Find your niche and seek advice
MY PARTNER and I are on the verge of being accepted for a $30,000 loan for a small cafe business. We are one year out of school and have earned a combined $25,000 in a year of work. All together we have $55,000 to get the business going. Are we too young for this business venture? Do we need more
MY PARTNER and I are on the verge of being accepted for a $30,000 loan for a small cafe business. We are one year out of school and have earned a combined $25,000 in a year of work. All together we have $55,000 to get the business going. Are we too young for this business venture? Do we need moreexperience, or can our ambitions lead us to make a profit? We have a detailed business plan, which forecasts making a profit of $10,000 in the first year. Do you think paying for professional advice on the business is necessary, or is it not that much of a high priority, given our tight budget? Any other advice would be appreciated.I'm assuming that you're buying a business that already has the premises, equipment, inventory and everything you need for the cafe to be operational. I like your courage and your ambition, but you need a lot more than that to be profitable.That's why advice, regardless of your budget, will be absolutely vital to your success. Take your business plan for example. You say you'll make $10,000 in the first year, but someone else might look at your forecast and see that you'll easily lose $10,000. What will you do if that happens?Hospitality is a long-haul industry and while it's possible to make good money, you also have to be committed and watch every cent that goes out and comes in. You'll need someone to ask you the tough questions, and a business adviser will be your best asset to make sure your business is on course.I HAVE been running my own gym for almost 10 years. We turn over a modest profit and our membership base has steadily risen to 200 members. Updating equipment regularly can be very expensive and while I maintain all the machines to make sure they are of the highest OH&S standards, I do not buy newer models very often. Recently a Fitness First gym has opened in my area. Their equipment is superior, their brand is much more well-known and they have an endless supply of staff, but I believe the personal touch and the price at my gym being 50 per cent of theirs makes my business more appealing. I have heard a few of my members talking about Fitness First and I am worried that I will not only lose potential members but also the ones I already have. I cannot afford all new equipment, nor can I afford to hire to more staff. How can I compete?It looks like the 800-pound gorilla just moved into your neighbourhood. Don't try to compete where you can't win, i.e. equipment, size and variety. What you need to do is find a niche and be the best in an area where they can't contend, which in your case is customer service.Your new competition might have the best equipment and all the latest classes, but I doubt they'd care to know their clients by name or have a relationship that extends beyond the workout routine. You need to concentrate on offering a boutique service and keep your pricing in the sweet spot. You might lose some customers but that's just a part of the game. Don't let it discourage you.In a gym, there is a certain quality that you must maintain to be attractive to your clientele. While you can't afford top-of-the-line equipment, you also can't afford to have a load of beaten, broken-down machines. Ensure you meet benchmark standards for the industry and concentrate on your boutique offering as a point of difference.Join @markbouris on Twitter from 4pm (AEDT) today for live Small Business Q&A #bizQandAMark Bouris is executivechairman of Yellow Brick Road,a wealth-managementcompany and small business adviser that offers productsand services for homeloans, financial planning, insurance, superannuation, investments, accounting and tax: ybr.com.au.Email your questions for Mark Bouris to Max Mason at firstname.lastname@example.org.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free