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Before you start a business you must realize that you will need capital - and you will need to justify your financial start-up capital outlay. You must also have a pretty good idea of your operational costs so that you can get a reasonable ROI on that investment in your new company
No matter what type of business you are going into, you obviously need to make sure that it will generate that revenue you anticipate. Hobby businesses are fun and often enjoyable, but make no mistake if you are going to make it in the boat cleaning and detailing sector, you need to make money. And you need a positive cash flow if you are going to grow and expand your business.
Perhaps we should create a case study here to better illustrate what I am saying. Let's take a boat cleaning business down at the local harbor or marina and let's talk about capital expenditures and your original start-up costs.
We first need to talk about your equipment needs, as you are going to need buffers, supply box on wheels, a pressure washer, portable generator, lighting system, safety gear, shop vac, extension cords, boat fenders/bumpers, and perhaps a vehicle or pontoon boat to mount your equipment onto - depending on how you will operate your business.
Indeed, you will also need a business license, marina commercial activity permit, fictitious name statement, bank account, and you may also wish to incorporate, all of which cost money up-front before you earn dollar one - and let's not forget insurance too. Next, you will need marketing materials such as; brochures, business cards, a website, uniforms with logos, etc.
We must also talk about initial boat cleaning supplies, as you'll need an inventory of aluminum, brass, and chrome cleaners, organic degreasers, waxes and polishes, and squirt bottles, wax pads, towels, and accessory tools to do the cleaning. Normally, your cleaning supplies are an operational cost, but for your initial inventory they should be considered a capitalization cost in your up-front figures before you start.
It is not my contention to overload your mind or give you reason to give up before you start, but you do need to know it takes money to make money and there are real costs. That money has to come from somewhere, whether it is savings, from a partner, borrowed from a bank or a family member - these are real costs which must be taken into account. So, take out a note pad and start by listing all the items that you need and the amounts for each item and add them up.
After you've done this, I'd like you to double that number, because entrepreneurs always seem to be eternal optimists, and as a matter of thumb most businesses cost twice as much as projected and take three times longer to get going than anticipated. Meaning you need a real buffer between your figures, no matter how carefully prepared, and the Murphy Prone world of reality.
Now that you've come up with what you believe to be a solid start-up capital figure and you've done your due diligence; talked to an insurance agent, a business formation lawyer, the Marina Superintendent, etc. and you have what you believe to be all the costs, and you've doubled it - now we must determine if you can make money operationally in your boat cleaning company.
It would safe to figure that you will easily use $150 to $250 per week in cleaning supplies, even with a moderate customer base. Even if it is yourself and a part-time helper in the beginning servicing 1-2 boat details per week, 5-10 regular customers who get weekly boat washes, and a few side jobs for various ancillary services.
Washing towels is another expense you'll have, so figure $15.00 per week on that, and shrinkage of $10.00 per week as well. Also fuel to get to the Marina and back, unless you have an electric car, figure $30.00 per week. Your communication such as web hosting, cell phone, text messaging figure will run approximately $25.00 per week in real costs. On-going printing costs $5.00 per week.
One of your biggest expenses will be labor, and you should expect to do most of the work yourself in the beginning, perhaps with one other helper. Your labor costs per worker will be approximately $12 to $18 per hour including taxes, workmen's compensation, and health care insurance. Obviously, you will want to watch that cost carefully.
Now then, are you beginning to see why you must sharpen your pencil and why pre-accounting during the business formation stage of your new company is so important? If you haven't realized it until now, maybe you need to go hug your accountant, they are worth a lot more than people give them credit for, and once you go through this process you'll see why. Please consider all this
No matter what type of business you are going into, you obviously need to make sure that it will generate that revenue you anticipate. Hobby businesses are fun and often enjoyable, but make no mistake if you are going to make it in the boat cleaning and detailing sector, you need to make money. And you need a positive cash flow if you are going to grow and expand your business.
Perhaps we should create a case study here to better illustrate what I am saying. Let's take a boat cleaning business down at the local harbor or marina and let's talk about capital expenditures and your original start-up costs.
We first need to talk about your equipment needs, as you are going to need buffers, supply box on wheels, a pressure washer, portable generator, lighting system, safety gear, shop vac, extension cords, boat fenders/bumpers, and perhaps a vehicle or pontoon boat to mount your equipment onto - depending on how you will operate your business.
Indeed, you will also need a business license, marina commercial activity permit, fictitious name statement, bank account, and you may also wish to incorporate, all of which cost money up-front before you earn dollar one - and let's not forget insurance too. Next, you will need marketing materials such as; brochures, business cards, a website, uniforms with logos, etc.
We must also talk about initial boat cleaning supplies, as you'll need an inventory of aluminum, brass, and chrome cleaners, organic degreasers, waxes and polishes, and squirt bottles, wax pads, towels, and accessory tools to do the cleaning. Normally, your cleaning supplies are an operational cost, but for your initial inventory they should be considered a capitalization cost in your up-front figures before you start.
It is not my contention to overload your mind or give you reason to give up before you start, but you do need to know it takes money to make money and there are real costs. That money has to come from somewhere, whether it is savings, from a partner, borrowed from a bank or a family member - these are real costs which must be taken into account. So, take out a note pad and start by listing all the items that you need and the amounts for each item and add them up.
After you've done this, I'd like you to double that number, because entrepreneurs always seem to be eternal optimists, and as a matter of thumb most businesses cost twice as much as projected and take three times longer to get going than anticipated. Meaning you need a real buffer between your figures, no matter how carefully prepared, and the Murphy Prone world of reality.
Now that you've come up with what you believe to be a solid start-up capital figure and you've done your due diligence; talked to an insurance agent, a business formation lawyer, the Marina Superintendent, etc. and you have what you believe to be all the costs, and you've doubled it - now we must determine if you can make money operationally in your boat cleaning company.
It would safe to figure that you will easily use $150 to $250 per week in cleaning supplies, even with a moderate customer base. Even if it is yourself and a part-time helper in the beginning servicing 1-2 boat details per week, 5-10 regular customers who get weekly boat washes, and a few side jobs for various ancillary services.
Washing towels is another expense you'll have, so figure $15.00 per week on that, and shrinkage of $10.00 per week as well. Also fuel to get to the Marina and back, unless you have an electric car, figure $30.00 per week. Your communication such as web hosting, cell phone, text messaging figure will run approximately $25.00 per week in real costs. On-going printing costs $5.00 per week.
One of your biggest expenses will be labor, and you should expect to do most of the work yourself in the beginning, perhaps with one other helper. Your labor costs per worker will be approximately $12 to $18 per hour including taxes, workmen's compensation, and health care insurance. Obviously, you will want to watch that cost carefully.
Now then, are you beginning to see why you must sharpen your pencil and why pre-accounting during the business formation stage of your new company is so important? If you haven't realized it until now, maybe you need to go hug your accountant, they are worth a lot more than people give them credit for, and once you go through this process you'll see why. Please consider all this
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