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Skills needed to setup
Here is a set of much needed skills for this enterprise.
Negotiation skills - Impressive profit margins and staying ahead of the competition means finding the most competitive rates to take to your clients - not standard rates but competitive ones. Finding the right supplier and working out the best deals and promoting your products efficiently are part of the solution. So if you don’t have the negotiation skills for it, it is best to find a partner or an employee who does.
Managing your inventory - This is a primary skill required for managing a supply business. Maintaining a clear inventory of products that are in stock and ordering those that aren’t is essential to fill out orders as soon as they come in. You can end up with serious backlogs and delays in delivery schedules if you fail to maintain an accurate inventory. Although POS systems do help a lot, it still falls on you to update this system.
Organising a distribution system - Once the supplies come in, they may have to be stocked in distribution centres to ensure quicker delivery and to schedule easier delivery routes with your delivery personnel. Finding the right service for your deliveries too is part of scheduling an effective distribution system.
How to setup?
You can begin by drawing up a business plan. Contrary to popular belief, an office supply business does require a significant amount of capital for leasing/renting space for operations, creating a display nook for all the products that you supply, point of sale systems, tracking devices for your stock, supplies, investing in a good delivery system and other start up costs like legal and registration fees.
Your next step would be to finance your operations. This process is discussed further on. Once you have a business plan and your finances settled, scout for a good location. Nothing sells quite like it.
You have to rent a space close to mid sized firms and schools: people tend to shop more readily from local vendors.
Also, you’ll be saving a heap on delivery expenses when you have key customers immediately around you. It is highly unlikely that customers would rely on a home based operation for their extensive supply needs. Besides the limited storage space is sure to present a problem, so opt for a rented space, but make sure you negotiate the rates well with your landlord.
Planning your layout is important too. Although you are not a retail outlet, you may still have customers stopping by to view the quality of your products, make payments or pick up small orders. Invest in a good display system and maintain it well.
Be sure to store your supplies according to the needs in the area. You can use your home too as an alternate location to stock more supplies and cater to more customers in the area.
Negotiation is important every step of the way if you hope to increase your profit margins continually. So talk to your suppliers and pick those whom you can rely on as well as get the best rates out of. Passing on these economical rates to your customer can help you beat the competition.
Yet another way to stay ahead of the competition is to ensure you offer a variety of products. After setting up, make sure you constantly introduce new supply items to keep your customers interested while eliminating those items which are neither in demand nor profitable. You have to come up with the ideal office supply items to market after gauging demands from customers.
Don’t skimp on a POS (Point of Sale) system – it is a valuable addition to your business and helps you retain an accurate inventory. Hoping to maintain a handwritten one will only give room for error. Also, installing a CCTV setup is a good idea to discourage employees or delivery personnel from pilfering office supplies.
To make things easier for your customers, you can also set up your own website to place orders, receive payment and schedule deliveries.
When setting up a distribution system, you can negotiate with professional carriers for monthly rates depending on your regular orders. Alternatively, you can set up your own delivery system by hiring delivery vehicles and employing personnel to ensure deliveries.
Your business plan should begin with all the legal aspects of the business that need to be covered like registration, business set up details, applying for permits and licenses, etc. Here is a list of things you will have to ensure in the process:
•Applying for and acquiring a business permit and license from the government to commence operations
•Registering your company with the permit as a base
•Getting relevant zonal permits for your operations (For instance, if you take up printing, you may have to get a pollution permit)
•Getting your business documents stamped at an authorized bank or at the Superintendent’s office
•Obtaining a PAN (Permanent Account Number) card for paying taxes
•Obtaining a TAN (Tax Account Number) card for income taxes that are deducted at source
•Applying for a sales tax license and registering for professional tax
•Making necessary arrangements for various legal transactions like leases, contracts with suppliers, etc.
•Completing legal formalities with your bank and financiers
•Obtaining a Certificate of Incorporation from the Registrar of Companies (ROC)
Type of business set up
Establishing your business setup is essential to determine the formalities that need to be followed. You can set up as a sole proprietor if you are willing to be personally liable for any losses incurred in the business. You can also opt to operate as a sole proprietor with limited liability. The paperwork and procedures are similar to those of a sole proprietor, but the liabilities are weighed out against those of your business assets and it does not include your personal assets.
If you team up in a partnership venture, the profits and losses are shared in a predetermined ratio based on the capital brought in by each individual. In a private limited set up, the company is treated as a separate entity and your liability does not extend to your personal assets.
Start up expenses and investment
Starting up an office supply business on a low capital can be done, but don’t hope to plunge head first into it with barely anything as start up capital. Going in under-capitalized is one of the reasons most budding businesses fail.
You can also explore an option to solicit investors depending on the size of your setup and your profit forecasts. If you are looking to operate under the ecommerce model, and avoid the hassle of setting up an office, a start up capital of about Rs 8-10 lakhs with about Rs 1 - 2 lakhs a month on operational expenses should carry you through.
Registration fees and other setup expenses are likely to run into a few thousands, but your bigger expenses lie in your operational costs. When it comes to renting or leasing an office space, your expenses depend on your location, space available, maintenance and amenities.
You will also have to put in deposits with courier services, suppliers and the like. Other expenses include salaries for employees, living expenses/salary for yourself, fuel reimbursement for sales and deliveries, food allowances where necessary, investment in POS systems, computers, printing equipment for personalised stationary, office furniture, website hosting expenses (should you opt for one), monthly insurance costs, warehouse rent (if you rent a warehouse elsewhere in the city) and phone and high speed internet connections.
Challenges with School and Office Supplies Business
Like other small businesses, competition is likely to be the most difficult to fend off. With the ecommerce boom in place, most businesses opt for online bulk purchases.
But even the advent of a paper free era has not slowed down the progress of the office supply industry. A worldwide growth of 3% was recorded in the industry in 2010. The scope for any new entrants in the market remains strong despite any challenges, but executing your business plan effectually and sustaining amid the competition are the biggest hurdles to overcome for startups.
How to promote the business and attract clients?
Target all potential customers including government institutions, hotels (especially business class ones that host seminars and conferences on a regular basis) and hospitals.
If you have additional skills, put it to good use and offer innovative services like designing and printing menus and flyers to substantiate your income initially. Once you can afford to invest more, offer a better range of products like smart phones, office furniture, corporate gift supplies, etc. to expand your profit making avenues.
If you have a printing facility and equipment, you can always print out flyers and get a newspaper dealer to distribute them. Again, target areas with potential requirement like commercial sectors and not residential areas where the requirement is marginal.
Host a website to make sure you have a wider reach. A website can expand your operations nationwide. Taking the ecommerce route is not as expensive if you already have a physical presence too.
Managing your business effectively with a small business software
The most critical factor in succeeding with your business in the beginning is to focus on spending as much time as possible on revenue generating activities and as little as possible on admin activities. This will help you grow cash flow and give life to your dream.
A software designed specifically for micro or small businesses can make the whole admin process much simpler and easier. This is why Zoostr was created. Zoostr helps you reduce the amount of time you spend on admin. Quickly & easily create price quotations, invoices, purchase orders, sms marketng campaigns, schedule lessons, track payments etc. And the best bit? Its free to use.
Sign up for your free account here.