In case you missed last month’s article, I’ll get you up to speed: My fiancé Christy, her sister Shelly and I opened a new business called Inspired Ink (see ST, July 2014, page 20). The girls will primarily be printing backdrops for professional photographers, while also producing wholesale banner and wrap-vinyl printing. The column addressed financial and operational aspects, which range from doing market research to assess your plan’s viability to determining power requirements for your facility.
We pick up the story in January of this year; we’re approximately four months or so into our business development. So far, we’ve named the company and filed incorporation documents through Legalzoom.com, and our research on equipment, materials and shop space is complete. But we’re still not open; Christy and Shelly are having a fit! They’re ready to do some printing!
Big steps
We’re just about ready to move past all this caution and preparation, and have some fun. We’ve done our due diligence, completed the necessary paperwork, and we have funding. Hmm, I don’t remember securing any loans or financial support. What happened? Well, I wrote a bunch of checks … and then Shelly wrote a few. Christy’s “shoe budget” dried up. (Sorry baby, but it’s all going to be worth it, I promise.)
We swallowed hard and dove full-bore into implementing the steps for which we’d prepared. At this stage, you can’t hesitate. If everyone involved still believes your business plan provides a great opportunity, now is not the time to “think about it”. It’s time for action!
Over the next three weeks, we accomplished the following tasks:
• We signed a one-year lease on a centrally located, 1,000-sq.-ft. shop. We were able to work out a month-to-month lease term as well. It’s always better to not be tied to rental debt just in case the plan flops;
• Christy and Shelly completed their work in developing Inspired Ink’s web presence by making more than 600 hi-res images available for purchase in numerous different sizes, which made customer ordering simple and efficient;
• After lots of focused research on our particular needs, we purchased and installed an HP DesignJet L26500 64-in.-wide, latex-ink printer, as well as an HP design computer loaded with Onyx Graphics ProductionHouse® software. These printers are the newest versions of the two HPs we’ve been running at Media 1/Wrap This! for the past four years, and we’ve been happy with HP’s performance and support, so it was a natural choice for us. Our friends at Grimco provided great service and very competitive pricing.
An electrician upgraded the shop’s electrical capacity to accommodate the heavy demand of running a large-format printer.
Then, we ordered enough material and production equipment to get started and built a really nice,
5 x 10-ft., aluminum work table that’s sheeted with a self-healing cutting mat.
After a few late-night training sessions with Wrap This! lead designer Jason Wissig, the girls were more than semi-confident in their printing capabilities. They hadn’t yet mastered every possible printing concept, but they knew enough to start getting some money through the doors.
Full steam ahead
So, on Monday, Feb. 3, we made our web-based marketplace live and ready to take orders. Immedi-
ately, the orders started pouring in. Because Inspired Ink’s business model is entirely based on internet sales, we knew once we activated the website, we’d be busy.
Is Inspired Ink selling to its capacity? Are we slammed beyond belief? No way. We still need more orders. Are the girls taking a fat paycheck every Friday? Has Christy bought any new handbags? Not yet. But it’s coming!
We’ll have to step up our marketing to grow the business. Christy is a people person with great ideas, so I’m sure she’s up for the challenge. But, I’m happy to say that no one has written a personal check to support Inspired Ink’s debt since it opened. So, it’s been 100% self-sufficient. So, we feel less pressure now than we did initially.
Inspired Ink has not reached anywhere near the sales volume we want, or can handle, but it’s no longer a liability. That’s a great step for a first-year company. After tracking our profit-and-loss statements for the first few months, we have an accurate gauge on the company’s “burn-rate” (the amount of money a company consumes every month, regardless of sales).
We’ve already saved enough cash in the bank to cover two to three months of our monthly burn rate. This is an absolute necessity in business! Do not take cash out of your business until this cushion has been established! This is definitely one of the hardest truths of business ownership.
Also, do not go into debt trying to open a business! To be reasonable, purchases will be put on vendor accounts, credit cards, etc. But, if you have zero savings and have to borrow $50,000 to open a start-up business, you would be better served waiting until you’ve saved the money. I know that’s discouraging. But, remember the new-business failure rates in the U.S. According to a recent www.statisticbrain.com report, 44% of new ventures fail by their third year. That number jumps to 55% by the end of year five, and 71% by year 10. That’s staggering.
Don’t borrow $50,000 from, say, your father-in-law. No matter how good your intentions, you could easily become a statistic. Then, you have to contend with the emotional stress of a business failure, as well as owe $50,000 to possibly the last person to whom you’d want to owe money. And he’s probably already been waiting three years for you to “get on your feet”, anyway. This can also make holidays a real pain. See my point?
Remember the basics: Create the business concept, and research every single angle of your idea. Figure out how you are going to get capital for necessary equipment, facilities, etc., to start the business. Take your time, and sleep on it.
Do not let creative impulses replace practical sense, although that’s what I tend to do sometimes. Once you are sure you have a good idea, pursue it and don’t look back. It’s still a roll of the dice, but you can prepare yourself for a better shot at success.
Good luck – and, again, stay inspired!