Many people dream of being able to open their own shop. However, to be able to do so, many things must be prepared, such as money and a significant amount of time. In order for your store to be successful and provide enough income to cover business costs and the necessities of daily living, there are many things to understand, from choosing a location, employees, to attracting potential buyers. Therefore, you must prepare yourself as much as possible to be able to start this business.
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Part 1 of 5: Setting Up the Basics
Step 1. Decide what kind of shop you want
You can sell a variety of items, such as clothes, home furnishings, office supplies, snacks, coffee, handmade products, etc. Decide what product you want to sell.
What do you know in depth? For example, if you have a talent for baking cakes and creating new recipes, you could try opening a cake shop. Focus on your talents and the things that interest you
Step 2. Find out which items are in high demand in your city
If you can't imagine what kind of store you want, try a more practical approach by finding out what products are not yet available in your city.
- Go around your city. Bring a pen and paper to jot down the types of shops you see. Put an asterisk on the type of shop you've come across more than once. For example, if you have five cake shops, put four asterisks next to the word “cake shop”. While this method may not give you an exact number, you can get a general idea of what types of shops are in each area.
- Visit your local trade office. Usually, there, you can get a lot of information about the types of shops and businesses that already exist and various other data needed by small business owners. In addition, you can also get good advice and input on entrepreneurship.
- Usually, government agencies provide a large amount of information on economic indicators, income levels, total incomes from various regions, and statistics on employment. This information can help you find good business ideas.
- Visit trade shows and read business magazines. Both can provide more information about business trends in your country or maybe even in your city. You can also seek inspiration for new ideas.
- Do an internet search. You can search for small and medium businesses, the area that interests you, and the name of your city to find other databases to even academic information on local business trends.
Step 3. Make your product unique
Once you've determined what you want to sell, make it unique and not found anywhere else.
Part 2 of 5: Calculating Product Cost
Step 1. Calculate the costs to be incurred
Will the items you sell make a profit? Compare the cost of making and procuring the product with its selling price. If the item has a higher production cost and a low selling price, you will have difficulty making a profit.
In the initial period, you will find it difficult to calculate the margin correctly. However, you can get a general idea of how much you will incur using a comparison between the industry average margin and those of its competitors. Example: You can find out the selling price of a competitor's product and compare it with your own calculations
Step 2. Determine the amount of the annual routine fee
These costs include store rent, phone bills, marketing, etc. Example: estimate routine costs of IDR 202,500,000,00 per year.
Step 3. Calculate the number of hours you will spend making the product each year
Example: imagine that you are going to work 40 hours/week, 50 weeks/year, and half of that work week (±50%) will be used to make a product. Also imagine that you are going to open a cake shop. Using the formula: number of weeks worked × number of hours worked per week × percentage of time spent making the product, you will get an estimate of the number of hours it takes to make the product each year. For the example above, the number is 50 × 40 × 50% = 1000 hours
Step 4. Divide the total annual routine expenditure by the number of hours required to manufacture the product each year
As an example, IDR 202,500,000, 00/1000 hours = IDR 202,500, 00/hour.
This is your regular hourly expense.
Step 5. Determine the amount of income you will earn in one year
Do the calculation of this number rationally because the amount of income is money that you will use for personal life needs. For example, imagine that you will be able to earn IDR 270,000,000 in the first year. To calculate your hourly salary, divide the desired amount of income (Rp 270,000,000, 00) by the number of hours you will spend making the product (example: 1000 hours/year). IDR 270,000,000, 00/1000 hours = IDR 270,000, 00/hour.
Step 6. Determine the amount of time it will take to make one product from start to finish
Example: perhaps, one cake takes 1.5 hours to cook from raw to finished. To find out the exact amount of time, you will of course have to repeat the process many times. Multiply your hourly earnings by the amount of time it takes to make one unit of product. In the example above, the result is IDR 2700,000.00/hour × 1,5 hours = IDR 405,000,00.
Step 7. Calculate the cost of materials
For the example above, you will have to calculate the cost of procuring ingredients for one unit of cake. If eggs are sold by a supplier or supermarket in the amount of one dozen for IDR 67,500, 00 even though only two eggs are used to make one unit, then the cost of eggs per cake unit is (IDR 67,500, 00/12 eggs) × 2 eggs = IDR 5,625, 00/egg × 2 eggs = Rp. 11,250, 00. Do this calculation for all the ingredients you use. In this example, suppose that you need IDR 54,000,00/cake.
Step 8. Determine the percentage of unpredictability
Example: in a baking business, you may find that a certain percentage of the product cannot be sold. Perhaps, some of the cake units were not cooked perfectly, fell to the floor, or were not sold before expiration. Keep the percentage rate of unpredictability low. For example, you could set the percentage of unpredictability at 10%.
