My advice on opening a business... And building a house.

[12sndsgood]

I'm working on building a solid foundation and trying to get my ducks in a row before i jump to just trying to get job after job. but even after 6 or so months I still feel like my foundation is shaky lol.

It's REALLY a LOT of research that goes into a thorough business plan! You've got to be everything: Secretary, Executive, Grunt, Accountant, Legal, Web designer, Marketing guru, creative.......... The list is endless and you have to do it all if you are a sole proprietor!

Yeah starting out when I got laid off I figured I had plenty of time. after 5 months and going back to work I realised I only learned about 1% of what I feel I need to learn. I'm looking forward to things slowing down in the winter so I can continue doing more reasearch and learnin about what I need to know.

 

[MLeeK]

Further to what MLeek said...

Business is about finding an (unfulfilled) need, convincing prospects that you are the one to fill that need, and to do it effectively/efficiently enough to make it worthwhile.
OR creating that need!!! You don't have to re-invent the wheel, you just have to create a need in your prospective customers for YOUR wheel and only your wheel.

Retail is servicing the public, which implies many small transactions. There is a wide range of possible price-points, ranging from boutiques (customized, relatively high margins) to commodity (standard product, very thin margins, reliance on high volume). At each price point, it is possible to make money, but the marketing, process of delivering the product, expected transaction volume, and investment in equipment/administrative systems/procedures/training is very different from level to level. Figuring out which segment you are best equiped to serve is not a trivial task. Learning about business gives a prospective business person some basic tools (and even an MBA gives only basic tools) to determine which components of the business model are relevant to their situation, and once the basic organization is done, to customize one's activities and processes to the specifics of the niche market they are trying to serve.

I run several businesses, and have, over the years worked in and with businesses ranging from multinationals, to one-person specialty shops. Probably the most frequent reason for going out of business is the lack of sufficient planning. The second most common reason is lack of sufficient financial resources. Third most common is not managing the cashflow. Over the longer term (10 years or more), businesses fail by not adapting to changing circumstances.

Keith (KmH) often refers to links discussing the business plan. MLeeks has referenced several links with very good business advice. The foundation of any business has to be a well-thought out business plan, which starts with a deep and detailed look at the prospective market one wants to exploit. What are the existing characteristics, buying patterns? Who are the preferred suppliers to that market? Is there an untapped potential in that market? Who are the "heavyweights" in that market, and why are they successful? Are there any societal/environmental trends that may change the dynamics of that market?

Once the market is researched and understood, the next challenge is to determine how to generate prospects in that market. What are the characteristics that define the most valuable prospects within that market? What/who are the authority figures that these ? the influencers? Which media do the prospects use to find the services they want? Where they shop/eat/entertain themselves? What are their "hot buttons"? Assuming that you reach them, how do they contact you? What is the process you use to log and follow up your prospects? How many steps are there before a signed contract is obtained? How do you follow up with the prospects that did NOT go with you, and what can you learn about why you did NOT get their business? Are there direct competitors who are winning away your most valuable prospects? If so, what are they doing right that you are not?

Once you have a contract, what is the process for ensuring a smooth production? How do you identify, quantify and minimize risk? Tim Campbell did a very good writeup in another thread (on weddings) where he described some of the prep work needed for a wedding. Each production project needs to have a similar level of thinking and planning. How do you cover equipment failure? How do you minimize communication failure? Do you have a plan and schedule for the event(s), the post-production, and the final delivery? What measures are you taking to ensure that you get paid?

Once the contract is complete, do you have a plan for the post-mortem? What went wrong, and what could have been done to prevent it in the first place? What opportunities presented themselves for new business? Are you dealing with the most valuable prospects, or do you have to re-evaluate that? What about your production efficiency - which activities took more time investment than you planned? Why? What could be done to improve the effectiveness? What changes to the process can you see to improve the client experience? to improve the marketing prospects? to reduce risk?

What administrative processes are you planning/using to stay on top of commitments? what followup are you planning/doing to ensure your investment in marketing is not wasted? What is your cashflow projection and how does your actual cashflow compare to your projections? What has to change to improve the cashflow?

and so on.

On the financial side, there has to be enough financial reserves available to buy/rent the production equipment needed, pay for operating and living expenses for about 6 months, and to remit to the various levels of government the appropriate permits, taxes, fees that need to be paid by a operating business, to pay for (some) legal advice and paperwork, and to cover (some) accounting services. If you've borrowed money to start the business, then the financial costs and available credit must be carefully tracked and managed.

And then there's the daily monitoring of the cashflow. You had a plan, how's it actually working out? Are you getting enough revenue in your bank account to match your cashflow projections? Are your collection timelines reasonable? Are your outflows all budgetted or are there many unexpected drains?

Business can be both fun... and when things go wrong, they usually go really, really wrong in a hurry. Business is not for amateurs.

AWESOME ADDITION!!! And much of the things you covered are things I'd like to go into much more depth on as I add to the initial post!!!

