How To Start and Operate Your Own

By Dusty and Bonnie Henson, Owners "World Famous" El Paso Saddleblanket Co., El Paso, TX

Free Catalog
Chapter I
Chapter II
Chapter III
Chapter IV
Chapter V
Chapter VI
Chapter VII
Chapter VIII
Chapter IX
Chapter X
Chapter XI
Chapter XII
Chapter XIII
Chapter XIV
Chapter XV
Chapter XVI
Chapter XVII
Chapter XVIII
Appendix A
Appendix B
Appendix C
Chapter XVII


How much money does it take to start a business? That's similar to the question "How much does it cost to go on a vacation?" There are too many variables until you start tailoring it to your own specifications.

The best way to start narrowing it down is to take a personal inventory of your current assets and determine how much of your own money you can put into the project. You may be in possession of considerable assets that would do you more good if invested in your business. Start by checking off this list, then add your extras at the bottom.


- Home

- Second home, cabin, condo,

- Time-shares

- Other residential real estate

- Commercial real estate

- Raw land

- Extra cars, truck, trailer

- Recreational vehicle

- Boat, trailer

- Savings accounts

- Retirement account

- Insurance policy

- Stocks

- Bonds

- Mutual Funds

- Pension Plan

- Inherited antiques or property-

- Household furnishings, appliances

- Electronic equipment

- Garden tractor, equipment

- Tool shop, equipment

- Piano or any unused musical instruments

- Exercise equipment

- Coin collection

- Stamp collection

- U.S. Savings Bonds

- Horses, farm animals

- Saddles, tack, equipment

After you've listed every personal holding you can think of, consider credit that is available to you. If you have a history of paying your bills on time, you probably have a favorable credit report. Your local credit bureau will print out any information they have on you.

Sources of cash through your good credit could be your credit cards, your savings and loan, your bank, any pawn shop or small loan company. If you need to borrow to start your business be sure you understand exactly how much interest is being charged and over what time period payments are to be made. Shop around for the best rate you can find. Let's take a look now at the different categories of capital needed for your business. Financial experts would label these.

     1. Initial capital

     2. Working capital

     3. Reserve capital

     4. Promotional capital

     5. Growth capital

  1. Initial capital is the amount you will spend to set up your store. This includes your deposits for rent and utilities, business licenses, store sign, attorney and accountant's fees, printing, initial supplies, fixtures, equipment, and most important, your starting inventory.

  2. Working capital is the money it will take to operate your store until profits from cash flow begin to cover all expenses. A conservative approach here would be to hold at least two months' worth of rent, payroll, supply costs, etc., in your bank account

  3. Reserve capital is your savings account or emergency fund. No actual money is required here if you have lines of credit available. If you keep your credit cards paid off, you have immediate access to cash through them.

  4. Promotional capital is money assigned to advertising and promotion to let people know about your business. After you get the word out and have a successful Grand Opening, your advertising costs should be figured into your monthly budget. If you have chosen a mall location, your advertising budget can be virtually nothing.

  5. Growth capital is for future expansion. Nothing needs to be set for this at the beginning. Your first year of operation needs to be on an extremely tight budget with nearly all  profit being reinvested into building inventory.

Your primary concern in the beginning is to raise initial capital to get your store up and running. The two examples on the following page will get you thinking about capital requirements, but these figures mean little until you tailor

Remodeling costs                     500 - 1,000            500 - 3,000

Printing and supplies                200 -  500             200 - 500

Grand opening promotion        100 -  500             500 - 1,000

Insurance 1st quarter                 200 - 800             500 - 800

Starting inventory               $40.000 -$50.000   $30.000 -$40.000

Can't a business still be started on the proverbial "shoe string"? Yes, it happens every day. But you would be better off in the long run to give your business every advantage from the beginning. Scrimp on supplies and fixtures, but don't scrimp on inventory.

First impressions are everything. Your customers will have a vivid mental image of your store from their very first visit. You must impress them from day one and make them want to return again and again.

Everyone loves new beginnings. The excitement and pride you feel for your new investment will  carry over to the atmosphere of your store and influence the attitude of your customers. Scrape up all the capital you can get your hands on and get your trading post off to the successful beginning it deserves.


Updated 2001
© 2001. El Paso Saddleblanket. All rights reserved
No part of this book may be reproduced without the written permission of
El Paso Saddleblanket Co.

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