Business startup idea..........

[ryansphotomax]

HI all,
A buddy of mine came up with a really good business idea for us to get into. He is thinking of starting a RTO (Rent-to-Own) business in a small town that I used to live in. There are no other RTO businesses within 50 miles of where we want to launch it at. It is in a "country town" where there are alot of below middle class people and we think that this idea could really take off!
He is in the process of applying for grants and SBA loans for the startup costs and to run the business for a year.

None of us have any formal business experience but we all have an entrepreneurial drive to build something great. I know that there are alot of details that will need to be figured out so we will be planning a meeting in the next few days.

Some topics that we will cover:
Location of Building
Name
Advertising
Target Market
How much and quality of inventory
Management of store (Collections, Applications, etc.)
Delivery trucks
Employees
Short-term goals
etc., etc., etc., etc.

If anyone has had any expereince with startups or RTO's, please leave me suggesstions on this idea and good things to consider in this process.

Thanks in advance<
Ryan

[akula]

ryan, the way you talk is an indication that you shouldn't have any problems, unless you break the rules and create them for your self

do your primary market research, don't create problems for your self

disclosure: the fact that your buddy is applying for loans tells me that you have limited experience with sales (because if you have had sales experience, then you would have done the primary research, then you wouldn't need the loan). it seems you're hoping to open a shop and have miraculous expectations to then be flooded with customers

things don't work that way. take the advice. it's cheaper than making the classic startup mistake, that I infer from the facts that you've given - which may be limited

do primary research, then open shop - it's cheaper

[bkamanski]

I stll do not know why people want to work so hard! The Internet has made it quite easy to earn a substantial six figure income without all the hassle of a brick and mortar business! You might want to learn from a 48 year old who's been there done that. Owning a business like that will own you. Where is the Freedom? Here is true freedom... http://www.58Prosperity.com Brad

[MfG]

it's great, i wish you the best of luck! only suggestion i can give is in the marketing - get the word out!

if you want, you can get some feedback from the folks nearby first, tell them you're going to start your business and get some response. And build on from there!

[LROT]

I agree with bkamanski . The internet has made is so easy to earn a great income. Low overhead and high revenues. Good luck.

Laser Recharge of Texas
www.laser-rechargetx.com

[Sam Barona]

I wish more posts asking for advice where like yours.

Location of Building: High traffic - low cost: You are after low-income punters, so look at things like unemployment offices (or similar) in your town. Most businesses dont want to be next to one of these, so its perfect for yours.

Name: Use something very simple, easy off the tongue and catchy to match your target market. You can even afford to be as cheesy as you like; they are not interested in designer names; pricing is their key driver, as is ease of ownership. If your name reflects these, so much the better.

Advertising: Local market with an easily recognised social segment; leaflet your ass off my boy. Benefits, benefits, benefits. Remember that all great adds hone in on one of the 7 deadly sins (yours are laziness and pride). Use killer copy to sell them these shamelessly.

Target Market: Depending on your products will be families (TVs, Home Cinema systems, PCs, outdoor toys like trampolines, etc), singles (mobiles, Ipods, branded gear, etc), etc.

How much and quality of inventory: quality needs to be good but affordable, easy to recognise brands (pride). quantity can start small and will depend on the size of the segments most predominant in the area; create a feeling of scarcity that will increase impulse desicions (buy it now as it wont be here next week)

Management of store (Collections, Applications, etc.): Recruit someone with a reputation in the area to do your collections. A middle class person knocking on the door of a less fortunate one will not be as welcome, and they are more likely to give you the run around (they are more street wise than your average middle class person). You will deal with a great deal of defaults, so you need to hedge this with high interest rates. make sure you have a credit broker who can turn around applications on the spot 80% of the time. Critical as these are impulse decisions. people are buying what are luxuries to them, and if a bill arrives between them applying and you deciding, then you're likely to lose a lot of your punters like that.

Delivery trucks: No need, you're a local business serving a local market with C demographics. home delivery (unless for much larger items) is not going to cut mustard with them. Its taking the laziness beyond their means.

Employees: older and hard. people will try it on, or get angry on a negative response of an application; so you will need someone who can easily stand their ground and take control of the situation.

Short-term goals: Do your market research, but focus on primary research as there wont be much in terms of secondary sources covering such a small area. Your financial goals will be easily derived from this. Secure your cheap site on a high traffic spot.

Good luck

Sam

[mysha]

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[Sam Barona]

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