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How to Start a Ceramic Business - Seminar - Part 2: Article or Project

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Regardless of what kind of ceramic endeavor you choose to pursue, you need to start with a plan. You need to have an idea of what kind of business you want to set up and then follow a design to achieve that goal.

Depending upon how you want to direct your business venture, your plan can be simple or intensive. You do need to have some kind of outline as a direction to follow, giving purpose, description and goals to include growth expectations.

Some of the things you will need to address include:

1. Create a Name
2. Secure a web domain
3. Make a budget
4. Obtain a checking account
5. Licensing. legal matters and accounting
6. Secure a location
7. Lay out floor plan
8. Gather fixtures
9. Order stock and supplies
10. Set up method of inventory control
11. Set up method of record keeping
12. Turn on utilities
13. Set up the store
14. Advertising Y& Marketing

Step One: A name

Your business name should be simple yet memorable. It should be something catchy but not so unusual as to be difficult for customers to recall. If you opt for an unusual spelling, it will not easily be found by potential word-of-mouth referrals. Example, using Siramik Korner instead of Ceramic Corner is ‘cute’ but not practical because anyone hearing of it for the first time will try to locate the business by the proper spelling and may not even think of the alternate option.

Make a list of a few options and then go online and do a search to see if the name is being used by someone else. You want something that you can ultimately register as your own web domain. Tweak your ‘name’ until you find something you will be happy with. If you can include your name as part of the business in a memorable manner then try it.

When you settle on a name, then secure the web domain with that name as soon as possible. (see: http://www.ceramicsmadeeasy.com/cmez/viewing-article-11-54/general-information/setting-up-your-own-website--beginners-guide.html )

Step Two: A Location

Once you have determined what kind of business you will strive for, you will then determine if you will operate from your home, a warehouse setting or a retail location. Costs will be significantly different for each of the options.

Try to find a location that is not close to another ceramic business. This is not always easy to do because many home-based businesses do not have signage nor are they in the phone book. However, your competition is not the home based business. Competition, in the ceramics industry is rather healthy, but it doesn’t make much sense to locate too close together and have the same customer base. However, the avid ceramist can nose out every nook n cranny and hidey hole ceramics location and haunts them all seeking the most unusual or perfect pieces to whet their appetites. They will settle on one as their home-base and you want it to be yours.

Residential Location

Naturally, your residence will be the least expensive location; but you will want to make every effort to have the business as separate from your living area as possible. Many people turn their basements, garages or some form of out-building into their studio.

You will need to become informed of any zoning requirements to make sure there will be no restrictions. Some locals will not allow a ceramics business in a home if customers visit the site; others will allow some freedom on a small scale often with permission of your immediate neighbors. The primary concern is the added traffic and parking for your visitors. It should not adversely impact those living near you. Though some zoning restrictions do not allow any form of home based businesses, many will allow a waiver for the ceramist who wishes to turn their hobby into a small cottage business.

There are usually some requirements before any city or county will allow a home business, this could be parking restrictions, a separate bathroom for customers, time of day for operation, signage, etc.

If dealing with the public, you will need fire and safety inspections and possibly handicapped access.

Warehouse Location

Warehouse space is the most economical if you do not operate from the home. If you are not looking for, or depending on walk-in traffic, you can search around and find reasonably inexpensive facilities. This kind of location is great for greenware and bisque manufacture as well as mass production.

This type of location does not limit you from having customers, but it will not be easy to garner walk-in business because of its lack of visibility. If you want customers to ‘drop-in’ you will need to make every effort to effectively market your business and be able to financially support it until you achieve an adequate customer base.

Keeping your overhead low will be very important in order to make a profit. If you want customers to come in for shopping or classes, then you need to give serious thought to your location because if you move to something different later, you can pretty well count on losing a large percentage of your clientele.

Consider this when choosing your location: Does it have easy access? Is it large enough to allow for growth? Is it close to your target population? Is it safe for clients and staff when open during ‘off’ hours? Is there adequate parking? Is it insurable?

