The prestige and freedom that comes from having your own retail store can put a long-lasting smile on your face. It’s your place, so you can have wonderful conversations with your customers. You can decide to host jams, groups, or parties after hours. The local celebrities may drop in from time to time. You’ll probably eventually end up making more than any hourly wage, and you can hand the whole works over to your children forty years later.

Being primarily a writer, I lost interest in the stores I started, so I did what you can do with your stores too – if you are impatient as I am: You can build your store up, then sell the business for what will seem like a remarkable amount of money. The longer you keep your store, the more it is worth. The downside is that you’ll be making so much after a few years, you may not want to sell it.

I have found that the idea of starting a store from scratch scares many people. That’s why so many will pay so much for an established store. However, as one who has done it several times, I can tell you starting a store from scratch is really quite easy.

It is also easy to lose money, so I’ll offer a few pointers in this chapter to help you start successfully and stay successful.

Consider this, the first rule of business: You’ve got to make more than you spend.

A good second rule might be: Don’t invest more than you can afford to lose.

Given those two rules, you may have to start something on a shoestring, and let it pay for its own growth. That’s very possible, and what this chapter is about.

But you may not yet have even a shoestring. If you don’t yet have the money for a retail store, you can put this book away and give up. Wait a minute! Of course, I don’t recommend that. There is another way.

you might like to start small – very small. You can usually find a way to start with a very few of whatever you’d like to sell, or something similar, put them in the trunk of your car, sell them to friends and aquaintences, list them on Craigslist if it serves your area, and possibly sell at flea markets or in consignment stores. As your mini-business grows, and as you are gaining experience with your product line, you can start building a pile of inventory and a pile of money, until you have enough to easily and safely start a retail store. I know a fellow who did it with camping gear. He started with second-hand things he bought at flea markets and garage sales. It’s been several years since he started. He now owns two full-fledged and full-service retail camping goods stores. His stores don’t compete with K-Mart. He mostly sells high-end used and new camping gear to expert hikers, climbers, hunters and others. It turns out there are plenty of those expert enthusiasts to keep his two stores plenty busy.

The biggest expense for most people starting a retail business is space. A typical store is around 1,000 square feet. Rent in a ‘good’ neighborhood is $1 to $2 per square foot (10 – 15 Euros per square meter), or more. So, right away, you’re looking at $12,000 to $24,000 per year.

Then you might want to consider heat or air conditioning, electrical usage for lighting and so on, liability insurance, telephone, credit card processing, and city or county licensing. All these typically add up to another $10,000 per year.

Then there’s advertising costs. And there could be the rather huge expense of employees.

These are the expenses for someone starting a typical retail store.

If you want to start a business in the usual way, you must be able to afford to lose a lot of money, at least until your business is up and running. And many businesses take from two to five years to become profitable.

Worse, many, make that ‘most,’ businesses never do become profitable. The statistics are staggering, and interesting. Did you know that one out of every four women fail in business? Ah, but what about the men? How well do they do? Four out of every five men fail in business!

Of course there are stories of people who failed two or even three times before becoming successful. Can you afford that? Would you want to go through that kind of stress?

But there is the other way – starting small – in which you can avoid most all the stress, most of the expense, and the risk of failure. Starting small has been covered in other chapters.

You can shortcut this process. You can do it your way. But I don’t recommend it. What I’m going to tell you is a rather safe and sure way to get into the retail business once you have some experience and money built up. Starting from absolute scratch has as much chance of growing into something big, maybe even huge, as those who start with $500,000 cash.

You want to choose a business that will work in our modern world. Urban blight, WalMart, a troubled economy, and inexpensive machine-made products are part of our world these days.

So, let’s rule out some things: If you have a hand-made product that’s the same as, or no better than what anyone con buy in a variety store such as K-Mart, then you probably aren’t going to be able to sell it. If it costs you $10 to make each of your ‘things,’ then the big companies can have the same ‘thing’ made in an Asian factory for perhaps $2.

If you want something that can be purchased wholesale, and you can buy them in lots of 100, you’ll pay more per item, and more for shipping, than the big chain store companies who can buy in lots of 100,000. They make all sorts of back-room deals with the manufacturers with which you can’t compete. UnlessÖ (more about that in a minute.)

