How did the business start?
Image: Chris King, the proprietor.
The Web site went live in October 2005 but Chris, the proprietor, worked on the development of the business for eight months previous to this. She had to carry out lots of research to see if her business idea was viable. This included:
- Finding out who her competitors were
- What the market size was
- Whether there was a gap in the market
- How easy it would be to raise the finance
- How she would maintain cash flow in the early stages
- How she would market the business
- Finding optical manufacturers to work with
- Finding a Web site designer and builder
She also had to develop her own IT skills. In addition, Chris needed to work out what resources she would need to run her business and what legislation she would have to comply with. The business would not have been able to start until all these areas had been organised. She also used a government sponsored Enterprise Advisor to check out the feasibility of her ideas.
How did the proprietor raise the funds to start the business?
As a sole trader, Chris has used her own savings to start the business. As the business develops Chris intends to turn Spextacular into a private limited company since she will need to bring others into the business in order to raise capital for its expansion. If, as she expects, the business is successful, Chris intends to turn Spextacular into a private limited company from April 2006 since she will need to bring others into the business in order to raise capital for its expansion. As an online business, the start-up capital needed is relatively low. However, money is still needed for the Web site development, stock and stationery as well as computer equipment and phone, fax and printer.
To run as an e-tailer, you have to have a system for taking payments online and need a merchant account and the services of a Payment Services Provider. These all cost money to set up and these services take a percentage of all payments made by customers, which is another cost Spextacular has to cover. Also Chris has to market the Web site to raise its profile and let people know it exists. Chris has set aside a monthly budget for this.
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