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New store - need advice...


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ok - here's the deal... I've been trying to get a business plan together and a list of things I would need to have (and their costs - either upfront or monthly) to open a b&m store. There are several buildings that have just come on the market that are within my area and are reasonably priced (my payment on them would be half of what rent would be!). But here's the deal - I'm not up against a bank for money.... much worse than that!! I'm trying to convince my husband to let me take out the equity in our house in the form of a loan to fulfill my dreams... the banks part in this will be easy... I can't say what we have in equity in our house but I can say it's a very substantial amount! We were at the right place at the right time and got a fantastic deal on our house 8 years ago. I know that if I had the space to grow, I know I could. I'm prepared for long hours and all the trials and tribulations that go with owning a store front. My mom owns her own floral shop and I see what she went through to get it and operate it. She won't tell me details though!! :mad: Don't ask why - I didn't! But that's why I come to you. I have a pretty good idea of what I need but I want to see if I'm missing something - because it sure feels like I am... OK - what I have so far:

Building payment including taxes and building maintance - $500-600

Utilities - $350

Insurance - $200 - I really don't know what this number should be - I took our home owners ins. and rounded up then trippled it.

Marketing - $100-200 a month - this is for ads in the news paper once a month and to pay for my newsletter that I mail out to all my customers.

I've already got displays, a cash register, and TONS of supplies and prodcuts made. The only thing I'm going to need is a few supplies in total of about $2000 - most of this is wax as I'm down to my last box :( and I buy by the pallet already. I've been doing craft shows and such for years and I've got a fairly loyal customer base (but who couldn't use more customers right?) and I have talked to my friends about this and already have people willing to come help me out if needed. My mom runs her shop by herself with the neighbor girl coming to help out after school and such. If she can do it, so can I! My husband is all about the bottom line and how much money for this or that - darn Libra! lol JK I am too as I want to make enough to profit but this is *my* dream, not his so he's not as gung-ho about it as I am...

Anyone have any advice?? I need to do something because my lil 10x10 space in my basement isn't sufficant enough! I keep hitting my head on stuff that I have hangin' from the ceiling because I'm running out of storage! lol I figure even if I can't get him to agree on a storefront right now - maybe I can convince him to let me finish out the garage so I can move out there - but that's "Plan B" and a little bit harder because that's going to require a lot more city meetings and permits and ug - government!! :shocked2: lol

Sorry for getting so long winded - I'm just excited, nervous, scared, and happy all at the same time! My hub has never been very supportive of my business but he's never asked me to sell everything and quit doing it either... so here's to hopeing...

TIA!

Life & Light!

Tish

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Question: What is a "b&m" store?

Why wouldn't you go to the bank for money, rather than the home equity route? I wouldn't want my house in the bank's hands in case things went sour with the shop. The home equity might possibly be an asset you could use in the future if need be. If you took a loan out and had trouble repaying it, the bank likely would give you a home equity loan to pay off your debt, but, if you have trouble paying the home equity loan, they would repossess your home rather than give you another loan to default on.

As far as insurance, I don't know if you think $200 per year will cover it, or if your talking quarterly, because where I live, $200 per quarter is more like it. If your agent knows you're selling homemade candles, maybe it's $200 per month. I don't know. My agent poo-pooed the idea of me getting the majority of my income from b&b products. He said if it's not a major source of income for my store, I could get away with the rates I was currently paying, but if the majority of my income came from it, I would have to get a special policy. If you've been reading the posts, you know what an issue it is for insurance.

Utilities? I don't know about that. My phone/internet alone is $100 per month (that's with unlimited long distance). My gas bill last winter was over $200. Then you have electric, water, sewer to consider.

Marketing costs need to be increased. Postage alone for my mailings is well over $100. Newspaper advertising is pretty expensive and ususally not very effective unless you can have a rather large ad, and run your ads frequently--and even then there are no guarantees.

Unless you are made of money, it's very hard to have a successful (meaning you can totally support yourself on it) shop anymore. With Walmart and other big box stores everywhere, it is difficult to compete. They can sell a huge candle for $3.99 and still be making a profit. If you are anywhere near a mall, Dollar tree store, Walmart, etc. people will likely expect similar pricing from you. It is very tough.

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I would suggest using a biz plan template you can go to the SBA website and find one..