You’ll find service is easier to sell. Yes, the big chain stores offer computer repair, eyeglasses, they have a big photography department, some offer tayloring, you can have window screens replaced, paint mixed, keys made. However, everyone knows this is boiler-plate service. The service is generally done by minimum-wage employees with relatively little training.

If you offer service by an expert, in a field that needs quality attention, you’ve got something you can sell. Then, if you can offer that, you can pump up your sales with hard goods – the very things I said you can’t buy at competitive prices. As you’re writing up service tickets, you can suggest this replacement part or that accessory. The customers who come into your store start to become familiar with what’s on your shelves, and will start coming for the specialty items they can’t find at the department stores. And, even though you have to pay more for items purchased from wholesalers in lots of one or a dozen (instead of 100,000), you’ll be able to sell them for more.

A small bicycle shop fits the mom-and-pop retail paradigm nicely. Wal-Mart does not offer high-end bicycles. They do not have special cycloscross tires, or Zefal pumps or Kool-Stop brake pads. They do not have employees that know how to custom fit your bike to you, or even sell you the right size. They do not offer any after-sale service other than a complete refund. They don’t know how to get you the same model, but in lime green. What else? They don’t know about accessorizing the bike: fenders, lock, lighting, luggage and so on. They cannot tell you from their own experience how it is to bicycle tour in Bulgaria, how to train for a double-century, how to strategize a BMX race, or maybe even how to fix a flat tire.

The same is true for a fabric store, a pet shop, or a musical instrument store. The department store employee doesn’t quite know what pinking shears are used for, why someone might like 12-inch hacksaw blades instead of 10-inch, or what a red-eared slider eats.

I think you’re beginning to see why a specialty shop would be successful, even with a huge chain store right next door. Maybe even more so, since all the chain-store buyers will see your sign and drop into your shop when they want something that the chain store can’t offer.

What other kind of store might work? Musical instruments. Tool supply. Certain kinds of appliances, many kinds of specialty sports or hobbies, as long as there are enough participants in the sport or hobby in your community. Ethnic foods. Organic natural foods are particularly good if your community is one that is aware of good eating, and doesn’t already have too many such stores. Automotive accessories. Antiques. Used merchandise can be a great choice, especially second-hand clothing and furniture.

Do you see the common factor in these? They offer products that can’t be found in the department stores, or something that requires more knowledge or service than those stores can offer.

It is probably important to pick something that you know quite a bit about. Whereas a person can just decide to start a guitar store without even knowing how to play music, it is harder that way. On the other hand, the owner will probably enjoy learning to play guitar, how to determine the value of guitars, and so on – but it can be an expensive process as mistakes are made, and customers are left without the advice they need.

So what do you know and enjoy? Second-hand building materials? Home crafts? Spanish cuisine? Sound systems? Digital photography? Soccer? Laptop computers? Organic gardening? You don’t have to start out as the world’s leading authority in your field. But it helps to know enough to advise your customers properly, and know what kind of inventory they will want to buy. And if you’ve been through this process and that, you’ve read the books, you know you’d want to buy certain brands and models, then you have the knowledge you’ll need.

What people notice first about a piano store is the pianos. A successful piano store doesn’t sell the kind of keyboards you find in the department stores. They start at mid-level, and go up in price from there. That’s because they can’t compete with low-end keyboards. You can purchase an entry-level Yamaha keyboard from a typical wholesaler for $119. You can buy the same thing at Radio Shack for $79. But when it comes to keyboards for $400 and up, with a USB port and weighted keys, they simply aren’t available at Radio Shack. On the other hand, customers shopping in that price range are rather specific about what they want. So, you need to carry a variety, be well tuned into what people want, or expect sales of new keyboards few and far between. Then, assuming there are other high-end music stores in your area, you’ll have to keep your prices competitive, making only a rather small mark up.

So, eventually, you’ll want to carry new keyboards and pianos because they bring customers in who buy sheet music, amplifiers, microphones, and all that. They come to look at your keyboards, as if it were a museum, but they don’t leave without buying a patch cord, a speaker cabinet, a sheet music book, or some other accessory.

However, if you were to start your music store with new keyboards and pianos, you’d be in debt on your first day – or maybe you would have blown your inheritance foolishly.

