Business Insight 4 – Startup capital (blog & vlog)

1973

As far as I can remember it went something like this: Supertramp opened to a mini fanfare, as we had run out of money and didn’t have sufficient resources for a decent marketing splurge or a proper launch; our bought-in stock looked very thin around the shop; and our ‘in-house’ denim jeans just didn’t cut the mustard, they were awful.

Somehow they just didn’t look cool and were a very poor seller. The bought-in stock that was selling wasn’t being replaced fast enough with similar lines and the slow or non-moving stock wasn’t reduced in price quickly enough to shift and therefore refresh the shop.

We found out pretty quickly that the clothes-buying female of the species gives you upwards of 3 weeks to maintain her interest. She expects to see something new every visit, and on the occasion that she walks around and sees that the same (unsellable) stuff (that she didn’t want to buy) is still hanging on the rails, well that is going to be the last time you see her for a while and her word of mouth is going to kill you off.

I can’t precisely remember how long the boutique lasted, but it wasn’t long, definitely less than a year. We didn’t go bust, everybody was paid; however it was a huge failure. We simply shut up shop. Rodney carried on with his (more) successful record shop and I carried on with my career at Jaeger. I (and my soon-to-be wife) had never left our jobs, we had however blown our savings.

INSIGHT 4:- Try and work out properly how much cash you need to start your business; there really is merit in doing a proper sales forecast and cash flow for the first few years. A new business eats up capital, and then some, and it is very common to underestimate the cash required. These forecasts should be updated very regularly and in line with what actually happens, i.e. Have you achieved the margins? Did you get as much credit as you had hoped? Do you have to give too much credit to your customers? Cash is King!

 

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