I'm a fashion hound, in my late 20's, and have always dreamed of owning my own boutique since I can remember. Besides my passion for this area and the knowledge I obtain from avidly reading tons of magazines on trends and brands, I don't have any formal "fashion education." My experience in this industry consists of being a Sales Associate and a Co-Manager for a retail store about 10 years ago, and (more recently) a "Business Planner" (not what it sounds) for a famous denim company for 3 years. I have just been laid off and would like to use this time to finally pursue my dreams. I received a decent severance package to get me through my responsibilities (I'm a mother and wife with a home mortage) for the next 6 months. Essentially, this is a Start-Up and I just don't know where to begin. I have an idea of where I would want my retail store and have general knowledge of the area, my competitors, and the brands they carry. I plan to differentiate through my products and have an idea of the kind of retail price range that will influence my brands but have not contacted any of the vendors. I also know I need a business plan and have read the posting from H. Harris on what I would essentially need. But is this the first step? Would filing for a fictitious name be first? Business license? Securing a lease? Or is the loan the first and foremost? I would say that I have fair credit but since I'm unemployed, I don't know how it will affect my chances of a loan. Is using my 401K towards my business smart? I just bought my house 6 months ago so there's not much equity. Lastly, if all "goes well" and I get my loan, etc., will I be able to pay myself a regular salary or is this all dependent on how the business does? Any help would be much appreciated because it's NOW OR NEVER!

Dear MD:

By reading your post, I can see that you have the desire, the enthusiasm, the opportunity and partial knowledge of what it will take to make your dream a reality. However, I am going to be very honest with you and say that the type of store that you are thinking of opening is one of those businesses with the highest levels of failure. Only opening a restaurant comes to mind as a venture with a lower percentage of success.

Let’s start at the beginning:

1 The first thing is to put your idea to paper. Your objective is to start your store and be successful financially. This means that your primary step will be to make a business plan. You won’t get a loan or financing without it so getting a loan will not be your first and foremost step. Business license? Should not take too long. Fictitious name takes 15 minutes to file and about a week to get it back {depends on the state}. And you should definitely, absolutely not get a lease for a business where most of the pieces are not in place or at least are not in the process of being in place. The following is a page on how to do a business plan that I wrote a while back. http://www.loanuniverse.com/plan.html This is not by any means the best resource. I would suggest that you browse the net or even visit the public library for more information. I am sure that if you look at a couple of samples it will help you greatly.

You have to think of financing as a tool to make your objective happen. I am pretty sure people don’t go around dreaming of getting a loan. They are dreaming of buying a property or opening a business. {Of course getting the money is important, but keep things in focus}.

2 . Is using my 401K towards my business smart? Well, it depends on how much money you need, the type and pricing of financing that you can get. Doing the business plan will give you an idea of how much money you will need. I think you will be unpleasantly surprised at the price of carrying inventory when it comes time to doing your business plan budget.

3 will I be able to pay myself a regular salary or is this all dependent on how the business does? When you own the business you can do both, one or none. If you take a salary when the business is producing a loss, it will just come out of your equity in the business so it will be just like taking it from one pocket and putting it in another.

Hope this helps somewhat.