So now let’s talk about this shoestring concept. That’s how I started. I took it to the extreme, by necessity. You see, I was 16 years old at the time, with just about no money at all – maybe $10. So doing what a 16-year-old sometimes would do: I started fixing bikes for kids in the neighborhood, trading used bike parts, and just having a good time puttering around. Every now and then, I’d make $20 or $30 on a repair or a trade. Then people started paying more regularly for repairs. The trading inventory became so attractive that people bought my second-hand things more and more often. It wasn’t long before I outgrew my one-car garage, and my parents’ patience. But by then I had a couple of thousand dollars. That’s when I made the leap to a retail store. I found a place of about 700 square feet for rent in the ‘bad’ part of town. It was a place I could afford. And I moved my eight used bikes, handful of used parts and tools into the store. I painted my own sign and kept the heat very low all winter. I was willing to do whatever it took. I remember one time regluing a bunch of wooden dining room furniture because I had a customer who was willing to pay for that. But I also taught some bicycle repair courses in the shop. By spring, I had made it through the winter without going in debt. In fact, I had more than when I started. Actually, it was right before Christmas that I was able to make my first-ever wholesale purchase. I bought $200 worth of lights, pants guards, reflectors, patch kits, tires, seats, and things I thought might sell as Christmas gifts, or be good general inventory. I had found a wholesaler who was willing to sell in quantities of one or two, not dozens of anything. Some of the stuff sold, and I bought more. By Spring, I was able to place my first order for honest-to-goodness NEW bikes. It was only 6 bikes, but oh, I was so proud!

Let’s fast forward four and a half years. My shop had turned into a ‘pro’ shop. In a city of 400,000 people there were 10 other bike shops. Too many, really. But I did well anyway, because I treated each and every customer as if they were important – because they were. I studied, practiced, and listened, and became a bike expert. I was able to offer advice. I’d steer someone away from a certain brand of patch kit because I knew the glue would always dry up after the first use. People like this kind of personalized service, and went out of their way to buy things at my shop. They told me all the time that they drove past this bike shop or that, to come to mine. I taught more bike repair lessons. I learned how to build custom frames, and taught frame-building lessons. I hired people to help. At the peak of the summer season, I had eight employees and had expanded into other units in the building. I was then operating out of a couple thousand square feet. To fill the extra space, I went crazy and bought 125 new bikes in one batch and sold them all within a month.

Actually, new bikes wasn’t the focus. The part of the profit pie that came from new bikes was actually rather small. The piece that came from the accessory sales, repairs and customizations those new bikes brought was larger.

The two biggest parts of the pie were the general repair trade and used bikes. It turns out that all my customers told their friends and family that my shop was good, honest, fast, and all the other right things when it comes to repair. So during the summer, I had enough work to keep four mechanics going full time.

Used bikes turned out to be much more profitable than I had figured. They were more profitable than new bikes. You see, I learned early on to ask anyone who was considering buying a new or used bike whether they’d like to trade anything in. I could buy bikes all the time for $25, put perhaps $25 worth of labor and parts in, and sell them for $125.

And that’s my advice for someone who wants to start on a shoestring. You may not have to start as small as I did, or maybe that’s just right. Can you work out of your back yard? Your basement? A tiny rented space? I have seen bike shops set up in 10 x 20 foot flea market stalls. What about partnership? If you don’t have everything you need, perhaps you can find a partner who has the missing knowledge, money, time, space, whatever you lack. Check out the Partnerships chapter.

As your business slowly outgrows your space, you’re gaining experience in your product line, and in dealing with your customers. By the time you have the money to move into a bigger space, you also have the expertise to make sure your profit is more than enough to pay for it.

What happened after 4-1/2 years? I sold the business for quite a bit of money. I bought a motorhome and traveled around the USA for several years on the profit. In retrospect, that may have been foolish, but I was still young. If I had kept the shop, it would probably have been a chain of bicycle shops by now. I may have had my own manufacturing plant. On the other hand, by traveling, I gained more and varied experience, and at any time I could have started another bike shop. In fact I did, twice. And I created some other businesses. Then I sold them. I can always start another. But of course today, I’m having too much fun writing about businesses.

