Ask YC: Advice on startup idea and funding.

Build and sell a web startup... use the profits to open a cookie store?

I would say something like this...if you haven't already, this is the kind of thing you need to really create a business plan for.

Read this - http://www.slate.com/id/2132576/ - it might give some perspective. The profit margins on these things can be very narrow. That isn't to say it's a bad idea - just be sure you know what you're going into. I fear too many people think about how cool a place is, but don't think about how profitable it is at the same time. I know this is heresy in the web start up world...but at the same time we all admit that starting a web site these days is mad cheap - starting a brick and mortar place like this is not. ;)

I'd honestly pool some money up amongst your friends who are looking into this and run a market survey. Maybe hire some college kids who are majoring in marketing on the semi-cheap, or run it yourselves if you have that background. Use the survey data to indicate viability - try to find your target market, and project profitability with an expansion plan. Maybe a franchise? Or do you just want to do this to pay a salary and have a fun job? These are questions that the business plan with hash out.

The real problem is the idea is easily reproducible, and the returns are going to be semi-low, so you'll probably have a hard time attracting VC or Angel money - but I could be wrong. I'm guessing the most feasible thing is to raise money through friends, family and maybe a credit union one of you guys belong to. If you do have a solid business plan and can convince yourself and others to put your own/their own money on the line, it's an indicator that it is a good idea.

There are those trendy cereal places in LA, right? Maybe you guys should go into one of those places and just ask the owner how it's going so far. Throw your idea out, who knows, maybe they'll know someone. Find out all you can from them.

Anyway...just some random thoughts. I'm doing a low-tech venture myself right now reselling a diesel fuel additive (despite my programming background), and have been going through a lot of this stuff (market surveys, business plans, viability, projections, etc) myself.

I really like the idea, but are you sure you'd be able to sell enough milk and cookies to make up for the cost of running the place? Seems like the only way to make it work would be to sell "gourmet" cookies and overprice them, and that kind of moves you out of the hipster/student arena and into yuppiedom.

Interesting idea, but be wary. I opened up a hookah lounge last year 2 blocks from Brighton Beach in Brooklyn NY. Before we opened we were hoping to get the chic, hip, free-wifi crowd, but instead got 18yr old troublemakers that don't spend a dime.

It's one thing to want a particular clientele and it's another to actually get it. There's no guarantee, and with something like cookies, you don't know who you'll get. To combat this problem we're acquiring a liquor licenese which of course comes with it's own cost and potential set of problems.

Furthermore, it's quite scary to see your weekdays come and go with only a handful of customers, and then need to rely on your weekend. If it rains that weekend you're hosed and better make sure you can make that rent, utilities and labor.

It's a tough, and this doesn't even include all the city issues, permits, violations, etc that you'll be sure to have some issues with.