Business Meeting

One of my biggest goals of 2011 is to open my own massage spa.  I have great ideas, and I have no doubt that I'd be able to open and run a successful spa, but I'm just not sure where to start; what to do first.  I've found a place that I like and it's affordable, in a good location, and suits my needs almost perfectly.  I guess that's a start.  Needless to say, I've got a lot of questions, and I'm not sure what the next step should be.  I've been doing some research online, but government websites are hard to navigate, and there's a ton on information out there.  I guess you could say I'm overwhelmed.

So on Tuesday, I met with a Houston SCORE volunteer to ask some questions and get advice.  The number one question on my mind was how to get funding for this little venture of mine.  Dennis thinks we'll need between $25K and $50K to remodel the space we found, buy all the necessary spa supplies and start an advertising campaign (for the record, I think we can get away with way less, but I'd rather think big and scale back).  We were thinking that a small business loan would work sort of like a car loan or personal loan--if you finance a $25K car for 5 years, the payments are in the neighborhood of $350/month.  If the business loan payment was only $350/month and the rent (utilities included) is only $850/month, then I'd only have to make $1200/month to pay the bills.  That sounds feasible.  When I told Hal, the volunteer, how much we thought we needed, and how much we thought the monthly payments would be, he was nice enough to keep a straight face.

He looked at me, with kindness in his eyes, and said, "Darlin', I hate to burst your bubble, but I'm going to burst your bubble.  A small business loan for a start-up business is a high stakes loan, and the payments on a $50K loan would run you in the neighborhood of $5K a month."

My jaw dropped.  My eyes got big.  I was speechless.  All I could think was there's no way I can start out making a $5K/month payment!!!  How do any new businesses ever get up and running?!?  That's crazy!

"Now, do you have any collateral to offer up?  Any cars or credit cards?" Hal continued.

"Ummm...we have two older cars and a low limit card that's almost maxed out due to our wedding," I stammered.

"Well, you can try talking to a bank, but I doubt you'll get any financing, especially without any collateral."

My bubble was sufficiently burst.  Obliterated.  My hopes had plummeted to the ground.  At least I didn't burst into tears.  And that was just the first 5 minutes of the meeting.

The rest of the meeting was a lot better.  Hal is a retired Texas businessman and gentleman.  He is a kind old man who volunteers with SCORE to help people realize their dreams of owing their own businesses  By the end of the meeting, Hal had re-inflated my bubble and I left with a sense of hope and determination.  He told me to sit down and come up with a business plan; to put it all on paper to give me a better sense of direction and purpose.  He told me to contact the City to make sure my location will pass inspection before I make any commitments on a lease or renovations.  He told me to figure out how to cut the start-up costs down so I'll have a better chance of getting a loan.  He also told me that he's here to help and that I can schedule another meeting with him when I get the business plan together and that I can email him or call him any time for advice.

I almost feel like I have more questions now, but somehow I feel more like I'm on track and heading in the right direction.  I still have a long list of things to do though, and I'm still not exactly certain where to start, but I don't think I necessarily need to do them in a particular order, so that makes me feel a little better.  I need to:

  • contact the City to find out if my location will pass all inspections before I even decide if that's actually the perfect location
  • start writing my business plan
  • decide how to structure the business--sole proprietorship? corporation? partnership? LLC? LLP?
  • come up with a concrete list with the cost of all supplies needed before the spa opens
  • come up with a concrete list with the cost of all renovations needed before opening
  • learn what the break-even point is and how to guesstimate it
  • learn how to do a cash flow estimate
  • learn how to determine my client demographics in the surrounding area
  • come up with a business name
  • register business name as DBA
  • learn how to market the business and come up with a marketing strategy
  • research small business loan options
  • research small business grant options
  • research private investors options
  • improve my bookkeeping skills
  • not lose my mind
So either today or tomorrow I'm going to call the City and ask about permits and inspections.  Next week I'm going to start the business plan and I'm not going to let myself stress and pick it apart.  Hal said it doesn't need to be perfect.  He said the important thing is to get something down on paper and go from there, so I'm not going to let myself get to caught up in making the perfect plan.  Essentially it's a living document that's going to change over time anyway.

Looks like I've got a lot to do.  Better get started!

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