Get the Right Location for Your Business
So the your Business has been registered and you loan has been approved. now you are ready to scout for a location for your business. If the business you have decided on depends on people coming in to your shop and buying, you will definitely want a place with high human flow and easy access to parking lots. However if you business entails you going to the customer rather than they coming, then locality is not much of a problem.
Do not have the notion that you are saving on operating cost by choosing the least expensive location. Normally these locations are unsuitable and no one wants them. Paying higher rental for a better location with lots of people passing by day and night is much better than getting a free shop lot with no human traffic at all.
Start calculating you Start Up Cost.
Noe that you have a location, you should start calculating how much you want to dump in to get the business off the ground. Taking a Retail Store for example. Say you have 100k in your bank from the loan that you took. After paying for the rental, the utilities deposits and the telephone lines which are compulsory items, you might be easily left with only 90 k. You will need reserve at least 30k to tide over the initial months where you can’t expect to make any profits. That will leave you with 60k to renovate and get in whatever good you need to sell.
Save on your Renovations
Renovating a shop is one place where you can cut down some expenses if you are tight on Capital Of course some with a huge capital base can renovate to their heart’s content but with a 60k budget, I think your Air Conditioned and fully carpeted office will have to wait. So will all those fanciful signboards and lightnings that you have in mind.
What you need are the bare necessities like display shelves. Look at those hypermarkets. They don’t have fanciful decorations, yet they are able to out perform any other Supermarkets. That’s because the have good, fresh and quality stocks. The first thing a customer sees when the walk into a shop are the goods on display. If you stack up your merchandise really well to give customers an impression that your shop is well stocked, they will be interested to browse. They won’t be bothered much by the blinking lights at the door. So with your 60k in hand, you will be better off using the major portion to stock up rather than to over renovate and then have an empty shop.
Get A little of Each Item.
So after some minor renovations, you are left with about 45k. That’s not much to start with. Most suppliers will require you to pay cash for the first consignment of goods. The good thing is because of the stiff competition these days most suppliers lets you buy in small quantities. So the idea is to get a few of each so you have a well rounded stock. Don’t overstock initially because you won’t know the actual turnover since you are so new. After a few months, when you get a rough idea which are the fast moving items, you can stock up more on those.
Very definitely when you have opened for a few months, you will be able to buy on credit and many more suppliers will come to you instead of you begging them for goods. Now you can buy on your own terms.
Is Buying on Credit a good Practise?
Not actually. If you can afford, it’s still best to buy on Cash Terms. You can bargain for better discounts. The downside is, you must always have ready cash to buy your goods. No many businessmen wants to do that. Buying credit lets you roll your money elsewhere like getting more items for display. Business is always like that. Utilizing people’s money for your own expansion and benefit. In this case, the money that you use to buy the other items actually belongs to one of your suppliers, but you have used it for stocking up.
You have to be very careful when you do this. You can easily get into trouble when your credit term is up and you have to pay your suppliers. You must have confidence in your monthly sales turnover and you don’t pay more than what our monthly turnover is, after deducting your fixed expenses of course.
Next – What are fixed Expenses?
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