You need to calculate everything..even things you don't think of..in the form of monthly expenses and estimate your sales..high and low.. ..how much you have to sell in order to break even..then how much you have to sell to make a profit..project your store increases etc..these are all in the template.

as far as insurance goes..round up MORE..mine quote was $600 a year..I estimated $2000..this is for biz insurance and liability..plus if you own the building then you have to calc..that in as well.

make a list of every single thing you need to open your doors..toilet paper, papertowles, receipt paper, labels, signs, maintenance(general..like windows etc).. my advertising budget is $200 first month and $100 thereafter with an increase in the same % as the sales..so I if I increase my sales by 10% then my advertising budget will go up 10% as well.. ..my biz plan is over 30 pages with all the projections and calculations in it..PLUS a detail of cost for each and every product broken down and then listed by wholesale price and retail.. a list of every single item I plan to buy to open and how much of each item...dont' forget your cost everyyear for city/state permits and little things like that..we have a fire service fee that is by the sq ft..so I have to calcuate that in monthly..for budget purposes even though it is a yearly bill.

as far as hubby goes..i don't know what to tell you about that.. it is a risk no doubt..but if you put a good biz plan together and show him how serious you are and how you can make $$ at it..then you just might get his approval.

it is a lot of work but even if I don't get my loan(which we still have a plan b,c, and d if SBA don't go through)I have a plan to work from..with details.

If we had a house with equity to borrow I would do it that way..so you are lucky..lower interest..mine is going to be prime + 4.75%..ugh!

IF he is about the bottom line..then work up your plan and show it to him...remind him it usually takes 3-5 years to turn a profit..but by then you should have an excellent customer base...profit could be sooner if you really work at it..and do the bare minium..and find better deals..

you have displays and a cash register..you are farther ahead than I am..I have buy all that stuff...but I am going to be renting.

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B&M is brick and mortar... a "real" store...

I have my own reasons for using the equity in our house - it's a long story...

anyway - I was thinking $200 a month for insurance. My homeowners insurance isn't $200 a month but I took what we paid and like quadrupled it. My insurance agent doesn't know that I make candles in my home - and as long as I have him as my insurance agent, he won't. There is another story here but I won't go into that now... anyway $200 was just an estimate...

As far as utilites go, my phone/cable/cable modem combined cost me about $65 a month. I am on budget plans for my other utilites (gas & electirc) for my home and together they are $125 a month. I figured my home expences and doubled it... like I said these are estimates - I know more when I look at actual bills from the buildings. Water and sewer are part of the building maintance that I bugeted for.

As for marketing - it depends on which papers I advertise in but I can get a decent size ad in the local paper for about $85... as for mailings, I only mail out stuff to my wholesale customers and the few retail customers that I have that I don't use email for. I email my newsletter to my customers - i get a better response that way and my customers like it thatway - no paper to recycle! My snail mail mailings are mostly to potential new customers - and those I only do 20-30 a month - only as many as I can follow up on...

My business isn't only going to be candles - I do way too many things to have just that. Nor am I going to be just B&M but I'm going to have wholesale accounts (I already have three decent ones - and growing!) and a presence on the web and at markets/fairs/shows...

I do thank you for your input though... you made me think about things and I am going to make a few phone calls and check out a few things that have to do with the buildings I'm interested in...

Life & Light!

Tish

PS - I know it's not easy making ends meet with a store - my mom taught me that... not looking to make millions, just looking to make ends meet for my business (and finally love my job!) - my husband supports us just fine!

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I would suggest using a biz plan template you can go to the SBA website and find one..

You need to calculate everything..even things you don't think of..in the form of monthly expenses and estimate your sales..high and low.. ..how much you have to sell in order to break even..then how much you have to sell to make a profit..project your store increases etc..these are all in the template.

I have a template but not from that site - going to the site now.. :) My major issue right now is how to figure sales... I don't have a clue as to how to realistically figure that... I don't want to just pull numbers out of a hat, ya know?? I know when I do shows I have to make a certain number to break even and a certain number to show a good enough profit to do the show again. I know how to come up with those numbers - is it anything like that??

The thing that helps me out the most with figureing stuff out is the building that i purchase will also be my home... so it will be HALF of the mortgage payment, a portion of utilities and all that... so I'll be sharing expences with my home - much as I do now, only a much bigger basement! lol

Thanks for the info on the SBA - I didn't know they had templates and such... I may have to check them out more tonight... :D

Life & Light!

Tish

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Just an FYI..they charges business more for phone/intenet/utilities than they for houses..

