Got any tips on doing business research?

[Sum Dum Gai]

The wife had what I think is pretty damn good idea for a business that our little town could really use. I'm currently looking at trade association websites to get info on general trends and statistics about the industry. I'm hoping I can take those stats and the 2010 census info to generate realistic sales forecasts and whatnot for our area to put into a business plan.

Do any of the savvy business owners we have on here have tips or tricks you guys use when researching a business or writing a plan? Do you trust trade association averages to forecast your sales, or hire somebody to do local market analysis?

[Savoir Faire-Demogague in NJ]

You would need to know your target demographics and income/disposable income data, for the area you plan to launch your enterprise. This data is likely at the county level.

[Pants]

Depends on the type of business, but make sure you know what your breakeven rate will be. Predicted overhead per month/average price of good or service/hours of selling or servicing per month. This will tell you how many of the things you need to sell or perform per hour to breakeven, then you can decide if that's likely or even possible. Gross sales figures are important, but feasability of achieving those figures is also vital.

[qofcc]

Your local SBA or chamber of commerce may have some resources.

[moneymaven]

Dark - good luck on this! Yes, I second SBA, Chamber, trade associations.

[Sum Dum Gai]

OK, before I get too far into this I need a reality check.

If the wife and I scraped up every penny we had to put into this we're looking at a grand total of right around $100k, and we're talking cleaning out retirement accounts and whatnot to get there. We're early in the process so I don't have anywhere close to exact numbers yet, but ballpark we're looking at probably 1 million in start up expenses if we can find the right commercial building to lease, and 2.5 million I'd guess if we have to buy land and build (I'm not a commercial real estate expert by any means, but this area isn't exactly cheap). So, we'd be looking at having 4-10% of the total capitol needed to do this, roughly. Do we have a shot in hell of raising the rest of the money or is nobody going to be willing to do this with us having so little to start?

[thyme4change]

2.5 million I'd guess if we have to buy land and build

There isn't any reason to buy and build. Smart businesses leave owning land to RE businesses and use their cash and resources to do their business.

As far as 10% down - that is probably pretty light. You might need a partner or an angel.

[Sum Dum Gai]

There isn't any reason to buy and build.

The business has somewhat unique building requirements which might make finding suitable leased space an issue. That would still be the preference though. Building anything in this area is a giant pain in the ass that I really don't want to deal with unless we absolutely had to.

[Deleted]

I think you need to at least do the research and set out real numbers before you decide not to move forward with it...

I'm not all that savvy in these things, but i think i'd try to get investors before i'd risk all of my capital/savings... that's too much risk for me...

[Deleted]

Dayum. That is a lot of startup capital.

[thyme4change]

Most landlords will make concessions. If you sign a long-term lease, you could do capital improvements on the building out of your pocket. Of course, I'm not sure what you are talking about - but I'm referring to stuff like DEA rooms and odd-ball production requirements. If it is more like a services company, I've seen a lot of places that were just big square warehouse boxes of buildings be built into all kinds of things. Would you really need a special building, or just something special done to the building?

[Sum Dum Gai]

I'm not all that savvy in these things, but i think i'd try to get investors before i'd risk all of my capital/savings... that's too much risk for me...

That's what I'm not sure on though. I'm worried we won't be able to attract investors or get loans without a more substantial personal investment to show we're serious or get everything started. I don't know, I've never had to raise money for a business. Are there people looking to invest in business where the owners have a dream and no real money to see it through?

[thyme4change]

Yes, definately any investor will want to see that you are "all-in." If you don't have your ass, your underpants and your last pair of shoes in the business, it is too easy for you to walk away and fail, but if failure means you are functionally bankrupt, then they know you are going to do everything you can to make it succeed. There are very few places that will give you a million bucks and all you bring to the table is an idea.

[qofcc]

Are there people looking to invest in business where the owners have a dream and no real money to see it through?

Yes, but they'll probably want you to show relevant experience or good contacts with potential customers. Since you can't share the idea here, it might be better to try to get more local mentor. I believe the SBA has some sort of service where retired business people act as advisers and they would be required to keep things confidential so nobody steals your idea before you get it started.

[Wisconsin Beth]

You can suck up to wrongsideof30 as she's looking to spend money...

[Wisconsin Beth]

It wouldn't be enough to get you to your 2.5M though.

[Deleted]

I think if you have a good idea with a doodle on a napkin that all the enthusiasm and charisma in the world won't get you a backer... but if you have a well researched plan with realistic numbers, you shouldn't have to risk everything...

But again, i'm not the most experienced here i'm sure...

[thyme4change]

Maybe you don't have to risk everything - but they definitely want to see some skin in the game. Given that this is such an expensive venture, they are going to want to see a significant percentage in funding. I was talking to a banker that loans professionals (doctors, lawyers, etc.) money to start up their business. He says that it either needs to be a major percentage of the total amount needed OR be everything the guy has (which at the time meant home equity.) Either way, their risk factor was high, which meant they were vested in the success of the business.

Now, there are many different ways you can get funding. If you are buying certain types of equipment, you might be able to get financed by the equipment company. After all, if they can repossess it, then the risk is less. But, if you need cash that will immediately fly out the door and have absolutely no residual value - like a really weird build out that won't be useful for any type of business except this business, then the risk is huge.

[Sum Dum Gai]

but if you have a well researched plan with realistic numbers, you shouldn't have to risk everything...

I don't mind having to risk everything really. There's no way in hell the wife or I would do it unless we were sure this was something with an excellent chance of success. Besides, we're pretty young. We didn't start saving until four years ago. If I risk it all and it fails, we buckle down and work extra hard to rebuild. I can live with that as the price of taking a shot.

I'm more worried that we won't be able to attract any investment even with us putting in every penny we can scrounge up.

[jarhead1976]

Not a good time to empty reserve fiat or start a business ....IMO

[thyme4change]

I disagree - now is the best time to start a business. You want to be counter-cylical about certain things. This is a high-investment business. Right now when times are lean is a great time to find people who are desperate to sell you equipment, or desperate to do your construction job, or want to keep their business afloat, so they will cut their prices to be your vendor. As the economy improves, you want your business to be ready to go, so as soon as people want to start spending money, you are poised and ready to take it. You don't wait until the ship has sailed to jump on.

[Sum Dum Gai]

Not a good time to empty reserve fiat or start a business ....IMO

Eh... it never is. Can't let perfect be the enemy of good.

[Deleted]

You really can't give us any details? I would think now would be the perfect time for certain kinds of businesses... others, not so much... but again, that's where research comes in..

[Sum Dum Gai]

You really can't give us any details?

Oh I'm sure I could. I'm not worried about anyone here stealing my idea or anything. It's just more fun this way.

[jarhead1976]

Good Luck and God Bless

[thyme4change]

Can we play 20 questions?

[Sum Dum Gai]

LOL! I was thinking the exact same thing while typing my last post.

Alright shoot, what's question #1?

[Sum Dum Gai]

No fair, you picked a question that gives away too much right off the bat.... *pout*

No, the core business is not food related, but we would derive some revenue from food sales.

[thyme4change]

Is it a pool hall?

[Sum Dum Gai]

Is it a pool hall?

Probably not. Somebody finally opened one here. It's a , but it's packed all the time so they're moving to a bigger location and getting better tables.