Speaking of plans... where's all that data coming from?

So you've started writing your business plan and you've hit the financial section and said to yourself "Eek! Where's this data going to come from? Is selling this much in my first year or five years realistic? How is any bank or investor going to believe my numbers? "

When I wrote the business plan for The Pot & Bead, I got a little lucky - but I also did a ton of research. There is an active trade association of paint your own pottery studios, and through them, there are several new business consultants. I consulted with another studio owner located many states away from where I'd be located and she was willing to share her financial data with me as part of her consulting service. Because her store was in a similar demographic to mine (similar average household income, similar density of people), the information was useful and I was able to make a case for having realistic numbers. In fact, my business plan was called "realistically conservative".

This doesn't mean you can just walk into any ol' store similar to yours, ask to see the owner and ask him or her for financial data. I would never ever hand over any of my numbers to a complete stranger and most people would find it rude to ask/be asked. Just saying your planning on opening up a store a long way away isn't going to work - LOTS of business owners I know have been flat out lied to about that.

So what can you do? Here are a few ideas:

1) You still might be able to meet a business owner in a similar situation through your own trade association. If not, ask people who know people. Can someone you know introduce you to someone in a different location? Does your cousin and her husband who live on the other side of the country know someone?

2) http://bizstats.com - in particular, look at their "sales per square foot".

3) The US Census has a whole division devoted to "company statistics": http://www.census.gov/csd/ I recently used this website to research the percentage of growth of Hispanic owned businesses in the US.

4) Call up your potential suppliers or manufacturers. They are a great source of info for your industry. Manufacturers want you to be able to sell their product so they're often willing to give you information and/or advice to help get you. They might know what's hot in your area, who else is carrying their product in your area and all sorts of other good information.

5) Contact magazine publishers. Often, when things become popular, magazine subscriptions go up. For example, say you want to open a store just for dog owners. Call the publishers of dog magazines. They might be able to tell you that subscriptions have gone up X percent over X years - which will help you make your case for the potential popularity of your store or service. They also might be able to break down increases in subscriptions by region.

6) Landlords. In order to attract new tenants, landlords often have statistics and numbers for their properties. Usually it's just demographic information (which you need, too), but if you ask, they might be able to tell you how sales have been for their tenants in general. If they're a large company, ask if they'll put you in touch with a business owner in a similar business, but far away location.

Good luck!

(Note: Sorry for the long delay between posts. Retail is a seasonal business and occasionally takes over your life completely... At The Pot & Bead, we just started summer camp and 3 of my employees graduated from high school last week!)

How you doin'?

How's business?

If you're in business for yourself, you've been asked this once, twice... okay anytime anyone who knows you sees you this is probably the first question they ask.

I always answer "fine" or "good" or something else pleasant and upbeat - any other answer isn't all that appropriate for the masses IMHO.

But can you answer this question objectively for yourself? And how do you really know how you're doing? One way (but not the only way) to do that is to compare ourselves to everyone else.

There's a fantastic website, bizstats.com, that has taken data from many (sole-proprietorship) businesses and compiled it in a useful way for the rest of us. Go ahead and click on your industry and type in your gross sales from last year. You'll get a fantastic indication of what your expenses and net income should be based on everyone else.

The other neat thing to check, especially if you're a retail business, is the Sales Per Square Foot (SPSF) section. This is one interesting retail benchmark. Unfortunately, it's not necessarily helpful beyond giving a warm fuzzy. For example, the only stores I can really compare my paint your own pottery business to are the listings for Jo-Ann, Hancock and Michael's (arts and crafts businesses). Note that the SPSF range from $75 to $204 for these 3 businesses. That's a pretty large range. The SPSF for my business happens to be somewhere in the middle.

So what can I take away from that...? If my SPSF was under $75, things wouldn't be good and I'd be worried. If it was over $204, things would be wildly fantastic. It's really just a point of interest beyond that. Since I have a single retail location, I'm comparing my number to these other businesses. If I believed that my current number is acceptable for my single location, and was planning to open a second store, I'd set this SPSF as a goal. Make sense?

So take a look at your numbers and answer these questions for yourself... what's you're sales per square foot for each year you've been in business? What about each month? If you have multiple locations, how do they compare with each other? If you're not open yet, based on these numbers, can you set a goal for yourself?

Have fun!