Here is some more detailed advice:

1. Remember the first rule? Don’t spend more than you take in. If you take that quite literally in your first months, you’ll stay safe. Furthermore, you’ll learn all sorts of shoestring tricks, ideas and work-arounds that will serve you well, even once you’re making millions of dollars. Then, you can have your managers show your employees some of the same things you once did to save money, so each of your employees is also profitable to you.

2. And the second rule? Don’t invest more than you can afford to lose. Once business is gaining momentum, you may be tempted to speed things along a bit by investing too much, too soon. I remember a camera store that had one Hasselblad, a very expensive camera. After a while, it sold. So, they bought five more. It took years to sell all five, and in the meantime, those five high-end cameras tied up a lot of inventory money that could have been used for everyday things that sell more quickly.

When you first start, it is completely acceptable to focus mostly on service, if your product line has a profitable service component. If you can fix the things you deal with, you have an immediate income in the repair business, without having to put much, or any money into inventory. As your repair business grows, you’ll know which parts and accessories to stock that will sell frequently.

It was quite common in past decades to find many stores in a town that were really almost entirely repair shops. You’d walk in, and see almost no retail displays. It felt like walking into a, well, repair shop. Right up to the front door was equipment in all stages of repair, tools everywhere, the ‘salesman’ who probably owned the place greeted you in dirty overalls. You may still see this from time to time. Shoe repair stores come to mind. TV repair stores often were like that. TV repair, however, has gone bye-bye, since solid-state electronics are more reliable and the cost of new TVs is so low in comparison to repair costs. But for many businesses, starting out as a ‘repair shop’ can be just as successful today as it was back then.

If your product doesn’t really have a service aspect, look into what else you can do. Can you teach in the back room? I know a health suppliment store that teaches classes on many aspects of nutrition and healthy living in their back room. They make more money out of the back room than the front room, with all its cans and bottles. Can you buy, sell, consign or broker used items? Can you set up profitable local events of some sort based around your product line?

Listen to your customers. Talk to everyone. Find out what they want, and do your best to provide it.

Be on the look-out for pride. What if I told the dining room furniture person, “No, this is a bicycle shop, I refuse to stoop so low as to fix your chairs!” Well, I’d have to borrow money for groceries that week! Plus, it turns out, the furniture guy bought bikes for both of his teenage sons that spring, and another bike when one was stolen, and spent perhaps $400 that year in parts and service.

Finding the right retail building can make a world of difference. If you can find a location where many people drive by, and where it is easy to park, you’ll be much more successful. Even better, if you can rent a spot in a mall, tourist location, or where there are plenty of people walking by, people who are there to shop, you may never need to do any advertising or publicity at all. Just put up your sign, and you’re in business! Really check out your location before signing a lease. If it is in the ‘bad’ part of town, there may be people who are afraid to come to your store. You may also have to deal with shoplifting. On the other hand, depending on your product line, you may find many grateful people in the ‘bad’ part of town who no longer have to commute a long distance to get what they want.

Parking meters are the death of a retail business. Many customers would rather drive across town to their competitor than be worried about whether 25 cents was enough the whole time they are shopping in your store.

Exposure is the thing. I’m sure you’ve heard the expression, “Location. Location. Location.” Getting the wrong place can ruin a business before it gets started. Getting the right place, even if it is small, or the cost per square foot is high, can mean that you start making money from your very first month.

Most small retail businesses start with rented stores. Unless you are prepared for an entirely different kind of investment, commercial real estate, you’ll be better off renting. Commercial leases are pretty much like residential leases. They are usually one-year or five-years in length.

In upscale settings, there is something called “Triple Net” abbreviated as NNN. This is a monthly fee added to the rent for maintenance, such as mowing the lawn, cleaning of the common areas, and upkeep of parking lot. The ‘triple’ in triple-net means nothing. The amount is anything the landlord decides. Typical triple-net for a 1,000 square-foot (100 square-meter) retail store is from $35 to $100 per month.

once you’ve found the right place, you may want to have the one thing that’s missing from most leases written in: An escape clause. What if a dry cleaner next door fills the neighborhood with perchlorethylene fumes? What if a family situation requires you to move to Philadelphia? What if the dog next door just won’t quit barking? You laugh, but these things really happen. What if your business grew faster than you thought, and you need to expand into a larger building? You don’t want to be stuck with a one-year or five-year lease. So, the escape clause is something that both you and the owner of the building can live with. For instance, you might suggest that if you want to move before the end of the lease, you’ll pay three months rent up front.

