Thirteen months ago, we opened our precious metals store. We've been blessed in a number of ways, and have made a pretty good go of it so far.
A month after we opened, literally right next door to us (we share a common wall), a mailbox franchise opened. They shut their doors Saturday night.
Same town. Same location. Same economy.
Totally different results. Why the big difference?
I think part of it had to do with homework. We put a great deal of time into researching the market and our competition. I can't believe they did the same.
For instance, the space we took over and renovated was previously used by a .... mailbox franchise! The space had been empty for 2 years before we took it over. While we were doing our build-out, the new mailbox franchisee came by -before he had signed his lease - and we fairly screamed at him to not open his store, at least not in this location.
He didn't listen, and he dumped he and his wife's life savings into the shop. Poof! All gone... It was horrible watching them move everything out.
So, what makes a successful business? At the core, you must have a product or service that is wanted or needed in your market. I know that sounds simplistic, but you've got to know your market. The suntan lotion market is limited in Alaska when compared to Florida.
If you want to increase your odds of success, see if you can find a business that sells one of two things: Money or vice - the two things for which there always seems to be a market.
And there are plenty of options for a small business owner to make a couple of bucks selling either of them.
Money - check cashing, payday loans, pawn shops, bullion shops, "Cash for gold" shops.
Vice - smoke shops, liquor stores, and bars on the legal side. The vice side also has the illegal side - pot and other drug sales, moonshiners, prostitution. Somewhere in the middle of the road would be porn.
Obviously, the vice options will have a lot to do with your moral outlook on life. I'm a die-hard libertarian - do whatever you'd like as long as you're not infringing on the rights of another, and everyone involved is a consenting adult - but I'd never get involved in the sex trade. It's a personal line I won't cross.
That being said, Vice Sells. Always has, always will.
Some other things to consider -
Not seasonal - boom or bust seasons can be rough. If this is going to be a second income stream, having a psycho month or quarter can put a strain on your regular job.
Consumable - if they don't have to come back for more, what you're selling had better have one hell of a profit margin with that first sale. Gaining customers is expensive. Leverage that investment as many times as you can.
Along those same lines, it can be something that is "hoardable" so people keep coming back even if they haven't fully consumed their previous purchase - like PMs, ammo, long-term food storage, alcohol.
With the firearms training, I "graduate" them to additional, successively advanced classes.
Unique or value-added - you could sell milk (not seasonal, consumable) but it is VERY readily available. Too much competition. In our precious metals shop, we sell an easily obtainable commodity - gold and silver. You can get what we sell less expensively online. We add value by providing immediate delivery, education, and annonymity. The latter two are a big edge over online bullion sellers.
We also are fortunate that our primary competitor in town is an ass. Seriously, he'd been the only game in town for so long, he forgot how to treat people. Don't expect that kind of gift if you open a business, but take advantage of it if it's given to you.
Good profit margins - You either want products you sell a ton of that have slim margins, or if it's few sales, you need big spreads. The mailbox guy has slim margins, and slim sales. Not the right combination...
Be laser focused - You need to obsess with success. Half-assed effort usually ends up with half-assed results. You have to know in your heart you're going to succeed.
I don't know if you've heard of the book, "Think and Grow Rich", but I read it a million years ago. There's a deal in it where you write down specifically how much money you're going to make, when you're going to have that money, and how you're going to earn it. You then say your little "mantra" - out loud - a couple times a day.
Get the book, give it a try. Seriously. It focus' your mind on your goal.
Be nimble - Things change. Just ask the old buggy whip industry. When I started Bison, its primary focus was in doing risk management consluting to small businesses. Securing data streams/storage, market change dynamics (crystal ballin'), emergency prepearedness.
That morphed into business disaster recovery. Nada, zip, zero. That morphed into personal preps and armed self-defense. Ding! Ding! Ding! We have a winner! It's now a reliable, supplimental stream of income.
You MUST adapt as things change. Markets, micro/macro economies, government intrusions, personal tastes. With the PM store, this surge to PMs will subside at some time. I believe that either the economy will strengthen, or the goverment will make it more difficult to purchase and sell precious metals as a hedge against their policies. I think the latter will happen first, so we're noodling through ways to adapt and to help our customers be successful.
Go forth and succeed!
Copyright 2011 Bison Risk Management Associates. All rights reserved. Please note that in addition to owning Bison Risk Management, Chief Instructor is also a partner in a precious metals business. You are encouraged to repost this information so long as it is credited to Bison Risk Management Associates. www.BisonRMA.com