Storefront; Worth The Overhead?

MattCoops

I've been having the idea for a storefront for a while now.
I now where I want it. And it just so happens a space has opened up for lease.
It's a 1200 sq ft wide open retail store in a heavily trafficed intersection shopping strip.

It would be another $1800 a month in overhead though.
But with the visibility I think it could lower current marketing expenses by about 20-30%.

Plus, we can have a new market of those just shopping for tile and continue to sell installation services.

All our tile vendors will give us extra percentage off purchases too.

Right now, I can afford the deposit (first and last rent), improvements to store floor, and display racks.

But, here's where my girlfriend disagrees, I want to have a cushion of at least 6 months rent and utilities in savings. Just to keep stress minimumized.
SHE wants to jump right in. She loves selling tile. She's good with coming up with designs for people. And she's one hell of a closer. She can measure, account for materials, sell a customer on product, and GET THEM TO SIGN THE BOTTOM LINE.

But I don't want to jump right in as she wants to. I think she's a little too eager. And as every tile job insists, proper planning and preperation is a must.

Just wanted to hear what ya'll would have to say about my endevour.

Is it worth the extra overhead and headaches?

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Matt with Cupan Custom Tile & Paint of Lowell, Massachusetts
Design and installation of ceramic tile and natural stone for floor, wall, and countertops
(978) 601-8774 | cupantile@gmail.com | view tile pictures and more

Patrick

just curious, will you allow other contractors to let their clients buy tile from you?

ruskent

Are your displays going to be able to rival the local tile suppliers?

Chris Johnson

Only you can do the math and figure it all out, but I would suggest you start another company that is the store only. Sell product from the store to your installation company at a reasonable markup, keep it seperate from your install company.

Now that you have kept it seperate...can the store sustain itself?

Now you have my answer

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Chris

airborneSGT

There is a pool contractor down here in FL that did something similar. His construction company did the pool build and remodels. His supply company specialized in certain types of materials related but it remained separate. I know from a friend who was one of their superintendents that the supply company was doing much better than the pool company for quite some time.

I guess the main concern would be the sustainability of your store front in a down market. I would not want to have any non essential overhead in times like these. The other side is it could very well drive more business to your company and increase sales. FWIW I know contractors who do seven figures and run their company from their home.

john elliott

Making sales to the end user at a profit is always the hardest part of any business. Everything else can be bought in from many willing suppliers, but the focus of any business that deals with the end user is to get the customers in and spending.

If you feel that this potential showroom is in the right place to attract the right kind of customers than my advice would be to go for it. There is a saying about this stuff, it starts "Location, location" but I can't remember how the rest of it goes.

I am in the process of doing something very similar myself.

John

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Ed the Roofer said "John too, in his crass and blunt demeanor.............."

MattCoops

Yes Patrick, of course other contractors can show tile in our store. We'll give them a 15% discount too. We're going to make a mailer to all the builders and contractors in the area for our grand opening.

Ruskent, yes, we get percentages off vendors retail. So we will be able to mark tile down below retail. "You should stop by sir, and see all the deals. We're doing everything to earn your business."

Chris Johnson, I already filed for a new business name and forming an LLC for the tile shop. The shop will be seperate from the installation company. Great, more paperwork and reciepts.

airborneSGT, here in Charlotte, it is definitely NOT a down market. I've been following housing market trends for a while, and we're not really affected by what else other things going on in country. We're still doing really good. Just yesterday I did 3 estimates, 2 granite tile counters and backsplashes and 1 kitchen floor tile and master bath remodel. We were working all through christmas and new year. If our winters are this good, I can't wait to see our summer sales. Especially with a retail store that sells for us, rather than "we'll bring by the samples to you".

john elliot, at the median discount off tile we will be selling, we will need to sell $8000 of tile supplies a month to pay for all overhead and make a profit. Any installations we do is extra money in my pockets.
As far as tile sales are concerned, we sold $13000 of tile, backerboard, thinset, and grout just in December 07 alone. That's december. We'll do ok without the storefront, but with it, I see it definitely having a positive impact on sales. We get probably 3-5 calls a week asking "do you have this tile?". Instead of answering "sure, we can set an appointment for me to show you some samples" and then drive all the way there, and then come back with more samples another day, and then comeback to close the sale. One centralized location in a busy intersection in a heavily trafficed shopping strip, where those callers are invited to our showroom to see ALL the tile we carry.

