I am now the owner of my second business (I'm 23) and it's going great but I wanted to share some tips with you guys because it's not always a breeze. That's ok by the way. Not everyday includes a flippy skirt, a doughnut bun and a designer cup of coffee when you own your own business. Don't let reality TV fool you.
I've broken this into two parts because it's a huge topic!
Part 1 will deal with going from the idea phase to starting to set up your business.
1// You need a full idea.
If this includes a mood board, a brain storm chart or an Excel document then that's all cool. You can even start a private Pinterest board so you can pop things you find online there.
Say you're starting a doughnut business, you need to fully form your idea before you get into the finer details. Start by making the big decisions because the smaller ones will either fall into place or you'll decide they're not worth the hassle.
This may sound silly but don't include finding a name for your business as a big deal. It's not. Once you've worked with the product a little, formed the idea and made a few smaller decisions, the name will normally take care of itself.
2// How big of a business do you want?
This may sound like a stupid question because obviously we would all like a business with many franchises and a boat load of cash from that, but you don't start businesses with this goal. Chances are, you're starting something with an idea you're incredibly passionate about so any money you actually make is just a bonus.
This rule sort of goes hand in hand with what kind of premises you're going to look at, but before you get to that you need to think about size.
Do you want an artisan company where you sell exclusively at markets, festivals and food shows or do you want a more commerical business where you sell to retail stores solely as a wholesale supplier?
If you're going to be a small business then it comes with different options to a bigger business especially when it comes to space, staff and capital.
- If you're going to be selling at markets, festivals etc then you need to do some research into the local opportunities available to you. If there are local festivals you will need to find out how much a stall costs, if there are markets then you'll need to research which co-ops you need to belong to. These things may effect your decision on the size of your business so be prepared.
- If you're looking at wholesale then you need to do a bit of research into warehouse costs, production value etc.
3// Looking at costs is key.
Once you've decided what size of a business you want, you need to decide what is economically viable for your situation. You won't be able to afford a $4000/£8000 store front as a start up business selling doughnuts. But you can afford a stall at your local market.
The cost of a vendor's liscence and a Health Certificate is minimal compared to a store front. Just make sure you have the right paperwork because a fine can cost more than you think.
One thing people always get hung up about is the branding of their product. They think they need sleek, name branded packaging with a individually designed logo by the new up and coming Van Gough. That's not true. You can buy yourself some self-adhisive labels in different shapes, design your own logo and print off your own labels to stick onto products. If you're going to the local market, you won't be needing 3000 packets with your name on it. You'll need around 150 to 200 for a very busy market day and you can take spares to use if you run out.
You need to look at all your costs, not just the exciting ones like decoration and marketing. You need to look at how much your product is going to cost to produce and then price it accordingly. In the food industry, it's a rule of thumb to market in thirds. A third of the price should be your cost price, a third wages and overheads and a third profit.
This is a huge section and it's a lot of work but it can't be swept under the rug. You need to realistically cost everything out, not for a bank or a business manager but for yourself. If you sell something at $3 then it must cost you $1 or less to make you money. It's basic survivial.
4// Utalise what you have.
This goes for equipment and services. Do you already have a deep fat fryer but think you need more space? Don't get over eager and buy yourself a fryer before you've been to your first market. If you're doing hot and cold doughnuts then you might want to think about making the cold ones the night before and the hot ones to order. This will mean that one fryer is plenty and you won't be out of pocket before you've begun.
If you want a really snazzy new sign for the market, think about using a friend instead of a company that might charge you the earth. If you know someone who is good at art work then spend a little bit on paint and a board and get your friend to help you with the sign instead. You could even have fun doing this instead of panicking about where the money is going to come from.
Likewise, use stuff you already have lying around the house. You don't need new stationery when a free pen from the bank and an old notepad from school will do just fine. If someone wants a recipe or invoice, offer to email it to them - saves you money on stationery and it's eco-friendly!
5// Assess whether you can do the job alone.
If you're not taking on a business partner (good idea if it's a small business) then you might need to assess if you can do the job alone. If you're trying to make 20 different types of doughnuts then you might not be able to make it all yourself. This is not a problem though because you can make a few changes that will help.
Simply cut out a few varieties (you'll see which ones sell and which ones don't) or get family involved. If you need to get a family member certified by the health authorities then do that instead of taking on a full time partner.
If you need help with the product that cannot be done away from the consumer (handling the cash register while you prepare hot doughnuts) then a family member is often the best idea. If you don't have a family member willing or able to help you out then a friend is also a good option. Depending on the friend, you may be able to get away with paying them in a batch of doughnuts which is a much smaller cost than paying them hourly.
6// Read the finer print.
Whether it's the contract for your new store, the delivery schedule for supplies or the terms and conditions at the market, make sure you read it properly. There is nothing worse than being caught out.
If you need to re-read the document or even get someone else to go over it with or for you then do it. And don't be afraid to ask for clarity on points you don't understand.
7// Have fun.
Just because business is serious, doesn't mean you have to be all the time. A little bit of charm and charisma goes a long way. Be prepared to go the extra mile, don't be afraid to be chatty and friendly with the people in charge.
Also, if it's a small business then you can afford to take a few risks. This means you can try a really wacky doughnut and pop it up as a special. Keep it fresh and fun and you'll enjoy it more.
I hope you find that helpful. If there's anything you'd like to ask, just pop in a comment and I'll try to cover it in the next post!