Finally, before you sign that lease, you need to work out a business plan. Oh, I don’t mean a fancy plan to show a banker for a loan. I do not advocate starting with a loan. If you don’t yet have enough money saved up, and the ability to risk that money, there’s no hurry. You can just keep selling your stuff on craigslist, out of the trunk of your car, the flea market, or whatever, until you do have enough money. This is a better plan, because you’ll be proving to yourself that your business is profitable, while you learn the ropes.

A business plan just for yourself can be as simple as scratching some numbers on the side of a grocery bag. What you want to see is whether you’re biting off more than you can chew. Figure that you’ll need to pay first and last rent, then pay the rent for a few months until your business is running and established. You’ll need to cover the electric bill and other overheads. If you’re smart, you won’t figure in employees. They come later, after you’ve become successful. This is a business that you’ll run entirely by yourself at first. Finally, you need a starting inventory. Ideally, you already have plenty of items. If you don’t, go ahead and step back for a year or so, continuing to do your business out of the flea market or whatever, until inventory surrounds you. Until it fills your garage, living room, bathroom, and takes up all the space under the kitchen table.

Moving forward, let’s say you have figured out the finances, and rented a store. Now what? There’s just a little bit of paperwork, and it is easier than you thought.

Through your chamber of commerce, find your local business license office. There, you can get a DBA – Doing Business under Assumed name, also known as a business license. This costs a little bit. Typically from $20 to $200 per year, depending on your community. You fill out a one- or two-page form with the usual stuff – name, address, phone number, and they give you the license. No one is refused. Furthermore, you don’t have to know anything about it. The people in these offices know that you are not an expert in what they do. The typical person coming in wants to start a car repair shop or a beauty parlor, and knows all about car repair or cosmetology, but nothing about business. So, they are there to help you. They want you to succeed, so you can keep paying your annual license fee to the community.

You’ll probably want a business checking account, and in some cases, the local government wants to see your business checking account number before they’ll grant the DBA. No problem, any normal bank can do this for you in twenty minutes. Most banks offer business checking accounts for free.

Customers coming to retail stores often expect to pay with credit cards. In the past, this was somewhat expensive and difficult to set up. Now, you can go to PayPal.com, and get set up to take credit cards easily. In one of my stores, I was unable to take credit cards for the first couple of weeks after opening. I told people up front – so as to not suprise them once they approached the sales counter, and let them know there was an ATM a block away. So far as I can tell, I did not lose a single sale during that time.

Finally, you need to get set up to collect sales tax or VAT in most countries unless you are in a place without sales tax such as Alaska, Delaware, Montana, New Hampshire, or Oregon. This costs nothing, and also requires filling out a simple one- or two-page application. The certificate, often called a resale certificate or tax number is usually given to you right away. They also hand you a pamphlet explaining how sales tax works in your area. You’ll learn what percentage to charge, and which items and people are tax-exempt. For instance, in New York State, American Indians do not have to pay sales tax if they present the retailer with an exemption form. In some states, labor is taxable, and in some, it is not. To find the tax office in your community, simply ask at the business license office. They already know that’s where you’re going next, and will certainly have the address. Now-a-days, you can often set up your sales tax account entirely online or by mail.

Collecting sales tax can be thought of as a right, responsibility, or privilege. I won’t get into the philosophy here. The usual arrangement is that you set aside the tax money you collect, fill out a one-page form, and mail a check to your tax office every three months.

Once you’re in business, you do need to keep track of income and expenses. You’d want to do this anyway, so you can understand how things are going, and what to adjust from time to time to make sure you’re making a good profit.

The old-fashioned way still works: You can buy an ordinary ledger book, and enter your expenses and income by hand. Domes Monthly is a ledger you can buy in any stationery store in the USA. There are no doubt equivalents in every country. Keeping track isn’t rocket science, although it may seem so at first. The only thing you need to do is list everything you spend money on and enter the amount of money you take in every day. You can optionally break out the income into categories such as “new,” “used,” and “service.” You’ll want to break out the expenses into categories such as “inventory,” “rent,” and “utilities.” You may want to additionally list all legitimate business expenses such as “automotive,” and “advertising.”

