How should you proceed with a business idea of selling hand-knitted winterwear? I want to connect with the rural population of Uttarakhand, provide them with raw material and source of income. I have a lead on logistics and online marketplace.

First of all, thanks for the very thorough question!

Secondly, I love the ethics behind the concept, so bravo for working on something that intends to create positive impact/change.

I will assume, since you say you have a lead on logistics and online marketplace, that you already have plans for the business infrastructure in this regard ie the supply and production process.

So, the next step will be to decide on your route to market (doesn’t necessarily have to be mutually exclusive, you can adopt several routes) – manufacturer supply, wholesaler supply, or direct-to-consumer supply.

Depending on how efficient you can make this infrastructure, and the price-point you need to achieve on the end product (retail price) to cover all costs and make a healthy margin, whilst still remaining competitive – will dictate which routes to market will work for you or not.

You’ll need to be making around 75% gross margin (at competitive retail prices), minimum, if you intend to target the major fashion multiples with your product.

The biggest retailers command at least 50% margin from the net (exc VAT) retail price, so if you’re working on 75% gross at net retail, then this will be the equivalent to selling direct to consumers and making 25%.

If you can do this, then a wholesale model may work best for you – focusing on the manufacture and delivery of products to a select few major retailers.

If you’re making even healthier margins than this, you may be able to consider manufacturer-level supply ie supplying major fashion wholesalers. These will command around 25–50% depending on their size, and then you need to factor in the retailer margin on top of this (retailers who buy from a wholesaler will typically work on anything between 25–50%), so you’ll need to be working on around 85%+ gross margin to look at this route to market.

And anything less than a 75% gross margin may dictate that you need to focus on direct-to-consumer sales, at least initially, in order to keep the operation viable.

The former approaches to market involve following the typical ‘buying process’ of the retailers and wholesalers that you intend to supply – there will be forms to fill out and meetings to attend. You’ll need to prepare pitches and be prepared to travel to and attend lots of meetings.

The latter approach, direct to consumer, will probably involve more work initially, in order to build your route to market.

You’ll need to establish a website, connect-up any third party platforms that you intend to sell on (Amazon, Ebay, Etsy and so on), get packshots made of your finished products, list all of your range, build promotional activity (social accounts and consistent activity, PPC campaigns, affiliate programs, SEO, PR, and much more), and so on.

Either way, you need to ensure your model and infrastructure is robust enough, and scaleable, from the outset so you don’t have to revisit this and rebuild it, when you’re trying to focus on the marketing of your business.

So spend lots of time testing – stress-test the financials (what could go wrong, and how badly would it have to go wrong – from projections – to start making a loss?), test the capacity and speed of your operations, and build contingency plans for each potential outcome.

Only when you have a solid model in-place, and contingency plans for what could go wrong, should you begin to move forward and choose your route(s) to market.

I hope this answers your question ‘How should I proceed with a business idea of selling hand-knitted winterwear . . .’

Good luck, and if you need any further assistance (especially if you choose the direct-to-consumer route), my Udemy course Fast Track Entrepreneur takes you through each and every step of starting a business from scratch, so may be quite useful for you.

All the best.

What do you need to know to start an educational children’s play area?

Well, firstly I’m going to side-step anything related to the experience itself for the kids – this is something you’ll need professional, qualified advice on (if you aren’t, yourself, qualified in this area), to ensure the play area is educational yet still fun and engaging.

After all, if the kids don’t want to come back, the business model won’t work, no matter how well you structure it.

Secondly, I’m also purposely avoiding any discussion around regulations and certification requirements when working with, and provided facilities for, children. This is Country/State/Area specific and should be researched thoroughly by yourself, to ensure you will meet all these requirements upon launch and thereafter.

But here’s some advice I’d give regarding the business infrastructure and establishment:

1. Don’t pay rent. Negotiate a 6 month (minimum) rent free term, with a 12 month break clause included on any lease agreement (landlords will want you to commit for a minimum of 5 years – but if it doesn’t work, you need to avoid that noose and cover your downside)

If you find all the commercial landlords to be too stubborn (most we’ve encountered, are), and if you’re lucky enough to find a unit of the size you’re after for sale, and if you can convince a bank to give you a commercial mortgage (lot of ‘ifs’ there) but IF you can do all these things – put the majority of your capital down as a deposit and buy the unit. Then test the idea in the leanest possible way.

