Starting a business - income?

System

I would try to avoid taking a loan if possible, the interest and fees!!

Also you're young, you sound like me before I started my business. You WILL make mistakes. Be careful how much you invest.

You asked:
When should I start to take a wage from the business and how is it decided how much I can earn from it?

My advice - Don't expect that you will be making a lot of money. If you work extremely hard and get a bit of luck along the way, you might make some money. No one knows the answer to this. Some businesses make a £50k profit one year, and the next make a £100k loss. You are probably more likely to lose money.

I would not take out a loan, or be very very careful. I am sure there are grants out there like the Princes Trust. Good luck.

Annisele

JWIOW wrote: »

Our competitor currently charges £3 for listing your vehicle (public - discounts for monthly businesses with a fixed amount of ads) for sale on their website, getting between 1000-2000 vehicles listed on there in any given month. This means that they are bringing in £3000-£6000 a month, just from the public on vehicles.
Properties come in at around 500-1000 a month, for which they charge £5.99 per ad. Thus bringing in nearly another £3-6000.

Our intention would be to come in at around half of their costs to the public, therefore £1.50 per vehicle or £3.50 per property.

I do not see that I have underestimated the potential of the business, if conducted properly and we are offering a 10x better service at a lower cost, who will argue with that?

I can't see how a newly established business could possibly offer a 10x better service, because you won't have the number of hits the existing one does.

However, on the assumption that everything you say is completely correct - what happens when the competitor notices what you're doing? If it's possible to run the business profitably with prices 50% lower, what's to stop the competitor lowering its prices - then it has lower prices and its existing reach, and you have nothing.

JWIOW

I'm now wishing I hadn't bothered to ask. You are all very quick to judge the idea and state clearly it won't work... You don't know my local environment and sources of advertising I already have, do you? The majority of people also commenting believe this is some sort of community information site. It is not.
Motorguy - who said anything about creating an auction site? Classified ads and auction websites are two very different things.

Opinion

JWIOW wrote: »

I'm now wishing I hadn't bothered to ask. You are all very quick to judge the idea and state clearly it won't work... You don't know my local environment and sources of advertising I already have, do you? The majority of people also commenting believe this is some sort of community information site. It is not.
Motorguy - who said anything about creating an auction site? Classified ads and auction websites are two very different things.

I'm sure everyone here would love to be proved wrong.

But at the end of the day you're just another young, naive wannabe businessman that won't except any criticism whatsoever from a group of people that A. See this on here every week and B. Have a lot of experience between them.

You're going to create a website--no, sorry, a Wordpress--that "without too much input from yourself" is going to turn over £3,000-£5,000 per month, that you'd potentially be able to replicate for multiple locations.

You clearly don't need our advice, you need PricewaterhouseCoopers because you're going to be a billionaire by the time you're 30.

Horace

You are upset because you haven't received the answer that you hoped that we would all give - that it is a brilliant idea and you should jump in with both feet without a care in the world. The people that use this board are self employed people with years of experience backing them up - they know the pitfalls.

Your business idea does not really add up - there is no way on this earth that you will be earning £3-5K a month.

You were the one that mentioned that your site was a community site. (Essentially the business will be started as a locally-focused community website, yet the system that I am implementing is a completely new system and if it works well locally, I would be looking to expand etc which would be quite rapid growth].
The section highlighted in red and bold is copied from a posting that you yourself made.

Sure some community sites do have paid for advertising (classified ads)on them from local businesses (it is how they fund their sites and their groups) but they do not necessarily have all the hits that you are expecting to have.

I am wondering why you actually visited this site asking for advice when you obviously had all the answers to begin with (or so you thought).

paddyrg

You may be right, you may have spotted a niche and may capitalise on it on a way that can't be threatened by external parties either by being protected somehow or some other means. And if so, well done!

Based on the information you've given (and you'll admit you're guarded in what you've given people to work with), people here are just concerned and flagging to you where they (often from experience) see the risks/flaws in your plan. Those are opinions, and take them as such, but they are opinions from people who 1) want to save you from landing yourself with debts and 2) to a degree care and 3) sometimes have decades of real-world business experience in which they found (for instance) that a great idea gets copied fast.

I don't really 2) care if you succeed or fail and not really bothered if you waste 1) a grand or five. It's a lot of money but it's the kind of level where you can make it back, and a part of being in business is knowing when to take a punt. Good knows I've taken enough punts, some pay off, some don't. Windows Vista, Google Wave, whatever, there are big companies who take chances and fail to find an audience, they spend millions in doing so. If they'd been right, the world would have adopted them to their hearts.

