The First Days of Small Business


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When we started our first business some sixteen years ago, we thought we had the answer to everyone’s need for a great rehearsal studio. Rehearsal studios are soundproof rooms, which give bands a place to rehearse their music without disturbing the neighbours.

At the time we thought we’d done everything right. We had done business plans, projections, studied the market and found an area where there was a need. We found a building to lease that gave us an initial low rent while we did a fit out inside. We had covered most bases, we thought.

But business always throws a curly one your way. Firstly, the building coordinator. Turned out he had more important jobs to do. We also found out later that his business was falling to pieces. In turn that delayed us. The builder. Agreed to a price, but could not deliver on time. We did get it finished, with a lot of hassle and extra money. Delayed again. The electrician. They were great. On time, on budget. The air-conditioning expert. Did not deliver. Ended up installing some machines he had lying around that did not push out enough air. He also took about a month longer than he said to install, completely ignored our continued complaints, and then disappeared.

And there was the local council. We submitted a business application and a development application. What a nightmare. It took about four planning officers and two years to get final approval. We had to do deals with the landlord, because the building was so far behind in its council requirements. But we were trapped, we had started building. Big mistake.

So, in effect we had been delayed by about three to four months. Now we were into normal rent. Ouch! No income.

The big day came and we opened the doors. Where were all the bands? Next day, no one. Next day, one band only. We were advertising in music magazines, distributing flyers at venues and music shops, running opening specials, where were they? Lesson one. Bands all talk to each other. That is the way they get the word about. In effect it took about eight months to create a decent stream of income. We had fallen into the red very quickly.

Then there was the recording studio. This was built at the same time. One of our great fears was that noise from the adjoining rehearsal rooms would leak into the studio. To make sure we got it right, we hired an expert. He had built many studios in Sydney, big name studios. He went over the plans, made a few changes and OK’d it. He was wrong, we heard everything! We got another expert in. He said we should sue the previous one. More cost. We did not do it. We spent more of our own time and money to fix the problem. It was cheaper.

Our working capital was insufficient to fund the extra time we’d taken to get the business up. This is a common fault, if not the most common for new business failure. It is better to over compensate for working capital than under estimate. Have a big pool of money rather than a small one at your fingertips.

So here are some thoughts for you.

Your business budget should contain ample working capital. You may think you don’t need it. OK, you may not, but if you budget for it, it will be there if you need it. Remember this can be money that has been approved, but not drawn down. Therefore you don’t have to pay for it unless you use it.

If you have to fit out a space, add time to what you are told. I would double it. At least if it takes less, you will be ahead. Get a solid contract from all your tradesman. Fixed price, fixed time. It may not work out this way, but you will have a starting point to work from if it all goes sour. You could even offer a cash bonus for getting the job done on time and budget. A few thousand dollars could be peanuts in comparison to what you will lose waiting for an extra month or two!

Get as many of your local council requirements out of the way before you build. Remember, these guys do not work on an hourly rate. They don’t really care that it’s costing you a bomb every time they open their mouths. Wait before you build. Believe me its worth it.

Depending on the market, you can get really good deals which will give long rent free periods to help you build and get going. Otherwise you may be able to broker a deal whereby you pay less in the first year, then increase the rental from there. Of course, you must be certain of your business plan to sign to a lease.

And lastly, don’t expect your business to be filled with customers on the first day. Even if you can do that through good marketing, don’t expect it to happen every day initially. Plan for the scenario that it will be a gradual build. That is, have working capital on hand to help you through the first year.

So going back to our story. We did build the right rehearsal studio in the right place. The market needed us. We eventually had one of the busiest rehearsal studios in Sydney. But through all the mishaps, delays and cost, it ended up taking us a few years to get over the hump.

Those first days can be exciting as they are frustrating. But keep positive, work one problem at a time, double check the detail and don’t rush with your decisions. It will be worth it in the long run.

Geoff McGarvey is a member of the team from Makes Business Easy. Our website is devoted to gving you real world, useable advice about business. Learn about how we made it through sixteen years of business as well as great information from our regular contributors who specialise in many areas of business. We also feature our ‘Millionaire a Month’ interview where you get to hear strategies and tips from business people who have made a million or more. We think you should hear it straight from the mouth of those that have done it. Find out more at


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