And if it doesn’t work then – you have a valuable asset that (provided you have other means of paying the commercial rent during any void period whilst putting it up for let) you can let out and earn a return on your capital from.

2. Make sure whatever fixtures and fittings you put in there can be easily liquidised and/or returned. Request a guaranteed buy-back price from the supplier, so you know what the definite residual value of the assets will be in 6-12 months time, should you need to exit

3. Automate as many processes as you (legally) can. Automated entry systems, concession-based cafe arrangement (charge rent and get someone else to run this entire operation), basically, employ as few people as you possibly can. Money is far better spent on equipment (which has residual value and value on the books) than people (which can walk away after taking a year’s pay and leave you with zero residual value). Automation has worked far better than delegation in my experience, especially in roles that involve zero value adding processes (day-to-day maintenance and operational type roles)

4. Basically, the gist of the above 3 points are ultimately to reduce your initial risk and outlay. You don’t really want to start a project expecting it to fail, but if you build it with that expectation in-mind, you tend to cover off most downsides. Remove any frills, outsource and automate where you can, and go in to test the market with the most basic offering that you can, initially.

Then if it shows promise, take feedback from the visitors and enhance their experience with tweaks and modifications thereafter.

You’ll also probably need some form of unique angle – a USP (Unique Selling Point). To differentiate from any other kids play facility in the area. Visit these places, read reviews online, pick up on areas where they are significantly failing their audience, and use that as the focus for your USP.

The concept is ultimately to rig the entire thing in your favour. From the outside it should look like a big risk. But from the inside, it’s not all that risky.

I hope that answers your question ‘What Do I Need to Know to Start an Educational Children’s Play Area’.

Good luck!

When is the right time to start spending the profit you make from a new firm?

NEVERRR. Muahahaha.

No, seriously though. On a personal level. Never.

Unless your entire intention with your firm is to create a lifestyle business, and nothing more – you’ll need to be reinvesting your profits in order to grow, or create new revenue streams.

Sure, you can pay yourself a reasonable, healthy wage if you can afford to – one that provides enough income to enjoy life and a few little luxuries (if you’re lucky), but when it comes to the money left over after that – you need to reinvest it if you are going to build anything sizeable and/or meaningful.

First of all, I’m making the assumption that you’re already running a profitable firm (if you aren’t already doing so, you’ll need to focus your attention on actually making the profit, first and foremost, since this is quite a difficult thing to achieve in the first instance).

I’m also making the assumption that the profit you are making is what they term ‘corporate profit’ – in other words, a profit after you have paid yourself a healthy, reasonable wage, and all expenses.

This is different to the profitability level coined ‘ramen profitable’ – where a business is technically, marginally profitable, but the owner(s) are having to live off noodles in order to keep it that way.

That’s no way to live, and shouldn’t be in anyone’s long-term business plans.

So, if all the above is correct and accurate, you’re in a position to start thinking what you should do with your firm’s profits.

If not, you need more time and energy spent on making your business profitable – to the point of corporate profit – before you start planning what to do with these anticipated funds. You’ll need to understand your break-even point ie how many sales do you need to achieve to cover all cost-of-sales and overheads (including a reasonable wage for your own living expenses and lifestyle) – and figure out what it will take, in terms of monthly revenue, to reach this point, and work towards achieving break-even, first.

Reverting back to your initial question, what is the right time to start spending the profit you make from a new firm?, a break-even analysis will at least provide you with an understanding of when you’ll be in a position to think about what you do with your new firm’s profit.

Typically, companies can start turning a profit anywhere between 6 months to 3 years or more.

It really is dependant on the industry and business model. Those businesses that can start with an MVP (Minimum Viable Product) that requires very little, or even no, overhead, will be more likely to see a positive return quicker.