So unlike the others, I say take the punt, just don't do it with money you can't afford to lose. It's easier to risk someone else's money than risk your own, but that means you need to take believe in the idea to risk your own. You can earn a grand before Christmas easily, so do so, pay for the development work. Sell your first advert to fund your promotional campaign, or have a real sure you can use as a demo tool to presell the first 3 months at a discount to eager buyers. If it's a great idea and they love it, they'll jump at the chance and you've cashflowed your business for free. Your stake has only been 3 months of a second job.

Just things to be aware of, your custom module development is either under or over priced. I'm going to assume it requires database integration of some sort, need to be robust, multiuser, secure - unless you've managed custom IT development projects before, you're going to get something half-baked with student-level code and very poorly defended. It will do what you say it needs to, but you probably won't spec it completely correctly and miss tranches of functionality 'Where's the "show history" button?'/'You didn't ask for one, and anyway we didn't retain transactional history'. I know this as I've been on both ends. You don't build a house without an architect or at least a QS/PM to guide the guys throwing bricks around, similarly coding needs constraint and guidance. All original code is R&D, and costs like it is, too.

Don't rush into bed with the first person who says they can do what you want for £cheap, however well meaning they are, they probably haven't actually thought the whole thing through at a commercial level. Will they really secure the code from SQL injection and XSS? Will they build management and public modules? Will they be skinnable? How will they test the functionality? Are they going to get you a certificate and set up your SSL or just leave personal details exposed? More than all this, how will you know?

Alternatively, maybe you will find a middle that is regularly updated by a large team of volunteers and can adapt your business model to fit their work, in which case donate to the development and go for it. It's not guaranteed safe, but a bunch of people are trying to keep it good and know the code, so you're not locked into one developer. That would be under a grand, maybe just spend some configuration time.

This is why I personally want to earn you that the figure of a grand is probably wrong, either too high or low. The amount of work and cost in custom development is underestimated day in day out. If it's a figure you guessed at 'I'll give my friend x a grand to make this for me', you've not really researched your options, if you've gone to the professional marketplace with an experienced software engineer/technical architect/programme manager to get quotes - well I just don't believe that's the case, as it'll cost you the grand just to get the spec right for a fairly simple business case.

Whatever, maybe I'm wrong too, maybe you've got an experienced PM and developer who will write you secure new functionality within the WordPress framework, securely, with database interaction, SSL, etc for a grand all-in, and good luck to you if you have. Or maybe you've evaluated the business risk in getting 'some bloke off the internet' to write the module for you and are using the initial 3 months profit (~10-15k?) to get the module rebuilt and bolstered - perfectly fine way of working, if it's in the plan, BTW. Or maybe you've found the one guy who'll work for peanuts but is really an excellent and experienced developer who'll preempt your development needs and help you write the spec. Could happen, maybe a relation, maybe they'll take equity in the company, whatever.

All that aside, you're here for opinions and advice. It's not really important if you agree with all the above people give you, however it is crucial to listen gratefully and with grace, weigh it up, and decide whether or not to follow it. Don't tell people they're wrong when they feel they're trying to stop you from making mistakes. Make all the mistakes you need to make (we don't learn from successes) and get up, dust down, and keep going.

You're looking for small money for starters, so go and earn it, back your own ideas. Between now and Christmas there are enough weekends to make £50/day and make a grand. Busk, wash cars, take a Saturday job, use your entrepreneurial flair and go and make some money to get your dream project started. If you really believe in it, you'll do it.

motorguy

JWIOW wrote: »

I'm now wishing I hadn't bothered to ask. You are all very quick to judge the idea and state clearly it won't work... You don't know my local environment and sources of advertising I already have, do you? The majority of people also commenting believe this is some sort of community information site. It is not.
Motorguy - who said anything about creating an auction site? Classified ads and auction websites are two very different things.

You do know that ebay have a MASSIVE classifieds section - thats what i was talking about, or have you not done your home there either?

People dont want a local environment - they'll drive 100 miles to save £100 on a car.

OK, heres a couple of examples for you, of people trying to do similar to ebay / autotrader / gumtree.

I'm in Northern Ireland, so if your "idea" is going to fly anywhere, its going to fly here, as theres a market with boundaries.

Anyways. UTV drive. Backed by Ulster Television. Thrown millions at it - have ended up copying ads off autotrader, gumtree and usedcarsni to give the impression they have people using their site. Cant get it to fly

UsedCarsNI. Reasonably successful. Have a magazine too. Have a small handful of staff mainly trying to get businesses to advertise at a price that makes them money. Probably doing ok, but probably several million and 10 years in.

