Looking for a new role? Head to Mumsnet jobs to find full and part time family friendly opportunities.
This is a Premium feature
Early start up reassurance needed!(11 Posts)
I've recently become a franchisee for a company which offers a local service. Prediction of earning supplied with franchise pack seemed a little over optimistic but the lowest figure far exceeded anything I would of been making from my part time job after maternity leave so decided to go for it.
I've been actually in business about a month and although bookings are low at the minute I love it and my overheads are relatively low (about 550 a month) so in my first month I'm about £100 shy of breaking even.
The problem is I'm still in a blind panic, I'm doing everything I can and I know most business will be from recommendation/word of mouth. We did the figures and we can survive on my husbands wage and can manage a few months of a slight loss from savings but we will have nothing other than bill money.
I've had a parking ticket today for an over stay the thing I do took slightly longer than expected and I've got to pay £100. Its not the end of the world but when you're just starting out and making no money it feels like it is.
I think I'm just looking for some reassuring stories! How long did it take you to make a profit? How are you doing now and are you glad you took the risk?
What is the business?
Word of mouth/recommendation is a pretty slow way to build business unless you have a product which is extraordinary. What other advertising are you using?
I'd also caution you about thinking £550/month as being your overhead. As if you revenue was £550/month you'd have broken even on costs but you'd have been working for free. The money you spend on advertising is a business expense and is offset against your revenue
In you cash flow forecasting ideally you want to start working out when you're going to be paying yourself salary & dividends to get a better idea of what your real outgoings are.
I've worked for a start up before and some of what we did doesn't apply to you (we were going for three years before we made a profit but had investors) but there are some things we learned.
1. Get a really good idea of what it costs you to obtain a customer. This means looking at what you spend on advertising and working out the conversion rate.
2. Farm existing customers. New customers are expensive to obtain, make the most of existing customers by keeping them and seeing what extra services you can provide
3. Work out how to identify non-profitable customers and drop them
4. Track all your time against appropriate billing codes so you really know where you're spending money (time). All those 15 minutes really add up.
5. Get your invoicing and payment process rock solid. Cash flow is what kills businesses in the early stages. If you're not taking payment straight away you need to manage your AR process carefully
6. Your accounting is should not be an end of month rush. Keep on top of the accounts on a weekly basis
7. Manage your stock levels carefully and track the lead times of all inventory, the rate you're using it so you can avoid overstock or running out.
Thanks for the reply.
Without being too outing I teach a class with a skill I have. It's basically doing a small part of my old just but just for myself.
550 is the basic cost for what it costs for me to do everything. Hire of room/ monthly advertising budget/ travel to classes/ telephone and Internet etc.
All my kit was provided within the franchise fee but it's all basic so there will be some extra costs when I decided to buy extras and upgrade.
Payment is all online and paid upfront so it's all tracked I don't have to worry about keeping track of cash.
I'm advertising on Facebook there are paid advertisements going out in relevant local magazines and online. I pay a central advertising fee to headoffice so there are ads going out with them. I have also been In contact with local promoters. What I mean is a lot of the business comes from recommendations from people who come to the class.
Keeping existing business is part of it and will definitely help but due to the nature of it I will loose customers as they progress so constantly need to be looking for new business.
I've spoken to existing franchisees and looked at their figures, they've all done very well with it so I know it works.
Everything I spend and make is immediately noted down on a spreadsheet all receipts kept etc.
I did my research but it's all very new to me so it's a learning curve. I'm just a little nervous as it's such early days.
Is it similar to baby sensory? My friend does this and matches her previous wage (good wage)
It sounds like you've got the fundamentals sorted.
Things I can think of that will make your life easier
1. Start using Xero or another accounting package to manage your invoicing, expenses etc. It will make tax time so much easier
2. Don't forget your travel is a business expense
3. Is insurance covered in your franchise pack? If not you really need to get your public liability and professional indemnity insurance sorted asap
Then from a business side we've always done from partnering with companies who provide complimentary products and services. They feed into your sales funnel and vice versa.
Running with the guess that someone else made that it's to do with babies if you can find someone providing ante-natal services who can funnel clients to you and someone taking post your desired age range that you can funnel into you may be able to make some additional money via referral fees.
Starting up a business can take a little while as you build momentum.
Do you have a referral scheme? Are customers leaving positive feedback?
Just Facebook advertising is not enough, do you have flyers in relevant local places?
Ask head office what more they can provide.
It's like baby sensory yes but for toddlers to young children. So I'll keep them if they start from a young age and then gain new customers as local babies grow up.
It wasn't in the area before so I knew it was going to take a few months for word to spread and customers to build up.
How much of a loss did everyone expect to make early on? I feel as though the loss I've made isn't too bad for a first month and I've tripled my advertising budget this month.
I'll look into xero I've just been doing it all myself up to now.
I've been leafletting got all the local schools to put some in bookbags, walking round the area after each class hanging them out. When the weather is nicer I'll be taking my dd to parks to meet parents there and hand leaflets.
I have insurance in place already so that's sorted.
I've also been in touch with similar groups offering different things so something with them is in the pipeline.
Libraries are a great place to advertise, low fees and lots of baby and toddler groups. Is it feasible to offer a trial session in the library before/after their popular groups?
It's hard at first and you will need to be creative to bring income in while you are building your core business.
OP, you are just starting out so i'm glad to know you have managed to keep your operational costs low. I feel it's good to get a sense of the minimum income you hope to achieve with the business, say, by the next 6 or 12 months - it gives you a goalpost to aim for and also acts as a "sustainability" compass.
One thing i learnt from a previous experience (a failed business) is not having the fiscal discipline to cut losses and let go if a business does not seem sustainable. Over time, we could get "emotionally" attached to the business. So, it will be good to get this target number "rationally" clarified at the outset. I applied this in my next business and it served me well and allowed me to be disciplined in maintaining my costs and finding ways/means to reach the target number. Just thought i'd share this bit of experience (even if it may not be a reassurance).
I started my own business at the end of last year (massage therapy) and whilst things were slow to begin with I have a few regulars and am encouraged that my bookings will continue to grow.
Is it la jolie ronde? I always wondered how much it's franchise cost.
Please login first.