But when it comes to what you do with the profit it generates – if you want to build something significant and/or protect the future of your company, you’ll need to reinvest, diversify, and experiment with new concepts and ideas.

It’s down to personal preference, of course, and the ultimate nature of the business. If all you are intending to achieve from your business is to maximise your personal short-term financial gains, then you milk it for what it’s worth, and dispose of the company when it burns out or reaches the end of its life.

My personal preference has always been to reinvest, and to spawn new ventures using the profit my businesses generate – since this is what I enjoy, and I want to create ventures that can adapt to market changes and last a long time.

Whatever your intention is with your own business, good luck!

Can you start an online business with just $10?

Of course.

But you will be looking at areas with extremely low barriers to entry (like, zero barriers), which are naturally saturated, since everyone can access them.

What this typically means is, these businesses take even longer to break through and start generating a profit.

So whilst it is fairly easy to start an online business with just $10 to invest, at the same time, it’s very difficult to turn a profit from such a business. What you avoid investing financially, expect to make-up in sweat equity – hard work, energy, and time.

My first piece of guidance, therefore, before we move on to the type of businesses you could start for just $10, would be to ensure you have an income from elsewhere so you can actually afford to live whilst your business gets off the ground.

When you start an online business with just $10, don’t expect it to generate an income substantial enough to live on, for quite some time.

Think about it in rational terms – people with hundreds of thousands, or even millions, of dollars to invest, they typically look for yields (return on their investment) of between 5–20% per annum for passive investments (property, stocks, other long-term investments), and when investing in trading businesses, the scale varies even more wildly depending on the industry, business model, and the investor’s appetite for risk.

Scale this back to the example of your investment of $10, and even in the best case scenario, a respectable 20% return on your investment would be $2 . . . per annum.

If there were business and investment opportunities out there that consistently and reliably yielded more of a return than this, and they were accessible to those with as little capital as $10, everyone would be doing it.

The reality is, lucrative opportunities don’t exist at this level of investment – without making-up the rest in sweat equity.

So if you’re prepared to absolutely work your ass off – every evening when you return from your day job, you’ll be working until Midnight, every morning, you’ll be waking earlier than usual to squeeze a couple of hours in before you go to work again, entire weekends will be spent on your business, and heck, even lunch breaks at work should be utilised (maybe you could be posting on your businesses’ social media on your phone?).

And you’re prepared to do this day-in, day-out, for up to 5–10 years before you even see a dime return.

Then, and only then, can you make a $10 business work.

I’m not saying this to be depressing or to put you off. I’m saying it to be realistic.

Pretty much everyone in the developed World has $10 available at one point or another, so any glimmer of opportunity at that level is going to be massively saturated.

So you’re going to have to be prepared to outwork the masses, to work harder, longer, and smarter than everyone else in that space, to come out on-top and make it work.

So, if you feel you have that level of commitment and dedication in you, read on.

If not, keep that $10 in your pocket, and stay employed (or focus on getting employed, if you aren’t already) until you can save enough money to start looking at opportunities that are a little harder to access, financially.

So, here’s a few business ideas at the $10 seed investment level, for the crazy-committed:

• Blogging (maybe utilise an existing free platform that comes in a hosted-solution, since your $10 will be spent in just 2 months on even the cheapest shared hosting package – that’s putting the domain purchase and any design requirements aside)
• Affiliate marketing
• Youtube videos (provided you have a suitable smartphone or camera for filming)
• Service-based businesses (what services require no equipment or tools, that you can offer? What are your strengths? What are you knowledgeable in? Copywriting is a good option if you can write well, social media management is another – you can use platforms like Fiverr and Upwork to bid on projects that people are looking to get completed, to get going for zero investment in advertising). More old-fashioned models in this space would be leaflet-delivery services, car washing, dog walking, grocery pick-ups and so on.

That should be enough to get your own ideas flowing regarding the areas you should be looking at when you’re wanting to start an online business with just $10.

When on offer, you can download my Udemy course Fasttrack Entrepreneur for just $9.99 – which will guide you through each step of the business idea and setup process. So this may well be the best way to invest your $10 when you’re looking to get started.

Good luck with your venture!