Gumtree. Advertise for free. Highly successful. Been around decades, now owned by ebay. Why pay you for an advert when you can advertise there free?

I used usedcarsni, autotrader and gumtree when i was motor trading. Every week there was some wee sheep without fail rang up offering me free advertising for a year on their home made website if i would just use it - some even offered to put the ads up for me from the other sites i used. I declined them every time as they had next to no hits and it wasnt worth even minimal effort for me. None of them made the move from giving away advertising for free to a profitable established site.

Genuinely - double your chances of succcess - buy a lottery ticket.

motorguy

JWIOW wrote: »

I'm now wishing I hadn't bothered to ask. You are all very quick to judge the idea and state clearly it won't work... You don't know my local environment and sources of advertising I already have, do you? The majority of people also commenting believe this is some sort of community information site. It is not.
Motorguy - who said anything about creating an auction site? Classified ads and auction websites are two very different things.

If you think you're going to make this fly by offering it on a town based notion, look up every wee local papers website and you'll see they all have small classifieds sections. If the local papers cant make it fly when its backed up by a good website and a physical paper, what chance have you with a wordpress site?

shegirl

motorguy wrote: »

If you think you're going to make this fly by offering it on a town based notion, look up every wee local papers website and you'll see they all have small classifieds sections. If the local papers cant make it fly when its backed up by a good website and a physical paper, what chance have you with a wordpress site?

That's true. Classifieds sections of local papers have dwindled over the years. My citys paper ended up closing it's paper associated classifieds website and directs people to a general local one which barely has anything on it (aside from older listings which make up the majority of the total listings). Hardly anyone bothers with it.


With places like ebay, gumtree, preloved and various others, there just isn't the call for it anymore. People go to the well known sites or do a google search.


Add on top of that, the increasing selling pages on Facebook and you really wonder what the point is. Facebook has a much further reach than the local paper or local sites, and there are so many local selling pages it's unreal. It's also absolutely free and people run those pages, acting as admin for them, giving their time for free to make it all run smoothly and remove anything that shouldn't be there, encourage people to state location and price etc.


I honestly don't see the call for what the op wants to do.


To top it off, if it was anywhere near as easy as he thinks, even more so with the insane income he thinks he'll receive, everybody would be doing it!

JWIOW

paddyrg wrote: »

You may be right, you may have spotted a niche and may capitalise on it on a way that can't be threatened by external parties either by being protected somehow or some other means. And if so, well done!

Based on the information you've given (and you'll admit you're guarded in what you've given people to work with), people here are just concerned and flagging to you where they (often from experience) see the risks/flaws in your plan. Those are opinions, and take them as such, but they are opinions from people who 1) want to save you from landing yourself with debts and 2) to a degree care and 3) sometimes have decades of real-world business experience in which they found (for instance) that a great idea gets copied fast.

I don't really 2) care if you succeed or fail and not really bothered if you waste 1) a grand or five. It's a lot of money but it's the kind of level where you can make it back, and a part of being in business is knowing when to take a punt. Good knows I've taken enough punts, some pay off, some don't. Windows Vista, Google Wave, whatever, there are big companies who take chances and fail to find an audience, they spend millions in doing so. If they'd been right, the world would have adopted them to their hearts.

So unlike the others, I say take the punt, just don't do it with money you can't afford to lose. It's easier to risk someone else's money than risk your own, but that means you need to take believe in the idea to risk your own. You can earn a grand before Christmas easily, so do so, pay for the development work. Sell your first advert to fund your promotional campaign, or have a real sure you can use as a demo tool to presell the first 3 months at a discount to eager buyers. If it's a great idea and they love it, they'll jump at the chance and you've cashflowed your business for free. Your stake has only been 3 months of a second job.

Just things to be aware of, your custom module development is either under or over priced. I'm going to assume it requires database integration of some sort, need to be robust, multiuser, secure - unless you've managed custom IT development projects before, you're going to get something half-baked with student-level code and very poorly defended. It will do what you say it needs to, but you probably won't spec it completely correctly and miss tranches of functionality 'Where's the "show history" button?'/'You didn't ask for one, and anyway we didn't retain transactional history'. I know this as I've been on both ends. You don't build a house without an architect or at least a QS/PM to guide the guys throwing bricks around, similarly coding needs constraint and guidance. All original code is R&D, and costs like it is, too.

Don't rush into bed with the first person who says they can do what you want for £cheap, however well meaning they are, they probably haven't actually thought the whole thing through at a commercial level. Will they really secure the code from SQL injection and XSS? Will they build management and public modules? Will they be skinnable? How will they test the functionality? Are they going to get you a certificate and set up your SSL or just leave personal details exposed? More than all this, how will you know?

