Monday, October 27, 2008

Sales and stashes

One of the most exciting parts of being a shop owner is having sales! We had one last month, and (this will show you what a sad life I have!) I really enjoyed it. There's something about watching happy customers leaving the shop with their bargains that makes me feel all warm and fuzzy - it's a sort of shopping-by-proxy, where I can experience all the joy of shopping without the horror of working out how to pay off my credit card afterwards :-)

My past life as a tech writer didn't really prepare me for organising and running sales. Negotiating contracts yes, but selling off 40kg of stock at a reduced rate, no. Now my life has acquired a new and wonderful dimension - the Marketing (Sales) calendar.

The calendar works thus: in order to attract traffic to the store during the quieter periods of the year (i.e. summer, when no-one in Australia knits or crochets because the temperature regularly exceeds 40 degrees), I need to hold at least one sale. I also need to ensure that I don't go broke by selling off too much stock at low prices. A third point - I need to try to run my sales so that they don't clash with other sales held by other stores - ideally, my sale will come first, so that everyone's stash will be full and they won't be tempted by other wool stores. Failing that, my sale needs to happen when everyone else is selling at full price so that people who have been tempted by other wool stores will still be tempted to buy at my sale.

In case that wasn't complex enough, our suppliers have sales. We can use those sales to get cheap stock for our customers and make them happy - but we need to make sure that we're doing this at a time that doesn't undermine our own sales. The last thing we want is to get known as Our Ladies of the Perpetual Discount Bargain!

All these factors come together in the Marketing (Sales) Calendar in a piece of organisation that could most accurately be represented in an equation developed by a quantum physicist. Actually, at present, my Calendar could more accurately be described as a 'conceptual document'. What that means is, being so new to the business, I am making a lot of stuff up as I go along! Next year, I might write something down - and the year after that, I'll go looking for a quantum physicist who can sum up the whole thing for me in a neat little equation...

Monday, October 13, 2008

On starting a business...

Recently on Ravelry (the all-time-best, most amazing knitting and crochet website in existence!), a member posted a question. She wanted to open a local yarn shop (an LYS in knitter-speak) and was looking for some advice. Since Ravelry is an international forum, I'm not sure how much help my advice was, but I gave it anyway - and then I thought, as a dedicated tree-hugger, I should recycle that post for this week's blog entries. I was further motivated to do this when two people asked me for advice on running a small business - it's an Omen! I thought, so I started writing.

Before I get too far, I should offer a disclaimer: I'm an Aussie, so most of the stuff in this post is useless to those of you who are not based down under. Also, even though I'm doing my best to comply with the laws in force in Australia, the state of Victoria and the City of Darebin respectively, I may not always have gotten it right - so even if you ARE an Aussie, don't rely on anything I've said here. It might be wrong and I would hate for you make your money back by suing me!!

The very first thing an aspiring business owner should do is go without sleep for four days. If you can't manage that, you won't last long in your own business.

OK, bad joke. The point of the bad joke is, anyone who starts a business expecting to start at 11:00, leave at 3:00 and spend their weekends partying is going to be sadly disappointed. Eventually, if you're smart and lucky, your business will run on its own and you can do all that stuff. Usually, however, there is a period of time where, no matter how smart or lucky you are, you need to do the hard yards. The hard yards for me has involved working seven day weeks from 8:00am until midnight when required. It's also involved some extremely quiet periods where I worked a standard 40-hour week, but got no money for it, because I had no clients - the entire 40 hours was spent advertising and networking to find customers!

Related to point 1 above: really love what you do. If you don't, then why would you work such stupid hours? You may or may not make the money to justify it - so you may as well make sure that it will be worthwhile anyway, because you'll be having so much fun, the cash is secondary.

Point 2: practical stuff. Aussies should visit On this site, you will find several useful things:

  • How-to guides for people who are starting or closing a business. They are written in governmentese, but, with patience, you'll be able to get some useful info out of them.
  • Copies of every form you might conceivably need to start a business.
  • An online form to register for an ABN.