It is much easier to use automated software. For under $100, you can buy any of a variety of business bookkeeping packages, such as Quicken. This software tells you what to do at every step. The people who make the software know that you’re a musician, beautician, or bike mechanic, not an accountant, so you’re not expected to know what to do. The software has a lot of built-in help.

If that still seems intimidating, you can hire a bookkeeper for a single session to set up your system, and tell you what to do. Only after your business becomes successful, unless you are already wealthy, do you want to hire a bookkeeper on a regular basis. Some bookkeepers are better at teaching than others. If your first bookkeeper is not good at explaining things, try another.

At the end of the year, you need to figure out your income tax. This too, is easier than it might seem. In the US, the basic addition to your taxes for business is a Schedule C. It is a single two-sided page. The categories are obvious. But it is easier to get the automated software that does it for you. At the HR Block website, you can do the whole thing on line, and then just pay $30 to $80 to file your taxes. With a business, it takes about twenty minutes longer than someone who is only filing an ordinary 1040.

What if you make a mistake? All the government officials are on your side. Really! They’d rather have you succeed, than harrass you. They know you’re not an MBA or accountant. They want you to succeed, so you can go on paying taxes year after year. If you make a mistake, they tell you what to do different. They may issue a reasonable fine – just part of the cost of doing business, and you get to move on. No one goes to jail. Well, OK, I knew one fellow who did. He was a professional ice skater who paid no income tax at all. Still, he wouldn’t have spent six months in jail if he didn’t stand up to the judge and the whole court and make a big presentation about why he shouldn’t pay income tax. Only rebels go to jail. In fact, even with all the small mistakes all of us make, almost no one gets audited. I’ve received perhaps five letters from the IRS and sales tax agencies in all my 35 years in 18 various businesses. In each of the three cases where I actually did something wrong, I had to pay a small fine. My fines ranged from $20 to $150. I knew one fellow who didn’t report his income tax at all for several years. This one was a professional juggler. He was probably making around $150,000 per year. He didn’t even keep any records, so no one, even he, knew how much he made. The IRS stated that he owed them approximately $20,000 in back taxes, which he gladly paid. Of course from that time on, he did have to keep records and pay the appropriate taxes. I know a lot of business people and these two are the worst case scenarios.

Something like a signage violation is so minor that some business people play with them. For instance, in a little store that had a maximum 3 x 2 foot (1 meter x 66 cm) sign requirement, I made a much larger sandwich sign and put it out on the sidewalk every day from the first day I opened. I knew this was in violation, and I knew someone would notice it. They did, after two months. The zoning office did not issue a fine. They only issued a ‘cease’ letter, telling me I had 30 days to comply with the law. So I kept my sign out for another month, then I threw it away. It had done its job. I’m not recommending that you play with your government regulations, unless you know what you are doing is morally correct and the repercussions are safe.

Once you are in business, you can get wholesale catalogs and the wholesalers’ secret price lists. In order to qualify for a wholesale account, all you normally need is to fax or mail a copy of your resale certificate or DBA. Some wholesalers do require a photograph of the front of your store. Some have protected dealerships. This means that if someone else is selling their brand within a certain distance, perhaps 5 miles (3km), you can’t also sell the same brand. That’s fine, find other brands that aren’t protected or aren’t yet represented in your neighborhood. You can find the wholesalers online. Often, they find you, sending representatives to your store, to let you know about their wares.

Whereas you might start your store with only second-hand or collectible items, you now have the opportunity to sell new merchandise. The biggest advantage is that you can buy multiples of things that sell well. I have always imagined how nifty it would be to have a store that sells nothing but 25-pound (10kg) bags of dog food. Only one brand, only one type. I’d sell them over and over, the same to everyone who comes in. This is of course an oversimplified dream, but you can imagine that in a typical store it would simplify things if you could sell 100 copies of the same thing.

