Merchandising and Inventory

Since the sole purpose of opening a new business is to provide products and services, you should be certain to know exactly what types of merchandise you plan to sell, and also to know which merchandise to include in your shop.

When thinking about your merchandise you should also consider the correct positioning of it. This can often be the difference between selling your goods and not selling them. For example, you should place your sales items in an obvious and easy to see place if you want that promotion to work.

When stocking your inventory, you should place like items together. If you were to open a car dealership, you would want to place your convertibles together and your vans together because it makes better sense. A consumer that is looking to buy a convertible would not want to have to travel all over the place just to find the one he or she likes best.

You will also want to place accessory items together and in a nearby position because they will be more likely to be purchased if they are near the item that it best fits with and in plain view.

Common Mistakes for a New Business

As mentioned a bit earlier, at least 80% of new businesses fail within their first year of being open. There are many reasons why businesses tend to fail, and it is best to list them here so that you can try to avoid making these common mistakes when you open your own business.

Advertising

Many new businesses fail to advertise properly. It wouldn’t occur to most business owners that insufficient advertising might cause a problem with keeping their business afloat, but during tough times, advertising might be your best weapon.

When the economy is running badly, you should have enough money put aside to advertise special promotions and sales to your customers. When you do advertise, you should try to be everywhere. You want people to see your businesses name no matter where they turn.

Here are some of the ways that you can advertise to ensure that  cannot be forgotten:

• Newspaper and magazine ads
  
  
• Newspaper and direct mailbox inserts
  
  
• Flyers and posts
  
  
• Commercial and media ads
  
  
• Websites, complete with online store

You should know that advertising does not need to cost you an arm and a leg. Commercials can be costly, but these others don’t have to be. Running a website can be free or cheap, and the software to host your own online store can also be cheap or free. You just need someone that can keep track of orders for you.

Improper advertising can leave the community not knowing that your business exists -- especially during hard times. You want to stay available to all of your customers because if you disappear from view, so will your customers.

Improper Bookkeeping

It doesn’t matter what you do to keep your business running at its best. If you do not keep proper track of your monies coming and goings, you will eventually be left with none.

If it is at all possible, do your own bookkeeping so that you know exactly where your money is going. If you do not know much about it, you should hire someone that does, but also someone that you can trust. If you must, hire someone just to watch the bookkeeper so that you don’t get ripped off.

As the business owner, you need to know exactly how much money that your business has. You should know exactly how much profit you are gaining each month so that you can use your money wisely. It is not always easy to keep track of all of your money, especially if you are generating a lot of business, but it doesn’t have to be impossible.

Even with a good book keeper, you should look into popular accounting software like Quickbooks and Microsoft Money because they do most of the work for you. All you really have to do yourself is add the right numbers and let the software add and subtract for you.

Every year many businesses go under due to bad book keeping. They spend money they don’t have or they make errors processing payroll deposits. Don’t let this happen to you.

Credit Problems

The worst thing that a business owner can do is to run up too much credit. Each day it gets easier and easier for new businesses to gain credit accounts and credit cards from various companies. All too often, these companies run up more credit than they can repay.

It just goes to say that you have to live and run your business within your means. All too often business owners find themselves buying things that the business simply doesn’t need. They also buy things for themselves on company credit. This is a big no-no in the business world.

Once a business spends too much money on credit, they learn all too late that the interest rates on credit cards can force hundreds of extra dollars in expenses. New and small businesses just can’t afford to pay them. There is also the fact that overbuying supplies and merchandise can be a far bigger problem than businesses expect.

Overpaying employees can run any business into the ground. Any successfully run business owner knows that you start off small, and hopefully build your way up. That is impossible if you are living and running your business above your means.

Opening at the Wrong Time

It is impossible to succeed at business if you open your business in a bare market. You do not want to choose the wrong time to host a grand opening. If you are trying to open your business during a depression for example, you will undoubtedly fail unless it is a dollar store that you are planning on.

Even a dollar store can fail under a depression because they rarely sell anything that is essentially needed. Some things they do sell are needed but most are simply knick-knacks that are of little importance.

As a budding entrepreneur, you will have to keep up with economic trends. These days, the economy is constantly changing. You should avoid opening your business during an economic collapse. If at all possible you want to open your business during a steady economic period or when your market is on the rise.

That is not always possible, but you must try.

Unreasonable Prices

It is really common sense, but many companies have a tendency to over charge their customers. It sounds like an easy thing to avoid, but sometimes, a business owner might have to charge more money for their wares because of financial difficulties or tax problems.

Many business owners take advantage of adverse economic situations. They overcharge as a means of capitalizing off of the consumer’s desperate needs. This can be devastating to any business if others aren’t doing this or if the demand just doesn’t meet the standard that the owner might have predicted.

Tax Problems

You would be surprised at how often a business owner fails to properly deal with the taxes on their goods and property. It would seem to be an easily dealt with issue, but the unseasoned proprietor can easily fall prey to the IRS.