The Retail Storefront

This location is considerably more costly than a warehouse situation. Most often production of greenware is done at another location so that the square footage may be better utilized for product and classes. It is too expensive to pay premium per foot rents to store your molds, especially when you could easily grow to 10,000 or more molds within a small amount of time.

Free-standing stores are very hard to draw clientele. A lot of advertising is needed as well as good signage. The most difficult thing about having a free-standing facility is that people drive-by multiple times and think that one day they need to stop in and check it out but keep putting it off. Many businesses fold while waiting for that potential customer to fit the visit into their busy schedule.

Choosing a retail location is critical. You want to make every effort to locate near some kind of keystone business that brings in enough people to the area who will see your store and eventually venture in. The strip mall is a good option rather than free-standing. Most people are destination oriented and rarely deviate from their plotted course, especially if it means they need to turn off from their course or have to re-enter a busy highway.

When looking into small strip malls or mini malls do an informal survey of their parking lot. Sit out there for a while and count traffic. How many people drive into the parking lot?
Where do they enter or leave? What times of day and what days are the busiest? What store do they visit most? Most generally a strip mall that has a major chain as an anchor, will garner the most traffic. This could be a large grocery chain or department store. Depending upon the anchor store, the rental rates will increase accordingly. Department stores will be in higher rent areas than grocery stores.

A Mall Location

A mall is the highest rent per foot facility. Its plus side is that there is high visibility and potential for a large number of walk-in traffic. Less advertising is needed, though there should always be a line item in your budget for it.
Naturally, because of the high overhead, you would not want to use the facility for production of ware or storage of molds.

Just being located in a mall is not a guarantee for success. Even within a mall, there are locations that are less than desirable. An informal survey of the walk-by traffic to any available spaces-similar to the mini mall survey, will give you some idea of the exposure and potential customer base.

Step three – Setting a Budget

Now that you have an idea of what your rents may be, you need to determine a budget. Your budget should include Rents, utilities, supplies, staffing, licenses, insurance, fixtures, advertising, accounting, taxes and legal fees.

It is strongly recommended that you have adequate cash capital or an alternative income to support your business for at least six months or up to the first year if needed.

Step four – Licensing and legal fees

Most home based businesses set up under their names with a DBA (Doing Business As) rather than under a business name. However, once you enter into a rental situation you will need to use the business name in all your licenses and documents.

In any case, a sales tax id needs to be secured. This is at no cost, but the reports need to be filed on an established schedule whether you make sales or not.

A business license may or may not be needed for a home based business but will be required if you enter into an away from home location. Fees range from city to county and state to state

Many people decide to incorporate their business in order to protect themselves from personal liability. An attorney can best advise you as to what would be best for your situation. IF you incorporate, all legal matters have to be handled by an attorney, where as without an incorporation, should the need arise, you can respond to any legal matter yourself. It could cost $200-300 to file as a corporation. Fees vary from state to state, and attorney to attorney.

This would also be a good time to hire or at least consult with a tax advisor. You need to know what records to keep and what is taxable and what isn't. Keep good records from the very beginning and save legal fees later.

Step five – leasing a facility

Your best protection is to secure a lease; however, keep in mind that you are liable to pay those rents whether your business succeeds or not. If you find you don’t want to stay where you are and want to terminate the lease, you often have to make some kind of payoff or arrangement that you will continue to pay the rents until the facility is once again rented or the lease period is over.

If you sign a short term lease, make sure there is an option to renew and hopefully with some proviso that any rent increases will be limited. Some landlords will consider a percentage of sales over a specified income amount in lieu of rental increases. Don’t be afraid to negotiate.

If possible, make the start date of the lease a few weeks or couple months after the signing in order to give you the opportunity to gather all your product, fixtures, etc. and be ready to move in.

All of the above are major decisions that need to be addressed before you can effectively get your business off the ground. From this point on, it is all a matter of actually setting things up and advertising. These things will be discussed in the next seminar.

 

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