Step 9. Calculate the cost of the final product accurately using the figures from the previous stages
Here are the equations: The last number from step 6 (Rp 405,000, 00) + material cost from step 7 (Rp 54,000, 00) × percentage unexpectedness in step 8 (110%) = Rp 504,900,00/cake.
In order to get the final calculation result correctly, you must add the number one (1) in front of the unexpected percentage because when you multiply a percentage, you will put a decimal in front of the number (10% becomes 0, 10), and if the decimal number is less than one multiplied by a whole number, you will get a smaller number than that whole number. In calculating the price of a product, you must add one to make the number bigger, so that 10% becomes 110%. For multiplication purposes, the number will be 1, 10
Part 3 of 5: Preparing for Shop Opening
Step 1. Research competitors in the area
If your closest competitor is a large store with heavily discounted prices, you are less likely to make a profit. Unfortunately, these big shops are now operating in many cities. However, if you can create a store that provides a unique experience for shoppers, you will get a lot of customers.
- Usually, you will be able to find information about the location of local shops and companies at the trade and industry office.
- Get to know the toughest competitors by doing an internet search. For example, if you want to open a beauty salon, do a search with the keyword “beauty salon” + the name of your city. Read reviews for each existing salon. Find out what consumers like and don't like from each salon. Apart from knowing your competitors, you will also be able to get ideas to improve your own business.
- You can also find out about competitors by making in-person visits. Take note of the prices they offer, talk to the staff there. Observe the layout of the goods in the store. Look for ways to be able to offer something more than they give. Example: You can offer an additional service for free or at a low price.
- Once your store is established, never stop keeping track of competitors. By doing so, you will be able to work towards always outperforming them.
Step 2. Develop a good business plan
A business plan is an overview of how your business will generate income over the next three to five years. In general, it will include a description of the product to be sold, a description of your company, market analysis for your business, and a marketing plan that will be used.
- If you plan to seek financial support (for example, a small business loan or a government grant), make sure you write down how much money you will need over the next five years, how much of the funds will be used, and what plans you plan to use. You apply in the future (eg whether, after the company can make a profit, you will sell it or not).
- Ask an accountant to evaluate your business plan. Various inputs may be given by him, such as the presence or absence of additional costs, tax breaks, or other suggestions related to income projections.
Step 3. Find financiers for sources of capital
When you've just opened a shop, you're less likely to make a profit because all the money you have has to be invested and paid out. This means that you will need capital funds to cover the initial costs of opening a business.
- Information about how much money is needed and how it is used should be included in the business plan. Whether or not you find a financier will depend on your own situation. For example, maybe you have a friend or family member who wants to help, or maybe you want to get a small business loan.
- Ask for information on government lending at your local trade office.
- Usually, all investors want to make sure that you have a solid business plan in place before starting a business.
Step 4. Find out about all the requirements needed to open a business
Business opening requirements and tax regulations will vary for each type of business. Before starting a business, you should find out all the legal requirements needed to set up a business. The best way to find this information is to visit the commerce office.
You can also look for information on local government websites
Step 5. Find a supplier
You will have to source the commodities to be sold or the components to be used to make the final product. There are many ways to find a good supplier, including:
- Ask other shop owners who sell similar products. Make it a priority to ask the store manager who is not a direct competitor to your business.
- Search the internet. For example, do a search with the keywords “product supplier” + your industry + your city. If you have specific requirements for the item you are looking for, include it in your search keywords as well. For example, if you want to find suppliers of organic products, enter “organic” in the search field.
- Do a search in trading journals. Look for the most popular trade journals for your industry and buy the most recent issue. Apart from interesting business information, you can also find lots of advertisements from suppliers.
Part 4 of 5: Choosing a Store Location
Step 1. Research your city carefully
Find the best place for your store based on the products you want to sell. A bad location will cause your store to go bankrupt.
- Find out which areas are shopping centers. While renting a place can be more expensive, the exposure it offers will be the key to success.
- If you can't afford to rent a location in the best places in town, look for other areas that are considered to be growing rapidly. These places usually offer lower rental rates with good growth possibilities.
Step 2. Consider the level of exposure of a place
Are there many pedestrians in an area? Will your shop be hidden behind a building or another, bigger and well-known store? Choose an ideal place with lots of people passing by who might come to visit just out of curiosity when they see your shop.
- The best way to find out the level of exposure of a place is to observe the behavior of people passing by in the area. For example, how many people do you see walking in that place in an hour? Are there many other shops that you frequent? Do people often look at the displays in shop windows, or do most of them walk briskly?
- Also pay attention to vehicle traffic. Is there sufficient parking space nearby? If you live in a city with many drivers, look for a location with easily accessible parking.
