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Ask Jane Applegate
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January 13, 2000: 3:22 p.m. ET
Starting out: Advice for an aspiring tour operator and children's clothing retailer
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NEW YORK (CNNfn) - Here are answers to your questions for CNNfn small-business columnist Jane Applegate:
Dear Jane: I am starting an e-business service promoting luxury tours of Thailand. Since this is very new to me, kindly advise on where and how I can find a role model for an online travel business and how we can promote our Web site.
Dear Jane: I am a housewife and mother of two. I live in a small town outside Dallas, Texas, and want to open a children's clothing store. All of this is new to me and I would really appreciate any help you could offer.
Whether you are starting a business in cyberspace or the local strip mall, the business principles are the same. You have to determine right away:
1. Is there a market for my product or service?
2. Can I provide my product or service at a competitive price?
3. Do I have enough money saved to cover my personal expenses for six months while I'm starting this business?
4. Where can I get help learning about how to run a business?
5. What can I expect in terms of cash flow?
Too many novice business owners barrel ahead without doing their homework. This quickly leads to disaster. The most critical step is doing your market research. You have to make sure people out there want to buy what you plan to sell.
The woman who wants to open a kid's clothing store can send a simple postcard survey to families in the area. You can buy a mailing list from a list broker or work with the local day care providers to obtain their lists. I would suggest starting out by selling used kid's clothes and taking in clothes on consignment. This would be a much cheaper way to go than stocking a store full of new clothing.
The travel agency entrepreneur should use a search engine to locate all the Web sites featuring luxury cruise information. There are hundreds of sites, both independent and related to travel agencies and magazines, providing information about cruises.
Since you are based in Thailand, you have an advantage because you know what wonderful sights visitors can expect to see when they arrive. This local expertise will help set you apart from the competition. As far as marketing, setting up alliances and links to appropriate travel-oriented Web sites is the way to go. Being included in directories and travel publications (send out a press release about your site) is also essential. Contact travel writers and invite them to take one of your cruises as soon as possible.
Figuring out a competitive pricing structure is critical. You go into business to make money. Breaking even is not your goal. You need to be sure you have access to a steady and reliable supply of whatever you plan to sell.
Since every business requires a different amount of capital and inventory, I always recommend first putting away enough money to pay your rent and expenses for six months. Then, figure out how much you need to start the business. Stay home as long as you can, buy used furniture and put your money into great computers and technology, not a fancy car or office. Make some cash flow projections, but remember they will have to be updated frequently.
Next, sign up for free online or in person counseling from SCORE, the Service Corps of Retired Executives. (Contact them at: www.score.org). Attend classes at a community college or adult education center. If you can take a basic business class, call the local chamber of commerce or business school and find a mentor in your field. Asking for help is a secret of success.
You need as much help as you can to avoid the many pitfalls facing new business owners. Don't quit your job until you are sure you have all the pieces in place. Locate and rely on experienced advisers from the start. Hire a good attorney and an accountant who knows a lot about running a small business.
Finally, be prepared to work harder than you've ever worked in your life! But the rewards of entrepreneurship are rich and not only in terms of money. Good luck.
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