The (Pipe) Dream of a Small Business

This blog will of necessity focus on my personal experiences, but I'm sure there are millions of folks out there who share the same dream and the same brick walls. I'm not sure what I'm looking to get out of this, except to lay it on the table and maybe get some thoughts from people who have been there and overcome.

Some of the comments on my Revitalizing Brookline series have really hit home for me in a painful way. Specifically, when I've talked about needing to attract new small business owners of a hip and/or cultural sort to the area, I've been challenged to put my money where my mouth is, and open one up. Now, I'm sure that the guy who made those comments didn't realize how badly he was twisting a knife in my ribs when he said that--his intent was genuine, and I'll be dead-on honest: I wish to God I could open one up.

For well over a decade now it's been my dream to open my own business. I'm a writer of fantasy fiction, a tabletop game designer, a lover of books and coffee, and one of my degrees is in religious studies--I have a deep and abiding respect for almost every religion and faith path as a result. Thus, the "elevator pitch" for my dream business would be kind of like a small Barnes and Noble for geeks. It would combine a coffeehouse with a book store focused on sci-fi/fantasy, history, tabletop games, and world religions, and add in things like an apothecary, crystals, and off-the-wall items like jewelry, action figures, etc.

Opening such a business in Brookline might be problematic as I wouldn't want to step on the toes of Cannon Coffee, the Geekadrome, or Moonstones in Dormont. But it's long been my dream to have such a business.

I realize that running your own business is a 24/7 job, especially in the beginning, and I'd have no problem with that. I have a pretty damn good work ethic, all things considered. I'm creative, driven, and have a decent head for business--I have to at my current job as business manager and executive administrator for a major research institute.

Here's the major issue. There's an old adage about needing money to make money, and it's wildly true, especially when it comes to opening a small business. I'm looking at, bare minimum, needing $125,000 to get going and be solvent for a couple months. It would be better to have $250,000-$300,000 to ensure I have a cushion for those lean times while I'm trying to get up and running. According to some quick calculations, I'm looking at nearly $55,000 just to open the doors. $100,000 would get me through two months; $125,000 through three. That assumes it's just me for those first three months, that there's no payroll or healthcare or benefits to worry about. And if I'm not doing solid business by then, it's good bye, another failed business.

I have no idea where I could possibly come up with that kind of scratch. Even to get a small business loan I'd need 20-25% down. So let's assume I'm trying to go for a $250,000 loan to keep me going for maybe 6 months, after which point I'll hopefully be breaking even, if not making a small profit. I need $62,500 in the bank before I even walk in to ask for the loan.

"Well, then," someone is bound to ask, "Why not pick one aspect of the business and start small, then build?" That's good advice, but the two businesses I'm looking to combine here (the retail and coffeehouse) are actually quite complimentary so dropping one wouldn't necessarily reduce my startup costs all that much. I could maybe get it down to $45,000 to open the doors, $90,000 for two months' solvency, and $110,000 for three months. Even going for, say, a $200,000 loan I'd be looking at needing $50,000 in the bank.

I have a mortgage to pay. A car lease. Utilities, insurance, food. Debts from three college degrees and various other bits and bobs that pop up for all of us in our adult lives. Even attempting to save that much money would put me well past retirement age by the time I got it together. Assuming I could somehow just clear my debts tomorrow, even if I was able to put up $500 a month towards saving, I'd be looking at 9 or 10 years before I could save up the money to go beg for a loan, and by then, I'd be about 50. It's just not realistic. I think my biggest mistake in life was the one that so many of us make: when I was young enough to start this stuff, I didn't have a clear vision of what I wanted out of life yet. I was too into "being young," to bother looking at the future. Of course, ever since September of 2001 all of us have watched our future change into something a bit bleaker than it was in the 80s and 90s. But that's beside the point.

I look at what I need to open my business (and note, I'm just talking about the monetary issues here--I know there's WAY more than that, too, in terms of a business plan, suppliers, etc.) and it just seems completely insurmountable. I just don't have the means to come up with that kind of money. You read about angel investors and whatnot, but what kind of angel investor is going to cough up cash for a small retail store and cafe? Unlikely at best.

And yet, I look around and it seems that thousands upon thousands of people--normal, non-wealth people--have done it and been successful, even in today's economy. I find myself wondering how? What's the secret? How do you pull it off? Is there a process? Some sort of hidden path to walk? Where the heck does all this startup money come from?

Anyone with an extra few hundred grand to spare?

That's a joke.

Sort of.

I hate the idea that I'll have to abandon this dream, but with each passing day it's looking more and more like that's just the reality of it. I'd love to hear the strategies of anyone who has successfully realized this dream.

For anyone who is wondering, here's my basic quick-and-dirty breakdown of startup costs:

Inventory: $20,000 - includes books, games, coffee, snacks, condiments, napkins, stirrers, and various other merchandise.

Rent, Improvement, and Operating: $15,000 (and that's conservative). This includes rent, utilities, equipment repair and maintenance and any renovations that need to be done as well as toiletries, cleaning supplies and equipment. 

IT Costs: $7,000 - this covers computers, networking, and Internet.

Marketing: $10,500 - Covers ads, web design, promotions, and some sort of grand opening event. Without this, nobody will know I exist, and the business will fail--one cannot rely on word of mouth these days.

Grand total: $52,500, which we'll up to $55,000 just to cover those little things you didn't think about. And there's my "open the door" costs for the first month.