You’ll find the markup is remarkable in the lower-priced items, if you’re not familiar with retail. Things over $100, in most specialty businesses are marked up 50 percent. So if you pay $100, you sell it for $150. If you can ‘turn’ your inventory six times a year, meaning sell six of those $150 items in a year, your profit will be $300, on what amounts to $100 invested. A 200 percent annual return on investment (ROI). Compare that to a money market account! But wait, it gets better. the mark up on things in the $5 range is 100 percent. So things that you sell for $10, you paid $5 for. And under $2? It can run as high as 800 percent. If your business sells a lot of left-hand-threaded ‘thingamajigs’ for $2 each, you may find that you can buy them for 25 cents each. But you do have to sell a lot of left-hand-threaded thingamajigs to make any real money.

Insurance presents an interesting quandary. You want to be covered for liability, especially if you’re selling anything like ladders, saws, bikes or automotive accessories. But at first, you may not be able to afford $500/year for general liability insurance. On the other hand, if you can’t afford that. then you have no money, and no lawyer will take the case against you, because there’s no money to be had. So, you can buy insurance when you can afford to. By then, you may have assets to protect.

The one hole in the theory is that you might want to help people who have somehow have had a loss due to something you may have done. Its like driving a car. You want insurance in case you bump into someone. You want them to have their fender fixed without paying for it out of their own pocket, or your pocket.

So, my advice regarding insurance is to keep it high on the priority list, and get it as soon as you can after you’ve decided you’re going to grow a business.

Most local insurance agents are a bit unfamiliar with general liability insurance for businesses, but they can talk to their parent companies or refer you to agents who know how to help. Shop around, because you’ll find the costs vary considerably.

Most general liability insurance comes packaged with some other things that you might enjoy having, such as loss of contents. If your building is flooded, and if you have the right insurance, you can be covered for your lost inventory, equipment, and even loss of income while you were repairing the damages.

Then there’s advertising. The huge mistake most new retailers make is to buy too much of the wrong kind of advertising.

Especially when you are starting out, try to do as much as you can with free publicity. If you’re offering something new or different, or even if only something about what you’re offering is new and different, the newspapers (press releases, editorials), TV and radio stations will want to tell the public about it. After a while, when your initial publicity wears off, maybe you can invent something else that’s new and different about your business, and get another round of publicity.

In absolutely every case I can think of, placing display ads in your main newspaper, your local ‘throw-away’ newspapers, merchant maps, or anything else like that, works remarkably poorly. In this country, literally billions of dollars have been spent on advertising that brings absolutely no new business.

The advertising salespeople always have the same story when your advertising doesn’t work: “You didn’t buy enough yet.” Don’t fall for that!

Coupons work better, but don’t pay very much for any sort of coupon ad campaign. In fact, I’d suggest staying away from that altogether, unless you can make the coupons yourself and place them with restauranteurs, on bulletin boards, and so on. The nice thing about coupons is that you have a way to gauge the effectiveness of your advertising.

A reasonably small yellow pages ad, in the main phone company phone book (not any sort of third-party phone book) can be useful. But today’s customer mostly looks online, trying to find your phone number on your website.

So, of course you’ll want to build a website. Even if it’s just a home-made blog with a couple of pictures of you at work, your storefront if you have one, etc. All you need to do is display your phone number, hours, directions and a description of your products or services. In most cases, the website won’t initiate new customers. They need to have heard of you elsewhere, then they’ll use the website to see if you carry X-brand, or if you’re open on Sundays. So, don’t spend any significant money on a website.

In some cases however, SEO – Search Engine Optimization can work wonders. The basic idea is that you put product or service and the name of your community in the right places on your website, and the search engines such as Google, will display your website high on the page of search results if others in the same product line, in the same community haven’t already optimized their pages in the same way. You can read much more about website and business in the Website chapter.

Craigslist can be useful if it serves your area, and it is free! See the Craigslist chapter for techniques for maximizing Craigslist.