Use this information to work out what type of entity you want your business to be:

  • It is really easy to set up as a sole trader - all you need is an ABN in your own name - but you then take on all the risk of your business. That is, you personally get sued if anything goes wrong and you personally are liable for all the debts of your business. Think very hard about how much you want to keep your house, car and family before you decide on this route!
  • You could trade as a partnership with a close friend or spouse. This is the same as being a sole trader, except there are now two of you to sue! Speaking from experience and observation, make very, very sure that your values and attitudes are similar enough to your partner's to make the arrangement workable. If you disagree on fundamental things such as how to manage a customer relationship, your partnership will go sideways faster that you could imagine. On the other hand, if you both agree on everything, one of you is redundant (except as a diversion for unpaid creditors!). You need to be able to get value with both parties bringing different strengths and knowledge to the partnership to make it worthwhile taking this option.
  • You can trade as a company. There are significant running costs, but the company, as a fictitious person, can take the rap for you if someone decides to sue you or your business goes under. You keep your home and the family stays on speaking terms. I decided this was the option for me.

Once you've worked out what type of business you want to be, do a business plan. Make it a really thorough one, including the following sections:

  • Your unique selling proposition. If you don't have something that sets you apart from the competition, there's no real point going into business in the first place (unless you want to buy a franchise, which is perfectly valid too!)
  • Your vision for the business. Break this section down into what you'll need to make that vision a reality, for example what sort of premises you'll need, furniture and fittings, equipment, stock, staff - everything, right down to the feng shui goldfish (if required)
  • A marketing plan. I suggest start with the amount of cash you have on hand and work backwards from there to develop simple and affordable marketing strategies. A 30 second TV ad might be a great way to reach your target market, but it won't work out if your total budget for the year is $2000. Work out how to get maximum contact with your target market for the money you have - my personal preference is to look into things like AdWords, advertising on websites that my target market visits, advertising in specialist publications that they read and similar strategies before I look at mass media, but that's to do with the businesses I have.
  • A budget. The easiest way to do this is to add up the cost of everything you need to make your vision a reality. If you have the cash to cover this, then you have your budget. If you don't, then look at which parts of your vision you can hold over until some more cash shows up. Make sure you have enough cash on hand to carry the business for 12 months, even if you don't sell anything at all - this is probably pessimistic, but I like to know that I've got all my bases covered.

Once you've done this, set about making your vision a reality. This is easy now, because you have a written statement of everything that you need to achieve it - so all you need to do is go through and check everything off as you find it (shop in a high-traffic retail strip, done; white Swedish look tables and chairs, done; stock, done; etc).

As you go about making your vision reality, start the ball rolling on your marketing plan. You don't want to open your business without people knowing that you're there! A new business opening is a major event and it's usually pretty easy to get some buzz going - it's a bit harder to get people excited with a spiel like "Well, we've been here about six weeks now, so we're still kinda new, but only like compared to other businesses that have been here eight years...".

Last point: once you've opened your doors, track everything that happens against your business plan. The sooner you catch a variation from what you expect, the sooner you can fix things! And the sooner you fix things, the less likely they are to bring your business unstuck.

Here endeth the lesson...

Monday, October 6, 2008

Food, glorious food!

I don't think I've ever explained the origins of our name in this blog, so I probably should correct that omission now before I share this week's story.

Our name is an acronym made up from the products and services that we offer. (Why an acronym? The blog post on registering trading names in Victoria, Australia is coming...). We sell Coffee, Cake, Crochet and Knitting - CCCK! (Actually, we sell wool, yarn, cotton, tea, coffee, biscuits, knitting needles, crochet hooks, buttons and other stuff, but WYCTCBKNCH & OS wasn't particularly catchy or memorable. Looked like I'd been beating my head against the keyboard - which, after three hours of dealing with the Dept of Justice, was a distinct possibility!).

