Subject: I'm getting ready to open a store Author: Fanci
I'm getting ready to open a furniture & home accessory consignment shop. I have approx. $7000 of which I need to use to purchase some items for a variety and the rest will be working capital such as lease, utilities deposits, etc. At the moment I've located two buildings 1) approx. 1600sq.ft @ $675/mo. 2)the second is 6,000sq.ft @$2000/mo. They both have the traffic pattern that I like. The first (because of the lower rent) seems appealing because it's in the heart of a town that is being revitalized and there are
several shops I feel are good drawing cards. They would also be ideal to do co-op advertising with.
The second location is appealing due to the space. I could grow first of all, without moving. Secondly, I have an idea that I may offer 90 day lay-a-way and I'd have space to block off for such. My question I guess, Is it feasible to plunk out $2000. plus the extras for the larger space?
Thanks so much for your time.
Fanci
Hi Fanci:
Thank you for sending me your questions. This turned out to be a long letter of free advice. Just think how much I'd write if you're a client.
A basic tenet is - Don't ask a question, if you can't cope with the answer.
;^) My corollary is - Don't ask me a question if you can't cope with reading long answers. 8-)
Please realize my questions & statements are NOT meant to dissuade you. I want to persuade you to consider these issues so you'll be prepared.
Retailers & consultants should work together to prepare for, solve or mitigate problems. To fully serve clients, consultants need to be aware of issues to avoid as many problems as possible.
Worry & fear cause more trouble & aggravate current problems. Even awareness without action can be better than being negatively surprised.
Sometimes, some people think I over-think issues. I might think they're right - sometimes.
Some issues below are applicable only in a few situations.
Iterative Preparation
As you notice legal, consumption & economic changes, you can determine how conditions compare with your expectations & preparations. This will indicate which direction you need to iterate toward.
By knowing what to expect, you can iterate toward a compatible result. If you don't know what to expect, you'd probably have to make big, costly - disruptive - changes.
Some of these issues are long-term considerations calling for consistent preparation.
In effect, you can set up a plan - itinerary, so you'll be where you need to be at opportune times.
This part covers some external issues.
First, Some Benefits and Limitations Of Location
"You see, but you do not observe. The distinction is clear." Sherlock Holmes Quote from "A Scandal in Bohemia".
If your store is in a high traffic area, it can get a lot of peripheral visibility (in people's peripheral vision), but it doesn't guarantee significant exposure (not enough to make a meaningful impression).
That's obvious, yet retailers tend to think potential visibility is actual visibility. It's a bad assumption.
People are very distracted - consider how much people talk & text while they walk or drive.
Unless your store is their destination, they aren't in your neighborhood to buy from you.
You could use methods to attract them if their destinations would be near your store & especially if their activity is related to what you offer.
You'll need a good sign & window displays to get the attention you'll need.
Too many retailers have bland window displays. It's possible to push the envelope of interesting visibility without being offensive. You can probably find good ideas from other sources or hire a display designer.
You need to focus mostly on people who currently or soon will need/want what you offer. If people don't currently need/want what you offer, they don't need to be aware of your store.
Building long-term awareness won't keep you in business long enough to serve people more than a year from now. By then, if you're still in business, you might stock different merchandise anyway.
Could Be A Bad Sign
What are the signage laws for each location you're considering?
Sign regulations can include sizes & placements.
It's also good to be aware of precedents, proposed laws & petitions.
Depending on local laws, some business owners have bigger signs or positions than they're allowed to have legally, so they pay small fines each month. Those business owners consider the monthly fines to be a cost of doing business.
Be sure to get legal information from somebody who has authoritative knowledge in the matter.
Some city governments may require a sign to be taken down. In those cases, there are harsh penalties not small fines.
A city employee might show you the exact laws. You should get copies of all laws & be sure you understand them.
A sign maker should know about sign regulations, but you should also consult a lawyer about this & other issues.
It's like that with marketing laws. I know what the general laws are, but some business categories have more specialized laws. Since I'm not a lawyer, I won't guarantee full legal compliance. I work based on current information, some of which comes from clients, or I'd have to charge more to get information my clients should already have anyway.
I won't give legal advice except to advise consulting with a lawyer.
Though you can probably get copies of laws from government legislative web sites, attorneys are apt to know which search terms to use. Attorneys should also know how to interpret laws to determine which are applicable to clients.
Under Construction
What has been/is planned in the city/cities you're considering?
The city where I live had some streets reconstructed. It disrupted some businesses.
Beware: If a street is part of a county/state highway (like here) the county/state may decide to reconstruct the highway even if some citizens oppose the plan.
Street designers were sent to talk to us & get our input. They told us about budgets, what to expect & how they were limited since some citizens wanted things that would conflict with what other citizens wanted.
They advised local businesses about having appropriate back doors or alternate street access. When streets are torn up in front of those stores, customers should get into them.
