Too small for advice? My advice never
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 total of $25,000 in our year of work. All together we have a total of $55,000 to get the business running. Am I too young to go on this business venture, do I need more experience, or can my ambitions lead me to profit? I have a very descriptive business plan which is forecast to profit $10,000 in the first year. Also do you think outsourcing ...
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 total of $25,000 in our year of work. All together we have a total of $55,000 to get the business running. Am I too young to go on this business venture, do I need more experience, or can my ambitions lead me to profit? I have a very descriptive business plan which is forecast to profit $10,000 in the first year. Also do you think outsourcing for professional advice about the business is necessary or isn't it at high importance with my tight budget.I assume the business 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 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 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 close to 10 years. We make a modest profit and our membership has risen up to 200. Updating equipment regularly can be very expensive and, while I maintain all 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 better known and they have an endless supply of staff. But I believe the personal touch and the price being 50 per cent of theirs at my gym makes my business more appealing rather than joining a giant. 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 (equipment, size and variety). You need to find a niche, to be best in an area where they can't contend in your case, that is customer service.Your new competition may 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. Concentrate on offering a boutique service and keep your pricing in the sweet spot. You may lose some customers but that's just 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. Whilst you can't afford top of the line equipment, you also can't afford to have broken-down machines. Make sure you're meeting the standards for your industry and concentrate on your boutique offering as a point of difference.Join @markbouris on Twitter from 4pm today for live Small Business Q&A #bizQandAMark Bouris is executive chairman of Yellow Brick Road, a wealth management company and small business adviser offering products and services for home loans, financial planning, insurance, superannuation, investments, accounting and tax: ybr.com.au.If you have a question for Mark Bouris, email it 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