Been there already.. my phone was double what it was for my home..and plus they charged me $250 to connect. ..hopefully this biz I can find it cheaper....same with utilities..they were more. :sad2:

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I'm getting more and more confused by your post. You plan on getting an equity loan from your current home to buy a new home/business? Did I misunderstand something? Maybe you were referring to the profit from selling your current home and moving into the new business/home?

So you plan on making candles at your new home/business, yet you wouldn't be telling your insurance agent that either? I think you're kind of asking for trouble. You might be able to get away with it forever, but with your new policy they will ask what type of store you have, how much your inventory is worth, etc. If heaven forbid, there should ever be a fire due to your candle making and they determine you were in fact a manufacturer, you might not be covered. Just to be on the safe side, call a different insurance company, explain exactly what you are contemplating doing, and get a quote from them. I don't know what volume you're at now, or what volume you intend on doing, but that might have an effect on your insurance rates.

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I'm getting more and more confused by your post. You plan on getting an equity loan from your current home to buy a new home/business? Did I misunderstand something? Maybe you were referring to the profit from selling your current home and moving into the new business/home?

So you plan on making candles at your new home/business, yet you wouldn't be telling your insurance agent that either? I think you're kind of asking for trouble. You might be able to get away with it forever, but with your new policy they will ask what type of store you have, how much your inventory is worth, etc. If heaven forbid, there should ever be a fire due to your candle making and they determine you were in fact a manufacturer, you might not be covered. Just to be on the safe side, call a different insurance company, explain exactly what you are contemplating doing, and get a quote from them. I don't know what volume you're at now, or what volume you intend on doing, but that might have an effect on your insurance rates.

I understand your confusion... it's confusing to even me! But to keep this simple and as least personal as possible, the money is "mine" not his and I would just be asking for an "advance" so I could get the money now... it's a long sticky story and hard to explain... and not something I want to broadcast here on the MB.

As for the insurance issue - my *current* agent doesn't know I make stuff - I don't do enough sales to warrent the higher insurance - right now it's a "glorified hobby" like my husband calls it. BUT when I move to a store (or finish out the unattached garage - which is what I'm probably going to have to end up doing and forgoing the store for another 4 years - found out some bad news today after I started this thread - I guess I jinxed myself! :cry2:) I am going to tell my agent and get special insurance just for my store (or my garage -I've been told that since it's a seperate building, I can do this some how - don't ask because I don't know the details - I just called a seperate agent that handles the same provider).

I guess I'm not so concerned with the money aspect of all this - I've got the money... I just need to know what to plan for like do I need a wash zone for OSHA or do I need to have a certain type of ventilation system... things that I haven't accounted for.

Sorry for the rambling - lack of sleep and too much caffeine can really scramble your brain in a short period of time! LOL

thanks guys...

Life & Light!

Tish

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I really think you need to sit down and make sure your expenses will be covered. Everything doubles as a business. My insurance went from $75 a month to $175.00 a month. Advertising expenses are through the roof. I know most newspapers charge a weekly fee x however many weeks are in the year and it needs to be paid upfront or monthly. Advertising in the phone book is outrageous. I paid quarterly for a 1x1 inch ad. It was at least $150. a month. I did a commerical and that worked for me, but it wasn't cheap.

I spoke with accountants and they said if you are making 80% more business income than you made the year before than your doing very well. But if you are making 100% more than it is time to consider opening a business. My business made 150% more this year so far than last year and we haven't even gotten to the busy busy season yet. This year I was blessed with great people to help me succeed in business. I really don't have a desire to open another store. I drive by Camille Beckmans building every week and hope someday to have a manufacturing plant with great employees.. I have to Stop dreaming!!! Good Luck!!

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if your mom owns her own flower shop why not put some out at her store.at least till you can get your own. if she has room it could work out to be a good deal. no over head that way. even one shelf will hold a lot of stuff i sell my stuff to other stores and it works out great.

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HeavenScentU, don't ever stop dreaming! Dreams are what makes these things possible, they can't come true if you don't have any!!

SunshineSundries.. There will always be things that come up that we don't plan for! It's a given. Nomatter how well we plan, and how many pages our business plan is, there will ALWAYS be something that happens that we didn't even think about. I don't think there are any wash zones or ventilation standards that you'll have to worry about lol, although from state to state things are definately different.