Depending on particular situations, emergency exits could be used as temporary entrances. But emergency exits aren't always optimal as entrances.
Even if stores are equipped with back doors for emergencies, disabled people could have trouble entering. In an emergency, somebody would probably hold a door open so people can quickly leave.
It probably isn't practical for a small store to have somebody watching constantly for people who might want to enter. If disabled people can reach a well-displayed door bell button, they can signal their intentions.
In some places, this could fail legal requirements.
Emergency exits probably aren't near convenient parking spaces, especially for disabled people.
There might be other barriers. Is there a river or something else that blocks access to the backs of these locations?
Our retailers survived. Construction was done quickly since a drought prevented rain delays.
Thank you for using my blog. Please let me know if I should clarify anything.
Copyright 2016 Dennis S. Vogel All rights reserved.
When you compete against big businesses with big budgets you need powerful marketing strategies & tactics. You'll find them here-
https://thriving-small-businesses.blogspot.com/
http://www.voy.com/31049/
Part 2
This part presents some issues for retailers in general also.
What kind of insurance coverage will you have for the inventory?
How will the actions (or lack) of building owners affect your liability & business property coverages?
Which actions (or neglected problems) of building owners should you report to the insurance company covering your business?
How would product owners be reimbursed if you aren't healthy enough to run your business?
It may seem strange for a marketing consultant to ask these questions. I'm not asking you to answer for me, you should answer many of these questions for yourself.
You should be ready to deal with as many of these issues (below) as are applicable to your store.
What About ...
... Choosing Inventory & Selling Enough To Cover Expenses?
Will all of your inventory be owned by others or will you buy some inventory?
Will you check furniture in people's homes (so they don't have to haul something you don't accept)? Or will you only check furniture at your store?
Considering space & money, how much inventory can you afford to have?
Will you offer only firm prices, 'or-best-offer' or both - depending on particular products?
How will you determine if it's time to break-even on a product or possibly accept less than a consignee expects you to pay him/her?
If you have enough inventory (but not enough space & money), but get an offer for some great inventory, how will you determine what to do? Could you afford to get a loan? Would you use barter?
Depending on your cash flow & financial needs, how much sales revenue will/do you need per square foot?
Some fixed costs might be almost the same in either building you're considering for your store. Depending on the building condition, heating & maintenance of a bigger space will probably cost more.
How likely are you to get enough sales revenue per square foot (or whatever your main metric is/will be)?
If you need more inventory despite your 'wanted-to-buy' ads, will you go to rummage/yard/garage sales?
If you do it, will you have to adjust your personal & professional schedules?
Will you have a staff &/or partner to share your work load?
... Old, Unsold Inventory?
If a consignee brings in a furniture set, will you ask if the set (not individual pieces) will be sold together only?
Who will have final discretion over how & when to sell products?
Will you have a time limit on how long you'll keep a piece of furniture before you call the owner to pick it up?
Example - After displaying a product for 3 months, you might want to use the space for things people might be more apt to buy.
Where would you put the furniture, if nobody picks it up in cases like these? Without being overbearing, you'll need a strong, clearly worded contract to detail what you're entitled to do in cases like these.
Will you charge for storage of unclaimed, unsold inventory?
Would you haul unsold inventory back to the owners?
If consignees move & list a faraway address (for payments you send), how would you deal with what remains unsold?
What will you do if mail is returned as undeliverable (especially if it contains checks you've sent to pay consignees)?
How will you document your communication (& attempts)?
How extensive do you need your consignment agreements to be?
What kind of restrictions are you willing to put on yourself?
Depending on what you require of yourself, people might be more comfortable with you.
How many terms & conditions will people tolerate? (Have you ever read the many pages of terms & conditions for software?) If people feel forced to agree to the terms & conditions, they might be resentful.
Always Some Legal Considerations
Will you limit the item values to avoid expensive litigation & so any legal hassles would be handled by arbitration or small claims court?
After people dispose of items, especially when they try consignment, they might resent a requirement to take items back.
It might depend which they want more - money from selling items or to be rid of items.
Who will be authorized to reclaim products or receive payments? Example - If I'd consign things from my parents' estate, my siblings could want an unsold item or the money. If they're frustrated with me & I may tell them to handle the estate. They could try to claim whatever they can.
You should consider what to require of people to receive the items or money. Would you expect the original consignment agreement or receipt? What would you require for identification?
Will you charge for delivery to buyers? People might pay (full or down payment) for furniture & choose to pick up it later. How long will you hold sold products for them? What if they don't claim it in that time?
Where/how will you keep that money - as cash or deposited in a financial institution?
Thank you for using my blog. Please let me know if I should clarify anything.
Copyright 2016 Dennis S. Vogel All rights reserved.
When you compete against big businesses with big budgets you need powerful marketing strategies & tactics. You'll find them here-
https://thriving-small-businesses.blogspot.com/
http://www.voy.com/31049/
