch points (physical and emotional) for your customers. Word of mouth is easily top of the importance list but might run through others such as advertising, PR, first phone call/web hit, order, delivery and after sales service. Assuming you start on your own, you could use your personality (write it down) to highlight what's important to you then try and capture those elements in the product/service you want to offer. For instance, I personally like high quality items and spend considerably more time than average getting things right - this would be easier to replicate with a Next or Monsoon brand than with Primark, for example.

To summarise, get your cash flow sorted out. Some more structure such as a brand/customer journey/operations/outsourcing plan would help. Research the supply options bearing in mind the cash flow implications. Oh yes, and if you're looking at a sole trader or partnership, consider putting your flat into someone else's name!

Take Care,
John
john [dot] bickell [at] tesco [dot] net

Take Care,
John
john [dot] bickell [at] tesco [dot] net

Posted on: Mon, 19/03/2007 - 14:44 #3
Go For It

Great advise there from John.

Before you do anything else at all I would suggest you finish a complete business plan for both options.
A plan isnt just about information for other people to take a view on your business its a roadmap if you like it brings out problems and shows up areas you need to consider.

Good luck

Best wishes

James
james [dot] moss [at] BlackfishSolutions [dot] com