Wednesday, August 20, 2008

10 Tips for Starting a Business - Tip #5 - Basic Operations

You're really starting a business. Where is that business going to be? Now is the time to start planning your operations.

Is your headquarters in the basement of your house? Your garage? An empty bedroom? Or are you going to go out and rent a building or a space in a business incubator? This is one of the basic questions you need to answer. How much will it cost to rent space? Do you really need to do this?

One of my clients, a fashion designer, designed all of her creations in her basement. She had her patterns, her computers and her samples all in the basement. To manufacture her clothes, she ordered fabric from France and had it shipped to the manufacturers in New York. There, the pattern makers, cutters and sewers mass produced the clothes. Then, they shipped the clothes (the inventory) to a warehouse. The warehouse shipped everything to the boutiques. It was quite a process. Brigitte, the designer, found that she would need far more volume if she wanted to contract with overseas producers in places like China or Turkey. That's why she manufactured in New York.

Another client, Teroforma has their headquarters in the same building as their warehouse. They do their own shipping to consumers and to retailers. Their inventory is manufactured by artisans overseas. But while the management was finding designers and artisans, they worked out of their house.

Another client, MyBroadway.com, has its production studios for producing proprietary videos in the same building as its offices in New York City. This gives the company a distinct advantage.

What do you need to provide your service or manufacture and sell your product? If you're an inventor, will you license your design or actually manufacture and sell your product?

You need to think all this through and price the alternatives. What will computers cost? Furniture? Overhead? Personnel? Security? Should you lease or buy?

Start doing your homework.
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