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limited capital,no experience. shall I start new or buy resale business?

I have contacts in China for discount merchandise, but not sure the stuff I bring in will sell. what is the market for small independent discount store now? I live in San Diego, CA. what is my chance to survive? How much capital do I need? Or shall I forget it and buy a resale business? If so, a retail business or service business? Thanks.

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Small Business Underwriters

Generally speaking, your chances of surviving is 20%, as that's the average survival rate for a startup over the initial 36 months. That said, you can obviously do things to improve your chances of success. You'll need to do your homework on the industry as a whole, but discount stores are doing quite well in this economy (just ask Wal-Mart!)

How much capital you need really depends on how big the operation will be. This is where accurate and reasonable financial projections would come in. They won't be 100% accurate (they never are), but they will give you some sort of framework to start with.

There are discount store franchises out there, just google the phrase "discount store franchise" and I'm a bunch will come up. The key to understanding any franchise is to request the UFOC (or FDD), which details the success of the franchise, including how many stores there are, and how many have failed.

Good Luck,
Founder, Crown Acquisitions

May 29, 2009
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The BAF Group LLC

Regina, the biggest negative in your statements is the limited capital. In this market, at this time, having access to capital is probably the most vital concern I would have. A lack of experience you may be able to acquire or obtain, particulalry through a strong franchise. Whether it is better to start or buy is a key issue, and something I write about and teach. In a nutshell, which you do depends upon whether it is more cost effective to start it up or buy the business. You need to put together a detailed Business Plan and cost it out both ways. In small, niche retail stores, it is sometimes much better to start them; but if a brand is important, if you are introducing new products to the market that will take time to generate public awareness, which is needed to provide you with substantial revenue, then buying may be best.

The questions you ask are incredibely complex, and we would love to talk to you about it, but my general impression is that you have a LOT of research to do, a lot of soul searching to do, and in doing this, you must not rush into anything!!! Don't let anyone talk you into anything because it is easy, because there is no such thing; or that you can get in for very little money, since in most cases, you get exactly what you pay for.

Take your time. Research can be your best tool.

May 29, 2009

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