Alternatively, maybe you will find a middle that is regularly updated by a large team of volunteers and can adapt your business model to fit their work, in which case donate to the development and go for it. It's not guaranteed safe, but a bunch of people are trying to keep it good and know the code, so you're not locked into one developer. That would be under a grand, maybe just spend some configuration time.

This is why I personally want to earn you that the figure of a grand is probably wrong, either too high or low. The amount of work and cost in custom development is underestimated day in day out. If it's a figure you guessed at 'I'll give my friend x a grand to make this for me', you've not really researched your options, if you've gone to the professional marketplace with an experienced software engineer/technical architect/programme manager to get quotes - well I just don't believe that's the case, as it'll cost you the grand just to get the spec right for a fairly simple business case.

Whatever, maybe I'm wrong too, maybe you've got an experienced PM and developer who will write you secure new functionality within the WordPress framework, securely, with database interaction, SSL, etc for a grand all-in, and good luck to you if you have. Or maybe you've evaluated the business risk in getting 'some bloke off the internet' to write the module for you and are using the initial 3 months profit (~10-15k?) to get the module rebuilt and bolstered - perfectly fine way of working, if it's in the plan, BTW. Or maybe you've found the one guy who'll work for peanuts but is really an excellent and experienced developer who'll preempt your development needs and help you write the spec. Could happen, maybe a relation, maybe they'll take equity in the company, whatever.

All that aside, you're here for opinions and advice. It's not really important if you agree with all the above people give you, however it is crucial to listen gratefully and with grace, weigh it up, and decide whether or not to follow it. Don't tell people they're wrong when they feel they're trying to stop you from making mistakes. Make all the mistakes you need to make (we don't learn from successes) and get up, dust down, and keep going.

You're looking for small money for starters, so go and earn it, back your own ideas. Between now and Christmas there are enough weekends to make £50/day and make a grand. Busk, wash cars, take a Saturday job, use your entrepreneurial flair and go and make some money to get your dream project started. If you really believe in it, you'll do it.

Thank you for the non-biased response, I appreciate it and it has certainly given me a few things to think about from this.

The developer is a self-employed developer running his own company locally to me, who has been a family friend for 20+ years. He has told me that the normal price for the work required would be significantly higher, yet he is fitting it around other projects he currently has on the go.

The plugins will be significant changes to the way that Wordpress works entirely - predominantly the front end and a custom messaging system on the website.
Everything will be completely secure with SSL and such.

Have you done similar projects? You seem like a wealth of knowledge and would really appreciate some help and advise as I go.

To all of those stating that I have not researched enough, this is something I have researched significantly and there certainly is a demand for it.

motorguy wrote: »

I'm in Northern Ireland, so if your "idea" is going to fly anywhere, its going to fly here, as theres a market with boundaries.

This brings an interesting point - my market does have 'boundaries' as such. I live on an Island South of the UK and none of the previously mentioned websites are used here. The reason being, they all use the existing classified ads website locally here because they don't have the cross the water to go and get the items.

Our main competitor is a site that was set up initially as a local-orientated site which was then sold to a 'mainland' company. Since then, the website has not been updated - riddled with bots - not locally focused at all.
The website looks as if it was made in the 90s and is incredibly slow, lacks a lot of good features and incredibly cluttered.
Being on an Island, marketing is EASY. I have a strong connection to one of the top 3 Island news sources, who have a reach of around 40k people who are willing to push the launch for us.

Yes, people can use eBay or Gumtree - a small minority do, yet no where near as many that do use the local classifieds.

As I have previously mentioned, the site I am paying £1000 for is a skeletal design of what I effectively want to achieve over the long term.
Even if I only bring in £200 a month and I've invested £1000 - after 6 months I'd be turning a profit continuously - all that would be needed would be a small amount of my time to ensure it keeps ticking over smoothly.

If I were to price my top and side homepage banner at £50 a month and have 5 businesses here, I'm turning a profit.
This does not take into account vehicle ads and property ads.
Getting local vehicle sales companies etc on board with a mass ads deal offer would bring in a fair amount of income.

The long term aim is to determine whether the features that will make this site completely unique are worth developing to a project of their own. If it is a success, obviously we can look into creating it into it's own product.

Apologies if my previous posts seemed to be criticising anyone's opinions, everyone is entitled to one.

Yes, this may seem like a very simple idea but I guarantee that I have researched my market and marketing methods.

I may have been rather heavy handed suggesting that I need £3-5k, however - I could use this as working capital to work with whilst I build the site up.

Thank you all for your responses, I appreciate them all.