Poor calculation can be a costly problem, but failing to properly fill out your tax forms and missing valuable monies can be a problem as well. Sometimes it is simply an issue of filing your taxes late. Keeping up with your fiscal year’s end can be frightfully easy to forget. A good accountant is needed to avoid common tax problems like these and others.

Poor Location

It is very easy to fall into the common problem of choosing a poor location for your business, but it happens every day. Businesses that open in a hard to get to area often find themselves without customers, but this is not the only problem with location.

Sometimes a business can be greatly situated but be poorly accommodated. Basically, this is when a proprietor buys or leases a damaged piece of property. Sometimes a person can be in such a hurry to garner the property that they fail to see its flaws. This can run up a lot of debt in trying to salvage it.

You should always try to ask why the business that was there before you went under. Whoever the realtor, they are sure to know the details. If they don’t I wouldn’t trust that realtor. A failure to keep any piece of real estate is a common problem of the inexperienced proprietor.

Before you agree to take on any property, you should have knowledge of the property’s background. You should have someone with you that know the basics of plumbing and all of the other property damage that the average person cannot see.

Writing Your Business Plan

Even a one-man operation will benefit from a good business plan. It will be your tool for managing and marketing your business. You will know your goals and where you want your business to go.

Your business plan will be divided into four sections:

• Knowing your business
  
  
• Marketing plan
  
  
• Financial plan
  
  
• Management plan

When you write your business plan you will be examining all areas of the detailing business mark.  You will be able to make educated and critical assessments using probable and achievable timelines. This will be essential to predict your business growth.

You will benefit from being able to compare personal projections with real accomplishments.

You will be able to readily allocate valuable business resources, take on unexpected business problems, make informed business choices, and avoid costly mistakes.

Once you have mastered the fine details, your business plan will assist you with reaching your projected sales goals.

If you need financing, any proposed lender will need your business plan.

How to Start Your Business Plan

To start you will need a good budget, establish reasonable goals and develop a viable sales strategy. This will need to be revised approximately every six months.

When creating your plan be mindful that there are lots of existing detail businesses that provide good quality services, have the best equipment, and have experienced and trained employees. Many of these are struggling to stay in business. Why? Many are only focused on what is in front of them today. If they had a good business plan they would know the direction to move forward in and the best way to get there.

Business Plan Outline

Your outline contains different parts:

-Cover sheet -- This will include a title, company name, your contact information, a current date and the names of the principal or principals.

-Table of contents

-Executive summary

The first two pages will summarize your business plan.

Give a brief account of your detail business.

If you are creating the plan to apply for a loan, include the amount that you are requesting and account for how you will use the money.

Business Profile

Fully describe your car detailing business. State what and how you do your service, your target customers and any other information that will explain your business profile.

Describe how your customer’s needs for car detailing will be met using your service.  Cover both retail and wholesale ends. Show that your business offers good potential as well as practical appeal now and in the future.

State whether your business is a sole proprietorship, partnership, franchise, corporation, s-corporation, or LLC.

Define if your detail business is a start-up, if you are expanding an established detail business, or if you are purchasing an existing detail business. State your proposed date of business opening.

Getting the Loan

Be entirely prepared before you apply for the loan.  Have all documents in good order.

Financials

Applying for Your Loan

Detail precisely how much money you need to accomplish the goals of your car detailing business.

Detail exactly why you need the money, whether it is for new equipment, start-ups costs or for any other reasons.

Stipulate the terms needed on the loan including the number of years you will need to pay it back, etc.

Declare what kind of collateral that you can offer.

Financial Statements

When operating an existing business, provide financial statements, balance sheets and income tax returns going back two years prior and also show an interim statement that is no older than 90 days.

Capital Equipment List

Account for all costs on the present value of your existing equipment as well as the equipment that you will be purchasing.

Income Projection

Write a projection of your profits and losses over two years. Calculate what you anticipate will take place with the business, each month, for the next two years.

Show a full one-year projection of the seasons of the detail business, including all ups and downs.

Show how you detailed these figures; what is relevant to coming to them in every aspect in support of your statement.

Project your cash flow over a two-year period. Your projection should show whether or not you would have the necessary funds to run a business.

Create a comprehensive balance sheet, listing all assets and liabilities of your business.

Your business plan will include a start-up balance sheet and a projected balance sheet at one year out.

Supporting Documents

• Tax returns for principals for the past three years
  
  
• Personal financial statement (available from banks)
  
  
• Copy of proposed lease or purchase agreement for the building space
  
  
• Copy of licenses and legal documents
  
  
• Copy of resumes for all principals
  
  
• Copies of letters of intent from suppliers, etc.
  
  
• Marketing studies, articles, etc.

When you develop a realistic business plan you can expect to receive a very good outcome.  So long as your credit and collateral is viable, you can expect to get your loan on very good terms!

Preparing your business plan is the most important aspect in getting started on your new business venture. It is the best way for you to build your strategy and plan your course of action.

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