Anyone here own a retail store (brick and mortar)?

I am considering a opening a retail shop in my town and am looking for people with experience to chat with. I have great confidence that my idea would be a solid niche and although online is cheaper for what I would be selling, it is an industry that seems to still have as much local shopping as elsewhere.

Idea: Up until recently (Dec. 12) there was a Teacher store in my town (Columbia, MO pop. 100k+) that was very successful. It was closed by the owner because she wanted to spend more time with her family. My wife shopped there frequently and the place was always busy. There has been a bit of a vacuum with the teacher population that needs filling. I am planning to rent a location in a "nice" area. The last store was in a less than savory part of town and I think that this would boost my chances of survival greatly. Location, location, location. I would work the counter a lot in the beginning to reduce the number of employees that I would need towards the beginning. This would not be a long term option for me but I understand that I am going to have to bust my butt at the start. I have a number of my parents friends (retired teachers) that would be willing to help out for not much pay.

I am trying to come up with questions as I go but my main concerns involve governmental stuff.

If I have less than say 6 employees, how do the new healthcare laws affect me?

I'll post questions as I think of them.

If you have suggestions or thoughts, please throw them out there.

I know Poopshovel owns a frame shop- a few others own stuff too....

I just found a franchise (marketing coalition) that offers exactly what I am looking at doing. Interestingly enough, there are no franchise fees but I imagine that I would have to kick in to a marketing fund at some point.

Your main concern needs to be keeping your operating costs low. Unless you have fists full of dollars to gamble away at the beginning, you need to focus your attention on:

1.) Keeping overhead down(rent, utilities, payroll - everything)

2.) A good solid plan to spread the news to educators, to get customers in your door

Yeah, location can certainly help you turn greater profits, but you'll be losing money at the start regardless, so you need to focus on losing as little as possible.

Also, do you have any prior retail management experience? Ever owned a business? Have a background in education? What about you makes you qualified to pull this off?

Not trying to discourage you in the least, I just hate seeing people throw away their fortunes/futures because they had a "dream" or "idea" without having a rock-solid plan.

Also, I'd bet money the former business wasn't turning a profit. No one just walks away from a profitable business, they sell it or find someone to run it for them.

Contact your local SBA. http://www.sba.gov/ Get hooked up with a counselor, usually a retired person with a background in what you want to do. Write a business plan. You might try to get in touch with the previous owner as well. He might tell you why he closed shop.

I'll try to post more this evening.

Paging poopshovel......

Datsun1500 wrote: Think it through, be realistic with your numbers, and see if it makes sense. Even the nice parts of town have locations that are inexpensive because they are small, on a corner, last space in a shopping center, etc. With a niche business, you can take advantage of those spots as your clientele will see you out.

This is my thought. Do your marketing well, and you could be just about anywhere. Location, location, location is extremely important for a burger joint or clothing store. Not so much for a specialty shop.

I have retail experience and my background is business marketing. I already have many ideas about getting the word out. Most of my family are educators and would be integral in making this work. It is a dream to become self reliant for employment but I also understand how to run lean.

No discouragement taken. I am well aware of these issues and am asking to get others prospective.

Well damn. Either you guys value my opinion, or I post business stuff way too often.

My initial thoughts:

1. Do you have any experience in retail? (EDIT: Saw your last post.)

2. 6 employees sounds IN_SANE! I don't THINK that gets you anywhere near the point where you're required to provide healthcare, but holy E36 M3 you'd have to sell a lot of (Teachers? Teachers' supplies I'm guessing?) to cover that nut. Keep in mind, when factoring up what an employee costs, that you're matching they're tax contributions, FICA, and you'll need unemployment and liability for all of them. I couldn't keep the doors open with 6 people at minimum wage...much less the rates I actually pay.

3. The unforeseen stuff is the big killer. You'll want an accountant to handle taxes...and if you really do have 6 people, having someone handle payroll will probably be crucial as well. Marketing isn't cheap, and no matter how visible your location is, you need to do it. In the unlikely event that you're sitting there at the end of the first quarter going "Holy E36 M3! Look at this big pile of money I've made...." Tax time, motherberkeleyer.

4. Speaking of taxes, if you don't already hate the government, you will. You'll get random calls from some high-school dropout at the IRS asking what exactly it is you do? You'll get letters saying you owe money that you don't owe. It's usually under a hundred bucks, and it's usually "You've got till the end of the month to pay, or we'll start tacking on penalties...so pay up sucker. Do you really want to spend an hour on the phone with us? Draft and send 10 different letters saying you don't owe the money?" I am not exaggerating.

5. I have to think that to stay anywhere NEAR competitive with an online resource, your markups will have to be teeny tiny. Is there any way to contact the owners of the last place, take them out and pick their brains? Again, I'm just picturing this huge $7,000 - $10,000 nut every month just to keep the employees paid and the lights on...before you make a nickel. Random word to the wise: "I just want to spend time with the family" is a really, REALLY, common way of saying "I was in waaaay over my head, but I'm too embarrassed to say it." Not having any idea what your rent would be, or what the margin is on teacher supplies, but guessing it's tiny, I'll take a shot in the dark and say you need to sell $40k - $50k worth of E36 M3 a month just to keep your head above water(?) Total guess there, but I'll bet I'm not too far off the mark.

Best of luck, man! I'm not a big fan of the "hands-off" idea, if that's what you were implying by "I'd have to work the counter/hard at first." People will steal from you. 6 people will steal A LOT, especially if they're in cahoots.

