For many of you who just opened for business in early 2016, now looking back, do you now understand why sufficient capital was really needed to do a start up? I know I had no idea looking back over 30 years ago. I am sure you realize now that a lack of capitalization to support the start-up over the first 18 months is a major reason for most failures. The frozen desserts business is unique in that in most cases it is seasonal wherever you go. If you don’t make it in the summer you aren’t going to make it at all. Simple logic, but very true. If you listen closely and follow this scenario, you can greatly improve your opening day jitters and enhance your chance for an initial success.
For those just starting to think about opening an retail ice cream business, consider the following:
Don’t leverage your money when building your location. There is always a day of reckoning so pay as you build.
- Pay C.O.D. for everything you buy the first year. It keeps you on your toes.
- Don’t hire an architect until you have signed a lease.
- Open between February and April.
- Ask for a free rent period while you are constructing your business.
Forget about paying yourself a salary for the first six months. In most cases the money should be in the business, not in your pocket. What really happens the first year is that we go through our first selling season and boom, it’s September and we wonder, where has all the business gone, or more importantly, where has all the money gone. Winter comes and there is nothing worse than looking at an empty store, having no money in the bank, suppliers to pay, and taxes due.