__________________
Matt with Cupan Custom Tile & Paint of Lowell, Massachusetts
Design and installation of ceramic tile and natural stone for floor, wall, and countertops
(978) 601-8774 | cupantile@gmail.com | view tile pictures and more

GregS

How much of this operation are you basing on her being the salesperson?

She's a great closer and and she's still just your girlfriend? Not your wife? Careful there


Is that $1800 just rent? What about common fees, electricity, water, etc..

This does add to your overhead, so that's going to add to your markup. Can you still sell at higher prices?

Mike Finley

Are you kidding?

If you're broke and only can float the store for 1 month the answer is absolutely NO.

Do we really need to go into the what if's? What if you fail and are liable for the rest of the lease? Not to mention you're probably WAY underestimating your true overhead. Starting up a store front takes 3xs as long as everybody estimates and takes 3xs as much money to do it.

If you don't have $20,000 in cash laying around I would say you are insane or just a gambler.

airborneSGT

Matt,

I guess thats why I am looking to move to Charlotte myself! Don't worry though all I do is commercial and government. If you open it up I would like to see it for kicks. The "residential" work if you want to call it that has been just work for family up there.

john elliott

I must have missed the bit where Matt said he was broke


You really do let yourself get carried away, don't you. Couldn't you have said something along the lines of "are you sure you've assessed the overheads correctly, and the time it will take to set the store up?"


Every self employed contractor is a gambler, and I reckon very few of us had $20,000 laying around when we started.

Oh BTW your "free grab bars" link still isn't working, I guess that means you don't do the free grab bars anymore.?

John

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Ed the Roofer said "John too, in his crass and blunt demeanor.............."

fathersonfab

You should ask yourself.. Do you want to be a contractor who has a storefront, or a retail outlet who does installations. It is ALLOT of work to run a retail store.... it's a full time gig. Prepare yourself for long days, probably longer than you are currently working. My friend has a retail paint supply store. He is very successful, but he lives, eats, and breathes the retail business.

Also, it's still going to be allot of time and expense in MARKETING a retail store. Don't count on allot of foot traffic passing by. Like mike said, you will need at least 3 months to advertise and brand your store.

If all you want is a showroom, you could rent an industrial building and set up displays, and it would be allot cheaper. You could still market it as a store, Also you may be able to get a month to month lease and get out if it doesn't work.

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"I cut it twice, but it's STILL too short!" singerREO.com

vinylguy

heck i say go for it! why not all these what if's kill me cause what if you don't do it and your competitor does? and what if they are really succesful? and what if your 80 and sitting around saying i wish we would have? most of us here started our bussineses with nothing and made it something. i think it sounds like a great idea! the fact is i started my first showroom with out 2 nickels to rub together ahh! the good old days but just like you it is now doing fine and kept us busy during slow months. fact is i just signed a lease yesterday for a new showroom on a busy intersection strip mall and am scared to death but the popalation is 10 times that of the first one location is better and i think back on my first experience and say hey i did this my first year with no advertising so i should be able to triple that here. so what the heck i'm going for it now i will have 2 showrooms and hopefully 2x's the buss.

Mike Finley

Yep, that's really a key consideration. Even if you can afford to throw away $8000-$10,000 in start up costs for a couple of months rent, fixtures, product, labor, advertising, etc... if it doesn't work out, being stuck with a bill for 10 more, 22 more or 34 more months rent is something else.

I think Matt's got the right idea considering the issues and is looking at the big picture and most importantly how to cover the downside (which is what every business decision needs to based on), but his girl friend sounds like she's more of a 'instant gratification' type personality, believing everything always works out.

Anybody who says "go for" is a gambler. Yep, it's fun to look at the 1 guy who gambled and made it, cause you forget all about the 30 others who gambled and fckd themselves. Often the difference between making it and not can be just being able to hang on one or two more months. Having the cashflow to keep it going for just one more month might be the difference between looking back 5 years later at how successful you are or looking back at how that sucked! Contractors are gamblers or other non-sense like that is just one of the reasons why so many are broke all the time, out of business, or go back and forth working for themselves for a year then have to go work for somebody else again and back and forth. Some people think that just going for it is cool or the way it's supposed to be. Those are the people who are the very reason a bank wants colateral before it loans money to another bone head.

fathersonfab

Yes, and trust me... I've been there and learned the hard way from experience. I was a statistic. 90% of new businesses fail after 5 years.... I was in that 90%. I had too much equipment, my building was too big, my overhead was huge... I thought I was cool.... but there is no worst feeling in the world than thinking.. "if I can just make it one more month". And I did that every month for 5 years... Then my landlord kicked me out (because the rent was always late) and I was forced to pack it up and file bankruptcy...

