So, you have an idea for a business, eh? Has the thrill turned into fear yet? Already? Don’t worry; that’s completely normal. It can be intimidating to take a concept and put concrete numbers behind it.
But knowledge is power, and I can promise you’ll feel better with estimates of space requirements, lease pricing, salary ballparks, and industry revenue. If nothing else, rough numbers give you a jumping-off point for financials. The first step in turning your fantasy into reality is RESEARCH!
A prospective entrepreneur’s best tool is a good web search. While a lot of the really good information is stuck behind a paywall, there is still a lot of good info available for free. After all, you’re not the first person to start a business. Even though your idea is a novel one, you don’t need to completely reinvent the wheel (unless that’s your business idea!).
Here are a few things to research when starting a business:
You know your town as well as anyone, so I bet you already have a location in mind. If not, you can use a mapping website to see where competitors and customers might be located to find the best spot for your new business.
- Space requirements
What approximate square footage will you need? Again, to get an idea, scope out competitors’ offices or factories online. You can often find square footage on property management company websites. Keep in mind that many leases require a five-year commitment, so make sure you’ll have enough room to grow.
- Lease cost
Once you decide on a general size and location, Loopnet.com is a great resource to look up going lease rates per square foot.
Salary.com is a great resource for looking at salaries by position type, and will allow you to drill down to your location.
Visit your competitors. Many show pricing right there on their website. If not, don’t be afraid to call them and pose as a potential client.
- Industry comparison
You’d be surprised how much is out there, especially if your business is common like a restaurant, retailer, or an office. Consider looking up build-out, start-up expenses, and equipment requirements; direct costs; unique recurring expenses; and so on. You’ll be surprised what you can learn! Often, at the very least, it might remind you to consider accounting for an item you hadn’t before.
Getting approximate numbers establishes a framework for what it will take to make your company profitable, and will help you feel more at ease.
Ben Worsley is a financial modeler at Masterplans.
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