Once your business grows, you’ll want employees. There are four ways to handle this:

1. Only when your business is very small, you can pay a part-time person in cash to help you out. This is truly illegal but seldom enforced. So, you’ll want to seriously consider the following alternatives:

2. Contract worker: This is not an employee at all, but a person who technically has their own business and is designated to provide a specific service. This may be delivery, repair, cleaning, or commission sales. It is important to understand the distinction between a contract worker and an employee. Generally, the contract worker sets his or her own hours, often works off-premises, has his or her own tools, and does a specific task. If you can tell this worker to clean the bathroom, then this person is not a contract worker, but an employee. You can pay this person like any supplier – just pay cash or write a check weekly, monthly, whenever, in trade for an invoice. Contract workers are entirely legal – assuming they’re not illegal aliens or anything else that violates other labor laws. Be careful about having contract workers rolling around in vehicles. You’ll want to make sure you have the right insurance coverage if anything happens.

3. Temporary: You can contact a temporary agency (or “head hunters”) to get workers. This involves almost no paperwork on your part. All you do is pay the temp agency every month. They take care of all the employee insurance, the taxes, everything. But they also charge you 30 to 40 percent more than the employee would cost you directly. ‘Temporary’ is just a term. If you and your ‘temp’ like the arrangement, it can last as long as you both wish.

4. Employee(s): To do this legally, you need to provide workers’ compensation insurance and collect and submit payroll taxes. New software packages make this easy, but it gets even eaiser when you use an agency that exists for the sole purpose of helping you with employee paperwork. ADP is an example. You tell them the name, social security number and amount of pay for any new employee. At the end of every pay period (week, or two weeks), you tell them how many hours the employee worked. They do all the magic, filing federal forms, state forms, collecting from you any taxes that are required, sending those taxes to the government, and provide you with whatever accounting you may want. Occasionally they forward a form to be signed. For all this service, they charge around $50 per payroll period per employee. Another version is a bookkeeper who comes to your place every week for an hour or two, files all all your paperwork, pays your bills, fills out any tax or official forms, has you sign a document or two, offers suggestions to organize your business better, and then comes back next week. This is great, and relatively low cost, so you can focus on what you do best, and don’t have to learn anything. Bookkeepers are not licensed or tracked in most communities, so be sure you get a good one – one who knows what he or she is doing. When shopping for a bookkeeper, ask about training and experience, and check references. With a bookkeeper, probably more than any other worker, you really want to check references. In addition to possible embezzlement, you could get into trouble with the government, or lose money, if your bookkeeper is confused or uninformed. With a great bookkeeper, you’ll learn about and implement utility discounts, better credit terms with suppliers, and other tricks that might more than conpensate for the bookkeeper’s cost.

When hiring a worker, make sure not to discriminate. You can read more about this, but basically, be fair. Hire people based on their skills (including being able to co-exist with others in your business), and on their references, not based on skin color, sex, religion, etc.

So you see, it’s all easy. Especially if you think about the process only one step at a time.

And, it’s reasonably safe and likely to succeed if you remember the two rules:

1. Don’t spend more than you take in.

2. Don’t invest money you can’t afford to lose.

You may be amazed at how much a small store can grow, and how it can grow from almost nothing. Especially if you let it be a natural process. Imagine that you happen to like Lowrey organs.

Now, that may or may not be your favorite contraption, but they are expensive. So, if you happened to like them, you might eventually get yourself a used one on eBay. Perhaps it’s an old one and costs you only $1,000. You play it, enjoy it, and in time get a newer but still used one for $4,000. You sell the first one on Craigslist, and to your surprise, it brings $1,800. So, you put your $4,000 organ up for sale at $6,500, just in case someone would actually pay that much. And sure enough, after a bit of wheeling and dealing, you agree to sell it for $6,000. But now, you have no organ! So you quickly order another on eBay. Two in fact. And you end up selling them. Fast forward a year, and you have four Lowreys in your garage, and two in your living room, and you’re selling one every week or two. At some point, you realize you’re making $30,000 per year with your organs, and so you quit your job, devoting your full time to it. Now, you’re making $50,000 per year, and have $20,000 in a savings account. So, you rent a store, put the six Lowreys you currently have in the store, order four more, and things just keep growing.

As the years pass, you almost don’t notice the growth of your business, because you’re having such a good time. You spend your days playing your various organs, demonstrating them to customers, or just noodling around for your own amusement. You get to talk shop with lots of other people who love organs, including your sales people. Eventually you get a Lowrey dealership, and we won’t even talk about your income ten years later, because, well, wealthy people don’t talk about their money!

For more specifics, see General Business Action Pack.