A clever man learns from his mistakes, but a wise man learns from other peoples mistakes.

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"I cut it twice, but it's STILL too short!" singerREO.com

Mike Finley

Just so you don't think I'm talkin out my ass, I'll tell you a little story about my very first business I opened.

I spent months planning, saving my money, getting things I would need on sale or buying them used, even got my first paying client before I opened up. That client's business would pay my rent so damn, that was at least a really good start.

I did my business plan, even searched around and got a great deal on rent and it was month to month even. I did just about everything right you could do, in fact I was probably way ahead as far as keeping expenses low.

I had 3 months of operating expenses saved, and I got a private loan from a former employer at no interest for another 3 months worth of expenses. Looked pretty damn good, had 6 months of money in the bank, great negotiated rent and low expenses and even a client in the bag!

6 months later the money was gone, I was working 18 hours a day, every day, I had made enough money in the 1st 6 months to stay alive for another 2 months. 2 months later I was looking at the books and it was frighteningly apparent that the end was near. That was an incredibly bad time. Nothing worse than facing that after all you have poured into your business. I scraped by 1 more month and that was it, I was starting to face the facts and starting to try to figure out how life was going to be after I had to shut the doors.

The next week my neighbor business next door flooded the place, they broke a pipe over the weekend. I ended up with a fat insurance check from my insurance company that gave me another 6 months of life. During the next couple of months things started to loosen up, I landed another client that I had been after for ever, then another and pretty soon before that 6 months of savings was used up I was actually making money and getting ahead!

Long story short 5 years later I was #2 in my market and very successful. But when I looked back at those dark months and think about what the difference of being able to stay open just 2 more months made between where I ended up and never getting there, that was an eye opener.

My best laid plans, most conservative financial projects, my confidence of I would make it work no matter what turned out not to be enough. The difference for me ended up being an insurance check from a neighbors broken pipe, and the two months of being in business longer.

marc

We've had a storefront for the last 6 years. We just closed it and I won't go there again. YES we had some walk in business but I would think that at least 75% of that was because on every ad we run it says visit our showroom. The majority of the people that walk in are advertising reps and suppliers trying to sell me stuff. I'm all done with that. Back to a small office and wharehouse space.

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Marc

GregS

So I think what Mike is trying to say is, make sure you have easy access to your neighbours heating system so that you can kill it on a Friday night during the freezing cold months of the year.

MattCoops

Mike, as always you bring about some useful insight.

I'm not just jumping into this. We've been wanting this since last spring. It will just never happen if we don't decide to "roll the dice" (since yes, we are gamblers as that every small business owner is).

I'm signing the lease on friday!
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Right now we can sustain the initial expenses (Lease deposit, 3 months rent, signage, displays, renovation, grand opening mailers and advertising)
That's what I can cover out of pocket right now.
I just wanted to have another 6 months rent and utilities saved up.

I could sell my boat and have a whole year paid, and not have to worry about any storefront overhead. But who knows how long it will take to sell a 27ft sea ray cabin cruiser. And I don't really want to part from it.

Mike, my girlfriend just told me we have been saving $400 a month by not taking the boat out every weekend. Gas for boats is way more expensive than cars (and its the same ****). I got in trouble for bringing cans of gas to the slip. Dockmaster didn't like it.

But anyway, yeah. This is something we're going to invest in.
We have three subcontractors that use our vendor accounts already to buy tile. So we already have customers and an installation team.
We are just finishing a job with a builder that we did 3 baths with showers, 3 floors, and a slate deck. He's been talking about another job that is already starting to get framed, and he wants to start looking at tile soon.

So really, I can't open up this shop fast enough.

Just have a little shake in the knees sometimes. Guess it's a tile guy thing.

__________________
Matt with Cupan Custom Tile & Paint of Lowell, Massachusetts
Design and installation of ceramic tile and natural stone for floor, wall, and countertops
(978) 601-8774 | cupantile@gmail.com | view tile pictures and more

MattCoops

I was really wanting to bump heads with some tile shop owners.
I don't really want to talk to local "competition" cus they'll just tell me it's too much work and shy me away from it.

I called the owner of Floors N More in Bridgton, ME (Bill Vincent, another tile guy on here works for them). But the guy told me he "didn't have time" to talk to me.

Most store owners are too busy to speak with you.

__________________
Matt with Cupan Custom Tile & Paint of Lowell, Massachusetts
Design and installation of ceramic tile and natural stone for floor, wall, and countertops
(978) 601-8774 | cupantile@gmail.com | view tile pictures and more