 

[IByte]

Further to what MLeek said...

Business is about finding an (unfulfilled) need, convincing prospects that you are the one to fill that need, and to do it effectively/efficiently enough to make it worthwhile.

Retail is servicing the public, which implies many small transactions. There is a wide range of possible price-points, ranging from boutiques (customized, relatively high margins) to commodity (standard product, very thin margins, reliance on high volume). At each price point, it is possible to make money, but the marketing, process of delivering the product, expected transaction volume, and investment in equipment/administrative systems/procedures/training is very different from level to level. Figuring out which segment you are best equiped to serve is not a trivial task. Learning about business gives a prospective business person some basic tools (and even an MBA gives only basic tools) to determine which components of the business model are relevant to their situation, and once the basic organization is done, to customize one's activities and processes to the specifics of the niche market they are trying to serve.

I run several businesses, and have, over the years worked in and with businesses ranging from multinationals, to one-person specialty shops. Probably the most frequent reason for going out of business is the lack of sufficient planning. The second most common reason is lack of sufficient financial resources. Third most common is not managing the cashflow. Over the longer term (10 years or more), businesses fail by not adapting to changing circumstances.

Keith (KmH) often refers to links discussing the business plan. MLeeks has referenced several links with very good business advice. The foundation of any business has to be a well-though out business plan, which starts with a deep and detailed look at the prospective market one wants to exploit. What are the existing characteristics, buying patterns? Who are the preferred suppliers to that market? Is there an untapped potential in that market? Who are the "heavyweights" in that market, and why are they successful? Are there any societal/environmental trends that may change the dynamics of that market?

Once the market is researched and understood, the next challenge is to determine how to generate prospects in that market. What are the characteristics that define the most valuable prospects within that market? What/who are the authority figures that these ? the influencers? Which media do the prospects use to find the services they want? Where they shop/eat/entertain themselves? What are their "hot buttons"? Assuming that you reach them, how do they contact you? What is the process you use to log and follow up your prospects? How many steps are there before a signed contract is obtained? How do you follow up with the prospects that did NOT go with you, and what can you learn about why you did NOT get their business? Are there direct competitors who are winning away your most valuable prospects? If so, what are they doing right that you are not?

Once you have a contract, what is the process for ensuring a smooth production? How do you identify, quantify and minimize risk? Tim Campbell did a very good writeup in another thread (on weddings) where he described some of the prep work needed for a wedding. Each production project needs to have a similar level of thinking and planning. How do you cover equipment failure? How do you minimize communication failure? Do you have a plan and schedule for the event(s), the post-production, and the final delivery? What measures are you taking to ensure that you get paid?

Once the contract is complete, do you have a plan for the post-mortem? What went wrong, and what could have been done to prevent it in the first place? What opportunities presented themselves for new business? Are you dealing with the most valuable prospects, or do you have to re-evaluate that? What about your production efficiency - which activities took more time investment than you planned? Why? What could be done to improve the effectiveness? What changes to the process can you see to improve the client experience? to improve the marketing prospects? to reduce risk?

What administrative processes are you planning/using to stay on top of commitments? what followup are you planning/doing to ensure your investment in marketing is not wasted? What is your cashflow projection and how does your actual cashflow compare to your projections? What has to change to improve the cashflow?

and so on.

On the financial side, there has to be enough financial reserves available to buy/rent the production equipment needed, pay for operating and living expenses for about 6 months, and to remit to the various levels of government the appropriate permits, taxes, fees that need to be paid by a operating business, to pay for (some) legal advice and paperwork, and to cover (some) accounting services. If you've borrowed money to start the business, then the financial costs and available credit must be carefully tracked and managed.

And then there's the daily monitoring of the cashflow. You had a plan, how's it actually working out? Are you getting enough revenue in your bank account to match your cashflow projections? Are your collection timelines reasonable? Are your outflows all budgetted or are there many unexpected drains?

Business can be both fun... and when things go wrong, they usually go really, really wrong in a hurry. Business is not for amateurs.

...wax on,wax off.

 

[amolitor]

I think it's worth pointing out at this point that, while all MLeeK and pgriz have said is true, I think they've also given the impression that you MUST have all this sorted out in advance.

In reality, yeah, you should have a whack at it sorted out. No plan survives contact with the enemy, and business plans are no exception. Market research, pricing, processes for everything, selecting your target customers, all that stuff is all ongoing activity. You should have an idea when you start, but your idea might well be all wrong -- and that's ok, in fact it's practically guaranteed to be partly wrong. This is what cash reserves are for, to buy you time to sort out all this stuff into a functioning business that's cash flow positive.

Sweat it, but don't get fixated on "MUST BE PERFECT" because it's not going to be. At some point, you just gotta pull the trigger and go do it, knowing that changing the plan is a good part of what running a business is.

 

[rexbobcat]

To learn my teachings, I must first teach you how to learn.

He who questions training only trains himself at asking questions.

