Build customer loyalty. It’s easy to take this for granted until you don’t have it. Our first retail business purchase in Nova Scotia involved a long-established business with a loyal customer base. And the customer base was different than that of our new business in Smiths Cove. There was actually some industry around Fundy’s Mountain General Store – fish plants as well as wharves from which the many lobster fishermen in the area worked. There is only one year-round business near Three Little Bears: auto salvage/body shop. Owners of a new business will have to change the buying habits of their customers-to-be. This can take time, especially in areas like Nova Scotia, where people seem more reluctant than most to adapt to something new. And the owner will likely have to bend some of his or her pre-conceived notions about what customers want. Building customer loyalty may mean trying harder to get to know people in the community. We have distributed flyers, put up a big letterboard sign advertising specials, placed ads in the local paper and developed a couple of websites highlighting different aspects of the business.
Analyze your location. Location is arguably the single most important factor in the success of a business. Our new business is the only retail outlet in town (a good thing), but yet Conway, a large shopping area (by Nova Scotia standards) is a five-minute drive away via the Highway. Although most in the community would save money and time by buying a loaf of bread or carton of milk from us rather than driving to the supermarket, some still prefer to pay the extra gas and buy it at the supermarket, mainly because that is what they are used to doing. The challenge for us is to look at our location and see what business framework would suit it best.
Unfortunately our study has led us to the conclusion that what would really work here is a takeout restaurant catering to the tourists and campers. (And we swore we would never operate a takeout again!) There is only one licensed restaurant nearby, and it is part of an inn. This would mean renovating the building to accommodate a commercial kitchen or leasing/purchasing a chip trailer. And because our property backs onto a trail system that allows ATVs, we are considering renting out ATVs. As well, wagon rides (ATV or tractor pulled) along the trail system would support the community’s efforts to highlight its history and spectacular views.
Seek funding. “It takes money to make money” is so true, especially for start ups. But where does a new business access the money needed to make money? Here in Nova Scotia there are economic development agencies whose mandate is to help small independent businesses in their jurisdiction get a start. As well credit unions can access the provincial-government-backed Small Business Loan Guarantee Program, which will guarantee most of the funds lent to an approved business so that the credit union’s risk is low. The Business Development Bank of Canada is another option, though they want to see a track record, an impossible feat for a business just starting out! The bank holding the business banking account may consider a small business loan, but they will be less willing to take on risk. Composing a concise business plan will likely be a necessity to acquire funding, but in order to complete this, a business owner needs to have a clear vision for the business. Sometimes (as in our case) this may change as the owner’s assumptions and perceptions are revised by the reality of customer needs and preferences.
Know when to pack it in. There are instances when a business simply isn’t viable. Fortunately I don’t believe this is the case with our business. Ours is basically a seasonal business trying to make a go of it in the off-season. But if a business has been struggling for several months with low sales, it is probably time to take a serious, objective look at its prospects. The problem may be competition. Or perhaps funding shortages prevented the owners from building up enough inventory to make it worthwhile for customers to patronize them. Whatever the case, it may be more sensible for the owner to seek paid employment than continue struggling to make the business work. Or to move the business to a new location that would hopefully be a better fit.
Starting a new business can be rewarding. At its best it is an opportunity to meet unmet needs. But if the owner’s goal is mainly self-serving (make a lot of money, set his or her own schedule, be his or her own boss), meeting the reality of customer demand head-on may create a costly disappointment.