When we decided to open a shop, it was a "fly by the seat of our pants" decision. We had the building already in place for manufacturing purposes, and it had a store front, so we threw caution to the wind and did it. The one thing that I would suggest to you or anyone else considering this, is to consider diversifying a bit. It's a hard cold world out there for candles, bath and body and soap stores if you aren't a huge established business. Like it or not, we have a very seasonal business, and during these 100+ degree days, not very many people are thinking about snuggling up with a nice candle burning next to them while they sip on some hot flavored coffee :cheesy2: For us, it was antiques. We added antiques and a few consigned crafts to our shop and it was the best thing we could have done to carry us through the summer. Seems that antiquing knows no season around here. But there are other things you can do as well.. I'm sure there are a million ideas out there, we've discussed some on this forum too.

Location is another very big thing. I didn't think it mattered all that much before we decided to open up shop. But trust me, it matters! Being where people can "happen upon" your shop is going to be super important for some time. We haven't had to do a bunch of advertising yet, because we opened our shop during a huge summer fest and had thousands of people in the street directly in front of our shop. It was a wonderful thing! We will be doing some advertising in the coming weeks in preparation for the upcoming season, but it's a good thing to try and use as much free advertising as you can get. I have a wholesale account that regularly advertises for me in the local newspaper and I LOVE it.. can't beat FREE!

Good Luck with your decisions. I know I haven't been much help in answering your questions, but I just wanted you to be less frustrated and try not to get too worked up and stressed out about it.. It's good to be cautious of course, but sometimes you just have to Go For It and hang on tightly to those dreams!

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Thanks Prairie, I will never give up on my dream, It just seems that as the years go by you are closer to your dream but it is still a long way away. When I had my stroke a year and 1 month ago I thought I would never be able to make candles again., it was over. But the desire to make candles was even stronger, now my candles are in over 20 stores around my state and into two other states in just 7 months. That is a huge accomplishment, but I still want more.. And I can't reach it fast enough.. I told my hubby that by next June of 2007 I am hoping that he is able to quit his job because we are going to be operating a candle distributing business... He believes me! That is all I need to make it happen.

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Thanks guys for all your input. After examining my personal life and my business life, I'm going to keep my business homebased. I am going to petition to my husband to finish out the garage (insulate, add heat/ac, and such) so I can move my "craft sprawl" out to one contained area. ;) Even though I have the money and the desire to open up a store front right now, I want to make sure to have a larger and firm customer base (both retail and wholesale) and the support that I need before making the plunge into something bigger. I also need my personal life to settle down a bit. What I am going to do is work on a four year plan so in four years I can open up a b&m store and do so with atleast some confidence that I'm prepared to take on that kind of work load.

Thanks again for all your input! (((HUGS))) I will not let this dream die as it is so much a part of me. And those of you out there that are ready - go for it... you will kick yourself much harder for not trying...

Life & Light!

Tish

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I have been in two facilities since I started in 2002.

If I had to do it all over again, I would have stayed home. I also refinanced my house to get a little money for my business (second one in Utica) & although everything turned out for the best and we do very well there - if I had to do it all over again, I would have stayed home.

Overhead is a killer - whatever you think it will be multiply it times five and that is right around the figure you will need every month (no kidding!)

Good luck with whatever you decide :)

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Sunshine Sundries-Have you ever read a book called "Retail Business Kit for Dummies"? I just recently purchased this book and it has been alot of help so far. It gives you idea on how to write business plans. It has forms that you can print and really asks if you're the right type of person to have a retail business. I recommend the book highly. Hope your dreams come true!

Sheryl

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You may get some jerks at the SBA...just ask for a new person..when I had my first biz(consigment shop) i had a guy who was not nice at all..and not even willing to help me out.

This guy I have now..read my biz plan and is bound and determine to get my shop money before Sept 1st..he was also the Chamber of Commerce president and knows everyone..perks! Big time..They have alot of useful info as well..and templates to do all kinds of things from biz plans to hiring employees.

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Sunshine Sundries-Have you ever read a book called "Retail Business Kit for Dummies"? I just recently purchased this book and it has been alot of help so far. It gives you idea on how to write business plans. It has forms that you can print and really asks if you're the right type of person to have a retail business. I recommend the book highly. Hope your dreams come true!

Sheryl

Next time I'm up by the bookstore, I'll check for it. Thanks for the feedback on the "kit". I think between that and the info on the SBA website, I should be able to put something together to get a fire lit under my hub's arse! :rolleyes2 He's such a poop... but that's another matter completely! lol

Thanks!

Life & Light!

Tish

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