When you can balance a tack hammer on your head, you will head off your foes with a balanced attack.

That second one doesn't sound like very good wisdom. Lol

 

[Patrice]

Further to what MLeek said...

Business is about finding an (unfulfilled) need, .....

.. customize one's activities and processes to the specifics of the .. market.

reason for going out of business ... lack of sufficient planning ... lack of sufficient financial resources ... not managing the cash-flow ... not adapting to changing circumstances.

The foundation of any business has to be a well-though out business plan...detailed look at the prospective market one wants to exploit ...
...determine how to generate prospects in that market.

..process for ensuring a smooth production .... identify, quantify and minimize risk.

...plan for the post-mortem ... What went wrong.... What opportunities presented themselves for new business?

...processes are you planning/using to stay on top of commitments....ensure your investment in marketing is not wasted ...cash-flow projection... improve the cash-flow?

...enough financial reserves... financial costs and available credit must be carefully tracked and managed.

...monitoring of the cashflow.

...You had a plan, how's it actually working out?

Excellent post. It's a pretty good summary of a 30 hour credit course I teach at the community college.

 

[Derrel]

So...how many yards of Redi-Mix do we need to fill the foundation forms???

 

[pgriz]

I think it's worth pointing out at this point that, while all MLeeK and pgriz have said is true, I think they've also given the impression that you MUST have all this sorted out in advance.

In reality, yeah, you should have a whack at it sorted out. No plan survives contact with the enemy, and business plans are no exception. Market research, pricing, processes for everything, selecting your target customers, all that stuff is all ongoing activity. You should have an idea when you start, but your idea might well be all wrong -- and that's ok, in fact it's practically guaranteed to be partly wrong. This is what cash reserves are for, to buy you time to sort out all this stuff into a functioning business that's cash flow positive.

Sweat it, but don't get fixated on "MUST BE PERFECT" because it's not going to be. At some point, you just gotta pull the trigger and go do it, knowing that changing the plan is a good part of what running a business is.

True that. The real message, which you have pointed out very well, is that a business plan is not something you do at the beginning ONLY, but something that you continually update and revise as circumstances dictate. But having thought through many of the decisions, it's much easier to go back and revise a portion because the assumptions behind it or the actual reality is now different.

 

[pgriz]

So...how many yards of Redi-Mix do we need to fill the foundation forms???

Having done that last weekend, the answer is... Until you're done!

(or your back rebels...)

 

[MLeeK]

So...how many yards of Redi-Mix do we need to fill the foundation forms???

I would think a dozen or so bags of kwi-krete (sp???)It should be fine. Its not like its going to go anywhere. We should be fine!

 

[MLeeK]

I think it's worth pointing out at this point that, while all MLeeK and pgriz have said is true, I think they've also given the impression that you MUST have all this sorted out in advance.

In reality, yeah, you should have a whack at it sorted out. No plan survives contact with the enemy, and business plans are no exception. Market research, pricing, processes for everything, selecting your target customers, all that stuff is all ongoing activity. You should have an idea when you start, but your idea might well be all wrong -- and that's ok, in fact it's practically guaranteed to be partly wrong. This is what cash reserves are for, to buy you time to sort out all this stuff into a functioning business that's cash flow positive.

Sweat it, but don't get fixated on "MUST BE PERFECT" because it's not going to be. At some point, you just gotta pull the trigger and go do it, knowing that changing the plan is a good part of what running a business is.

YES! your plan is a foundation. But it is also pretty fluid and will change. Plan for how you are going to keep up with that need to change. The trends, things that don't work, education, technology.... you have to keep on things and that's a piece of the plan!

 

[CCericola]

All of this only applies to people who freelance or open their own business. There are other employment options if you want to be a photographer.

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But employment isn't what this is about-it's about starting your business (or freelancing, because that is a business in itself.) Which is why the title is my advice on opening a business.
Employment in the field is a completely different ball game.

And there is more than just retail photography.

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Again, that's not what this is about or who it's written for. It's written for those who want to open a retail business.

Ok, I can see what you mean. It was the "get a business degree and not a photography degree" that threw me. Getting a business degree can really shut doors for some photography jobs. But now that you said you meant it for only retail photographers I understand.

 

[MLeeK]

All of this only applies to people who freelance or open their own business. There are other employment options if you want to be a photographer.

Sent from my iPad using PhotoForum

But employment isn't what this is about-it's about starting your business (or freelancing, because that is a business in itself.) Which is why the title is my advice on opening a business.
Employment in the field is a completely different ball game.

And there is more than just retail photography.

Sent using PhotoForum

Again, that's not what this is about or who it's written for. It's written for those who want to open a retail business.

Ok, I can see what you mean. It was the "get a business degree and not a photography degree" that threw me. Getting a business degree can really shut doors for some photography jobs. But now that you said you meant it for only retail photographers I understand.

I had to figure you read it on the fly! Which I am HORRIBLY guilty of doing CONSTANTLY! LOL!