Step 3. Find out the crime rate of a place
This information can be obtained on the internet by searching for “crime rate” + area code of a place. If an area has a high crime rate, your shop will be empty of visitors.
Example: if you want to open a toy store, parents are unlikely to take their children to shop in a crime-prone area
Step 4. Get to know the owner of the place
If you're interested in a location, talk to the owner to see if he or she is trustworthy and honest. Landowners who don't manage their buildings well, who are willing to lease their land to direct competitors, or who don't allow you to put signs on windows will create a lot of trouble later on.
- Example: ask about treatment. If there is damage inside a building, how quickly can repairs be made? Your business will run into problems if the repair process takes months. Also ask if the owner is willing to not rent out other shops in the same building to your competitors.
- Use your instincts. When you talk to other people, you can often feel their caring and honesty. If you feel uncomfortable talking to someone, it's a sign that your instincts are at work. Don't ignore it.
Step 5. Think about the amount of investment required for a place
If you find a store for rent in a great location, calculate how much expense and effort it would take to set it up to become your own store. Example: if you want to open a clothing store in what used to be a pizza restaurant, you will need a significant amount of money to renovate it.
Part 5 of 5: Opening a Shop
Step 1. Purchase the necessary equipment
This includes decorations for the shop. If you are going to open a bakery, provide a seating area with comfortable tables and chairs, a counter for selecting food and transactions, and a cash register. In addition, you will also need equipment to make the product. For example, for a pastry shop, you will need an oven, a mixing bowl, a bowl, measuring cups, an apron, etc.
- Look for equipment suppliers in trade publications and the internet. You can also buy used equipment if new equipment is too expensive.
- Look for people who sell equipment on the internet. Now, there are various websites available where many people place advertisements for selling used goods.
- Some companies will offer rental options. If you don't want to keep a piece of equipment for a long time, or if you can't buy equipment outright, choose this option. In addition, you may also be able to negotiate a lease contract to form a co-ownership should you decide to use it in the long term.
Step 2. Hire staff
Advertise job vacancies in local newspapers, job sites, or through word of mouth (example: telling friends you have a job opening and asking them to pass it on to people in need). Once you have a number of applicants, conduct interviews, then select the best ones to hire.
- Make sure you also comply with all applicable employment regulations.
- When you're not there, the employees are the face of your business. Therefore, try to hire people who are friendly, reliable, and efficient.
Step 3. Promote your store
Place an ad in the newspaper, tell all your friends and ask them to help spread the information, post a notice on community forums or the internet, etc.
- Take advantage of social media. Create accounts on social networking sites to promote your business for free (once your store is well established, you can use paid features). With this, you will be able to share information about your business, discounts for account followers, and promote special events that you are currently hosting.
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Make sure you share as much information about your social media accounts as possible. Example: if you are opening a cake shop, go to the local farmers market for a few weeks. At your outlet, provide as much information as possible about your store location, phone number, opening hours and social media accounts.
You can get more followers on social media by offering special discounts to followers (example: customers who come to your store by showing a special code that only your followers on social media can see can get a discount)
Step 4. Purchase supplies
Perhaps this is one of the most important stages. Before you can open a shop, you must have an inventory of items. The inventory will vary according to the type of store you are in. Maybe you'll have to order supplies that will then go on sale straight away, or maybe you'll have to order ingredients to make the cake you're selling.
- The main rule to remember is that you should always have enough in stock so that customers can buy your products whenever they want. However, this obviously only applies well to stores that don't sell fast-moving items.
- Contact trade associations to find out industry stockpile standards.
- In the first months, you may have to do a lot of trial and error to find out the right amount of stock. Among other things, you must continuously record, accurately, the number of items you sell and the time of sale. If this can be done, over time, the amount of inventory you need will increase and you will increasingly have to record the best possible sales. You will also have to check inventory at least once every three months to see how much of each product you have.
Step 5. Have a grand opening event
This is one way to draw attention to your store. Once your store is up and running for a few weeks or months, throw a big grand opening party. In this event, you can hold distribution of free products, discounted prices, games for children, etc. In general, this event will be a welcoming party for your shop's customers.
- While a large opening party will cost a lot of money, if you do, you can earn just as much income.
- Spread the information about the opening party date as best you can. Distribute pamphlets, place advertisements in local newspapers, and share them on social media accounts.
Tips
- Have an emergency spare cash handy just in case. Unfortunately, most new businesses tend to fail and result in their owners going bankrupt. If possible, have an emergency backup fund that can be accessed in case your business fails.
- Make sure you really prepare yourself to be an entrepreneur. You will be at great risk, a decline in your standard of living, and interacting with and managing a large number of people. In addition, you will (at least, in the early days) spend long hours supporting your business and reducing time for friends and family.
