Business owners: Pitfalls of owning a small business?...?

I plan to open a small business in my barn, bookstore/collectibles, etc. What are some of the big things to look out for when opening a small business? It's already a commercial zone, since the previous owner had a shop there.
Additional Details
Sorry, I should have specified before that it will be a Used-book store with antiques and collectibles. Also, it is a very small upstate NY town with many other antique stores / antique malls...I don't think I will have to worry too much about large corporations buying me out as it will be a family-run place with maybe 1 employee. Thanks to all so who answered so far for the pointers!

There a hundred and one questions that will need to be answered. You have to be the one to answer them. Who will be your customers, how much will it cost to get the doors open and the most important question of all:

how much will it cost each week, month or year to run the joint?

This is the most important number to know. It is known as your break even.

In business there are two kinds of costs. There are fixed costs and there are variable costs. Fixed costs are those costs that happen every day, week or month whether or not you have any customers. The variable costs are those costs that increase as business increases. For instance: If you open your used book store and have no customers for an entire month, at the end of the month you will have to pay the electric bill. However, since you had no customers, you didn't use sell any books and therefore your cost of material (books) is Zero! On the other hand, if you have 100 customers the first month, the electric bill is the same (hence the term "fixed" expense) but you bill for replacing the books sold will be much higher.

To figure out what your break even cost is, you must have two pieces of information. The first is the total of your fixed costs. The rent, insurance, utilities and of course your salary. Say for this example the total is 4200 per month. The second piece of information that is necessary is your gross profit margin. Gross profit margin is defined as your sales price minus your cost of material to provide the service. (labor should be included in this cost if someone who is not on salary is providing the labor) Lets imagine for this example, that all you sell are coffee table books at $40 each. Lets further imagine that your cost of material for each book is $10. That would mean, at a sale price of $40 you have a 75% gross profit, or $30 profit for each book sold.

So now comes the break even question. In a month you need enough money in gross profit to cover the $4200 of fixed costs and you need enough money to pay for all the material required to generate those sales. The formula is fixed costs divided by gross profit equals break even. In our example 4200 / 0.75 = 5600 sales per month, or stated another way, you will need 140 customers per month willing to pay you $40 each for a book to decorate their coffee table..

Now lets look at gross profit. You say, OMG super, I can't sell coffee table books at $40 each, $25 is the going rate in my neighborhood. I say, that's really great to know because your cost of material has not changed. It still costs $10 to provide the product, since you are now only making 1/2 the profit at $25 as you were at $40 ( $15 profit vs $30) That is a 60% gross profit vs 75%. Lets look at the impact of the new price on break even. You still have fixed expenses of $4200 per month, but now the break even equation looks like this 4200 / 0.6 = 7000 sales or stated another way you need 280 customers per month paying $25 each.

As you can see knowing your break even can answer a number of questions such as How much should I sell my product for? How many customers do I need to make it? Etc.

You should also see from the break even calculation that controlling costs is one of a business owner's primary duties.

One other thing to consider. A good business person can run any kind of business because delivering the service is not the job of the business person. The job of the business person is to run the business. If you love books, become a librarian, if you love business and the business of running a business, open a business..

good luck

Make sure you know about all the taxes and licenses you will have to get. Call your local city and ask them about licenses and inspections, if you need them or not. Also size your comp. up- i know when i was looking around- i found about 3-4 other places i didn't know about. Also analize your expenses and assents to the store you'll be opening. Maybe it was just me, but i spent about 3-400 more dollars then i even thought i would because of things i forgot to include and get. So be sure to have the money to get started behind you- things can be a slow go at first. Be sure to start looking for an account / bookkeeper if you need one right now- and also a tax person- it's starting to be hard to find any as of lately.

There are alot of good books on the subject..One of the biggest pitfalls: Most businesses will fail within the first 5 years and the main reason is the profits are not put back into the business to increase it's profit.

Corporate giants that come in and either buy you out or just put you out of business by buying mass quantities of the same product you offer and getting major quantity discounts that they pass on to the public which makes you look like a dirtbag. Books are very difficult because you have competitors like Books a Million and Barnes and Noble who buy in very large quantities and there is one in pretty much every town. Not only can you usually find any book you look for there the ones you can't find can be ordered and it is very difficult for a mom and pop retailer of books to compete with that because it is very seldom that you will ever have to buy anything in that large of a quantity. Good luck though!

If it's going to be your only source of income, mostly it's just the stress of making enough money. And being tied to it. Finding vacation time can be difficult- who will run it while you're away? Are you employing people? Employing people is easy in itself-- though worker's comp stinks. Above all, find yourself a great accountant. Mine is very experienced and a great help-- tons of good advice. There are positives and negatives, as with any job. Weigh them and decide.

Besure you have insurance. Do as much of the work you can by yourself. Put your signs up and advertise. If there are other business like this keep your prices down a little. Good LUck.

you have to do everything

right payroll ....your overhead and when you get successful...big corporations (like hallmark) bullying you to buy you out

I'm a small business owner of 11 years and my biggest stress today is the same as it was 11 years ago - employees.

It is hard to find the good ones, harder to keep them, but it is most difficult to spot the bad ones early.

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