I was picking a number out of my ass. I doubt I will have any more than 3.

singleslammer wrote: I was picking a number out of my ass. I doubt I will have any more than 3.

Cool. Just don't forget to include your employer match on tax contributions and FICA, and unemployment and liability. A $10/hr. employee gets really expensive, really quick. You can look up the tax/FICA rates. I think handbook is free, and easy to use.

Also, schoolteachers are often a frugal bunch, out of necessity. These supplies are often coming out of pocket, so value is paramount.

If you are marketing to teachers, what kinds of hours will you keep? Could you be open nights and/or weekends?

Also, what kind of flooring does the place have? If some snot nosed kid spills the bubble mix on the floor and Mrs. Frazzle slips and breaks her hip, let's hope that the insurance is good. I am always amazed what can cause people to slip.

This will be open regular retail hours (nights and weekends).

What about running employees through a temp agent? That way I don't actually have ever any employees to pay for.

No location selected yet.

FYI all of these responses are sent from a phone so pardon the shortness

singleslammer wrote: This will be open regular retail hours (nights and weekends).

Is that even necessary? Theoretically you could be open nights and weekends for your demo.

Or, are you going to be supplying home schoolers? (if there are many around you). Some sort of home school support "programs" might be an income source (I suspect you have already thought of this)

Datsun1500 wrote: Older retired people are the way to go. They do it more for the social aspect than the paycheck

What about older retired teachers?

I would buy lunch for the owner of the former store. This would be the greatest investment you could make. In that one afternoon you could clear up a lot of what you "think" about the business and marketplace to what she "knows."

In reply to aircooled:

Homeschoolers are cheap, and exceptionally good at finding fr stuff. They make lousy customers. The only exception is niche teaching products and resources sold through conventions and online.

Ask me how I know.

Buy the previous owner lunch and stop guessing.

Lots of great thoughts/suggestions in the last few posts. IMO. You may be surprised how cheap a million dollar liability policy is. I highly recommend it in the interest of being able to sleep at night. In the first MONTH, I had one employee get a bad cut that required an ambulance, stitches, and left a scar. Didn't have worker's comp set up yet. She could've sued my ass off. Then a customer busted her ass HARD on the steps out front. I went for the big policy and never looked back. RE: The slip & fall thing. My landlord's policy probably covers a lot, but it's literally "cheap insurance." YMMV.

singleslammer wrote: I was picking a number out of my ass. I doubt I will have any more than 3.

Pay them as 1099 by the hour worked. Retired people who no longer pay full boat on taxes love that E36 M3. So do 22yr old bartender/actors with rent to pay and housewives who can balance a spreadsheet but are trapped at home with a couple kids who just want the eff out for 5 hours a week and no one will hire them for that. My wife's business uses a list of about 12 people who have various excuses as to why they can't help "this weekend" but even so... calling down the list eventually finds someone to carry heavy equipment around all day for $100 or spend a couple hours burning backup DVDs.

Using your own high school age children as slave labor is totally cool and instills the kind of character that makes them want to get away from you and your miserable little shop as soon as possible after they graduate. All win.

In reply to Datsun1500:

I agree with your point that the previous owner's experience is not very relevant, but it could be insightful. It could reveal their weaknesses, or mistakes, or best customers, or best ideas they never brought to fruition.

It may be negative data, but it still could be useful.

Either way, it's cheap data, and potentially worthwhile.

I'd buy the lunch, but not take the info at face value.

In reply to Giant Purple Snorklewacker:

Your 1099 idea is illegal 9 out of 10 times. Proceed with caution.

In reply to singleslammer:

I like your idea. Especially the fact that you have identified a market already.

Having said that, there is no way I would consider selling school supplies without:

A- including an online component,

B- selling to homeschoolers (online, and conventions). It's a huge expanding market. And,

C- recognizing that the person who makes the most in the majority of brick and mortar businesses is the landlord.

Poop covered it pretty good.

We aren't a "brick and mortar" store, but we do sell retail. We go to the customer.

We are in the middle of a sales tax audit. They "only" wanted all invoicing, incoming and outgoing; bank statements, check register, quarterly sales tax returns, state and federal tax returns and any other financial documents for the last 3 years. That's a full size filing cabinet full. That was fun. I'm still trying to get everything back where it belongs.

Get your filing system sorted in advance and be religious about it.

I'll reiterate, talk to the previous owner if at all possible. Talk to the SBA. The more information you have the, the better chances you have of success.

Write a business plan and a budget. That's going to take some research. You need to have a pretty good idea of your expenses before you take the leap. You will probably bleed cash for the first few months at least. How long can you hold out. We started with $20K in the bank. Cash flow got real low before it started going the other direction. That was with no employees and not drawing a pay check for the first 8 months. Between start up funding and keeping food on the table, my savings vanished in a hurry. It was several years before it started building again.

Plan on being at work long after everyone else goes home. All that stuff you didn't have time to do during the day, still has to be done. You really don't want to pay overtime, so you end up doing it after hours, yourself. I can't count the number of Saturday and Sunday mornings I've been at the shop, working, while everyone else was still in bed.

After all that, I will say it's worth it. After 8 years, the pucker factor is easing. Tonight, I'm paying an employee overtime to drive 4 hours to make a repair, while I sit at the house. There are still some sucky things (audits) but I wouldn't go back to working for the man.