Q: I am at an advanced stage of business planning for a new food product and all the indicators are that it will be successful. My projections show I will be doing several million in turnover in the third year, however my bank has been highly critical saying my projections are over-ambitious and not based on reality. What should I do?
A: I don’t know enough specifically about your business but the problem that your bank is identifying is a common one. Sometimes the entrepreneur can get so close to the business idea that they end up overestimating the revenue. In most cases, they are correct in the figure that they project, however they can be years ahead of the actual time when this revenue will be achieved.
This sounds like the case with your projection. I am sure you have done extensive research that is backed with quite a lot of logic. However, if you are suggesting the business will be turning over several million after year three, unless you have discovered something totally unique and will have a brilliant route to market and marketing strategy, then I would tend to agree with the bank.
Think of any successful brand that has enjoyed recent growth and if you have access to any published figures from them, you will find growth is far more gradual than you anticipate. Building the correct supply chain alone could take a year or more, and creating awareness in the market place could take up to five years to get to a high enough level.
I praise you for developing what sounds like a fantastic project, but would urge you to revisit the pace of growth to cover a longer period. It might be an idea to talk with your Local Enterprise Office or Enterprise Ireland and secure the services of a mentor who would be familiar with sales patterns in this area.
Q: I have been running a drapery shop set up by my grandfather in the early part of the century. As much as I have tried new ideas, the sales in our small town are no longer viable and I am not taking a salary. Are there any credible options left open to me?
A: Emails like yours are ones I get all too often, and they cause me to worry about what advice to give. On one hand, I should be saying to you to have one last try and use all of the new marketing tools available to you, like digital media, fashion shows and other fun events to attract customers and generate lots of free PR. However, judging from the tone of your email, you have tried this already and what you may be dealing with is the reality of a diminishing population in a rural area, and the perceived attractiveness of nearby larger towns.
On the other hand, I should be saying to you that it is probably time to close the business and see if you can utilise the property’s asset to either sell or convert into a revenue stream by using it for accommodation or other commercial purposes.
That has worked for many in a similar position.
There is another emerging option. In the UK, hundreds of towns and villages were left with no shop at all. Through a series of innovative projects, they now have quite a long list of community-operated shops, staffed with volunteers with perhaps a paid manager. These community shops tend to be in some of the more main street categories and it’s unlikely drapery alone would work.
Obviously interest would be more as a support for your town, than a profitable commercial venture. It is worth exploring and there is endless reading on UK research. It might give you an in-between option that you have not considered so far, provided it meets your own requirements with regard to an income stream from other sources, etc.
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