Let’s get straight into it.
In this piece, I will be sharing with you my top 5 bootstrapping tips for an extreme sports retailer.
1. Funding a new store
Funding a new store can be accomplished via various means, and when we started we used a variety of them.
The most important factor to take into account is the ‘extreme sport market or markets’ you wish to enter.
All of them are seasonal, but you still need to fund the business for 12 months.
If you can do a combination of sports it makes for an easier cashflow.
The majority of the funding was done by using my own funds and savings and this was enough to get us started but was not enough to get us ‘to the next level’ or to guarantee continuous cash flow.
In order to grow, we had to approach suppliers to offer us credit terms – not all did, and as a result, we chose a mix of brands who gave credit terms with those whom we wanted (or needed) to sell regardless of terms.
A part of our business was bought on an “earn-out” basis, which allowed us to pay out of profits, and only if the business attained a pre-determined profit level – this helps as the sellers carry part of the risk.
I had no family money available but this is a good option as they are probably the people that trust you the most – but remember to draw up a formal contract stating terms of repayment, etc.
I personally would only use credit cards for “non-inventory” purchases.
Under current economic conditions, all of these options will be more difficult and limited.
2. Tips to help you save some money
Who doesn’t want to save some money?
The easiest way to save money is to use sweat equity – do whatever you can yourself (use the strengths of family, friends, and staff but don’t abuse them) and that includes labor as well as administrative tasks.
Be creative by developing partnerships to get services or the best return on your money: a newspaper or radio station will often give advertising in exchange for the product to use as giveaways.
Look for free promotional material: in our industry resorts will give away lift-tickets.
Buying in bulk (whether supplies or inventory) will gain you discounts and save you money.
3. Know your market
It is important that you decide what your market is, know what your limitations are, and get to know that market well and what it will accommodate.
It is not advisable to set up a retail snowboard store thousands of miles from the nearest resort.
Board sports are all the same right? Wrong!
We tried selling wakeboards as there is a large crossover with snowboarding, but it was extremely difficult.
We thought of selling surfboards – we would have been the only ones for 200 miles – but the phrase “Reno Surfshop” has a strange ring to it.
Markets change continuously and you must be aware of this and stay abreast of the times and trends, but stick with what you are good at, and what is manageable.
4. Manage your business
The important word here is “your”. It is not sufficient just to be “good at it” or be passionate about the sport to be able to make a business success; it needs to be managed on a daily basis and preferably by the person who had the passion/drive/interest in the first place.
This is most important for the first few years until a business can be considered as “established”.
Absentee owners are common in the extreme sports arena (hey, who doesn’t want a day or three away to snowboard, or surf?) but you need to ensure that whoever is looking after your business has the business’ interest at heart, and has both the knowledge and authority to make decisions in your absence.
Over the years you will often ask yourself: Why did I go into business for myself just to work harder, longer and for less pay?
The answers don’t always seem to be there, but I have been an entrepreneur for the majority of my business life, and I have never regretted it.
5. Be a part of your ‘community’
Know your community, become a part of it, and give back.
In the extreme sports arena, it is usually easy to get to know your community, as they are a tightknit community and word spreads fast about a new store.
If you are willing to embrace the community, the chances are they will embrace you back and start supporting you rather than the “big box store”.
Donate to organizations and charities; sponsor extreme sports events, host an “extreme sports day”, and be visible at any event.
And remember to have fun while doing it; your enthusiasm will show.