Anyway - coffee, cake, crochet, knits. CCCK. Great name for a shop. Opened the shop. Got the wool and accessories for the crochet and knits part. For my next trick, I had to organise food and beverages for the coffee and cake part.

Do I need to tell you that this is where it all went slightly sideways? In case none of you have ever dealt with a local council or run a business, this is where it all went slightly sideways.

Before you can serve food and beverages in Australia, you need to convince the state and local governments that you will not kill or maim anyone by doing so. This is a very good thing, because without proper regulation, we'd all be in strife, but it seemed to me that the whole process was a mite complex for what I was trying to achieve.

*I rang the council for information. Yep, no worries, it would be posted to me straight away.

A week later, I rang the council for information. Yep, no worries, it would be posted to me straight away.

A week later, I rang the council for information. Yep, no worries, it would be posted to me straight away. (Rep from * four times.)

Six weeks after I opened, I got the promised information. The first thing I noticed was that it was extremely comprehensive. The next thing I noticed was that all the kitchens in the example photos were very new and shiny... For those non-Melbournians reading this blog, most of Northcote was built in the 1800s. The houses and shops are old and full of character. The kitchen here looks like it was added on to the building in the 1940s or 1950s. It is old and full of character, but the floor is plywood (nailed to what looks like the remains of the original back verandah) - the cupboards are painted ply - there are no tiled surfaces and the louvre windows, although barred to prevent thieves, do little or nothing to prevent dust. It is not easy to clean. It does not meet modern sanitation standards. When I offered to cook my bloke a meal one night, he reacted as if I'd pulled a gun on him ("You cook in there?") and he spent the evening carefully checking his meal for signs of life when he thought I wasn't looking. In short, if I was going to serve food, it looked like the kitchen was going to be a problem.

I filled out my food safety template on the Victorian government website and submitted it, together with a hand-drawn plan of my shop and a cheque for the application fee. Here's where I have to say that the Darebin Council did a sterling job - I got a call within two weeks of submitting the application and had a food safety inspector at the shop a week later.

I showed him the kitchen.

He assured me that he'd seen much worse and regaled me with anecdotes about shops where he'd found dead rodents in pies, cockroaches in bread and other things too horrible to contemplate. Needless to say, I wasn't that reassured to find out that I was only one tiny step away from slumhood!!

The food safety inspector carefully explained each of the problems with the current kitchen. The floor needed to have a tiled or linoleum surface with coving up the walls so that it could be cleaned properly. I needed a double-bowl sink to wash and sanitise dishes. I needed tiles or stainless steel on the wall behind the sink so that I could clean it properly.

I nearly forgot to add - at no point was I actually planning to prepare food from scratch. As a cook, I make an awesome knitter. The plan was always to buy in cakes, bikkies and snacks from a commercial bakery, with plunger tea and coffee. The revamp of the floor, the new sink and the tiles had to happen so that I could wash dishes in my kitchen without creating a public health hazard.

A final word of praise for the council: I explained that the kitchen looked as it did because (judging from available evidence) my landlord is a tight bastard who won't pay out for renovations. I further explained that, having sunk most of my available cash into stock, I didn't have enough money to renovate the kitchen myself. So we worked out a compromise.

I now have permission to serve tea, coffee and individually wrapped biscuits. The tea and coffee must be instant and made out the front using an electric kettle (because I'd have to wash a plunger). I need to sanitise the kettle regularly, but can do that safely in the shop. The tea and coffee must be served in disposable cups with disposable spoons (because I can't wash cups in the current kitchen). I can serve prewrapped food and if someone gets food poisoning from it, that's the manufacturer's problem.

Believe it or not, I consider this to be a happy ending. The food safety inspector was very reasonable and made every effort to work out a solution that was safe and met legal requirements, but that didn't wipe my business out by requiring expensive renovations. I spent yesterday ringing around to find eco-disposable crockery, decent instant coffee and tasty biscuits. Hopefully before next week's post, we will be living up to our name, serving tea, coffee and tasty snacks to happy knitters, crocheters and crafty folks!