How much start-up capital does one need to open up a business?

[XMan]

In this case, a computer shop.

How large of a town would be required to support a venture?

I have had this urge to save up enough money, quit my job, and move home . . . town of about 40,000 people, only one other computer store in town. Is that enough of a potential customer base to support a business?

 

[hzl eyed grl]

ttt

I'd like to know too.

 

[virtuamike]

Yeah i'd like to know too. How about in a college town, 2 local competitors, several more 20 miles away (including Fry's, CUSA, BB, etc)?

 

[Jimbo]

It really depends on the type of business you are starting.
Because you are starting a computer business, by my rough estimates; I would not go into this with less than $100,000 liquid with another $50,000 on tap.
Marketing will be your big thing.
Offer to give "build your own" at the local high school or senior center (assuming that you have one) or whatever gets your name in everyones mind.
The man to talk to is Russ. He has walked the walk and talked the talk.


Jimbo

 

[hzl eyed grl]

<< Marketing will be your big thing. >>


I agree with that. If you aren't on people's minds when they think of a computer store...how will they know to go there? You definitely want to get some good advertising.

 

[ViperMagic]

I didnt need any. but then again in the past month ive only sold 1 computer.

 

[gygheyzeus]

as for it being a good idea, YES!!!! we have well over 15 computer stores here, and our population is 65,000. So, i'd say you'd be safe to open one.

 

[VBboy]

Go to a local Small Business Bureau, it's a government-based organization that will be glad to help you. That's what they do - educate people how to start a business, where to get the money, etc.. I went there, but they gave me 30 brochures and I got too lazy to read them all..

 

[goldboyd]

It really depends on a lot of things. It depends on how much rent will be, how much inventory you want to carry, how many employees, will you have any other source of income and/or benefits(fiance?)...

As Jimbo said a buck fifty is a decent number, but that could easily go another 100grand one way or the other depending on the above listed things.

Another thing to consider is that there is no money whatsoever in hardware these days, all your profit will have to come from service, whether it's inhouse or onsite.

 

[FelixDeCat]

about $800

most of it is just sweat equity.

 

[amdskip]

Risky but maybe you could try and introduce the idea to people part time at first, I dunno.

 

[rawko]

ditto on the service thing

 

[damocles]

There are a lot of factors to consider if you want to start a business . Basically if there is an organisation that will offer you good advice, take it

Many new businesses fail within 2 years. Before you even start to look at the dollars realise that the majority of your banked margin will need to be reinvested in the company. It takes time to build a reputation and goodwill and you have to be prepared to struggle for a while. Be realistic when setting targets- you will have to be very tight with your expense budget

Understand also that you will have to work long hours and give 100% to every customer that walks through the door no matter how stupid they are. When you own your own business there is no such thing as a guaranteed 40 hour week and you may not get a real holiday for a year or two

Next draught a basic plan of business including...
- business concept ( your point of difference, method of operating, target market etc). Point of difference is very underated but you have to have something that makes you better than the guy down the road. If you are operating a physical store be very careful with your target market, a handful of geeks wont cut it. Not matter how much they say they will shop off you, most geeks will buy from the net given half a chance. . Someone like Russ isn't successful simply because he is 'loved' by a people on AT. He is a professional with a lot of experience in the field, he isn't the cheapest but he has built up a very good reputation. Many people will pay a little more to know they are getting straight talk and a real deal

As an avid computer fan (and not necessarily a business person) be realistic about who you have to sell to- normal people. I have seen 2 computer stores fail largely because they were set up as geek hangouts. Real people wouldn't shop there because they were geek havens, infested with smelly people with long hair and stained Southpark sweatshirts. The kind of people that will want to squat in your shop probably don't have a huge disposable income ( on average)

- Conduct a SWOT analysis (strength/weaknesses/opportunities/threats). With this look at competition within the town both from specialist stores and department stores etc, look at your own skills and see where you feel you have advantages and weaknesses (be honest, are you a skilled manager, can you fix 99% of computer problems without help, can you hard sell...?). Is the towns population large enough to operate the store? Are there redevelopments underway that may see competiton enter town? Can you benefit from an online site?

Basically you have to have a draught put together before you do anything. It doesn't have to be complicated, just all your ideas put together coherently ( a bit unlike this post).

I know you are probably just wanting to get a basic idea of the fiscal feasibility of opening a store but in all honest that isn't the biggest concern. You can't calculate anything until you have a decent idea of the kind of business you want to operate

Being self employed can be fantastic, you can put your own fate largely in your own hands.

 

[Bellgoody]

damocles covered the fundamentals well.
Luck equals opportunity plus PREPARATION!
I own a small store and started with well less than 150k. By the same token, my market is miniscule and advertising is cheap. BTW &quot;cheap&quot; is $2,000 - $3,000 a month.

Below is a repost of some of what I've learned in the past eighteen months as sole proprietor:

Twelve Certainties of Owning a Retail Tech Store

· Abandon the life you now lead. Your new business owns you 24/7.
· If you think your taxes are high now, multiply by a factor of six.
· EVERYONE is determined to steal from you, either through ignorance, greed or design.
· Your ?profits? for the first three years (minimum) must be reinvested back into the business. No new car, no vacation, nothing to show for your labor but business.
· You cannot survive on 30% net. Bare survivability requires 50% gross profit.
· If you do not advertise properly, i.e., a balanced mix of broadcast, print, signage, etc., your business will die before you are out of the gate.
· You must have a bookkeeping system in place with someone you trust with your life.
· You must employ a least one competent A+ Certified Tech who knows more than you do. ALWAYS HIRE INDIVIDUALS WHO KNOW MORE THAN YOU DO. Pay them whatever is necessary to keep them from stealing from you or worse, learning everything you do and starting a competitive business across the street.
· The cheapest deal is often the most costly.
· You must provide the customer with a reason to buy from you. If you live by the price point, you will die by the price point.
· One out of ten of everything you buy is bad out of the box. This truth is valid no matter how much money you spend or from whom you purchase.
· The customer is RARELY right. If they knew what they were doing, they wouldn?t be in your store. It is your job to perpetuate the false myth otherwise while relieving him/her of whatever disposable income they have in their pockets and making them feel as if they have received value.

If you have specific questions, PM me. I'll be happy to help.

 

[Emulex]

$100G would be plenty.