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Discussion Starter #1
I have the oppurtunity to establish a storefront on the commercial strip in my town. The community is an upper middle to lower upper income area. The households are by far a majority of professional households where one or both incomes are white collar. Executives, lawyers, doctors, etc. These people have for years used one contractor for 75% of the work done in their homes. The rest is divided amongst five or six small guys with one or two men crews.

My intent is to use my resources in the trade and supply houses to stock and show high-end custom geared contracting alternatives for the area. The lease has been written and will cost $4200 per month. Keep in mind that average kitchen in the nieghborhood goes for $65,000 and baths from $15,000 to $20,000. I don't expect instant domination of the market. But I do feel that I will be called in for an estimate on at least 50% of the 1.5 million in projects completed annually. (total has been set by researching my competitions gross purchases at the local yards. I was able to find this out by inquery and some well placed referals to these establishments. to figure the area gross biz I took the net of my competition added 25% for assumed out of network purchases and multiplied by 4 to get assumed job contract totals)

I am a salesman first and then a tradesmen (though I am no hack with a hammer or saw, I cope with the best) so I feel that the storefront will supply me with in your face exposure to the community and anchor me in the minds of the clientle for the next season.

Does anyone have experience with this line of attack? If so please share. Or generally what do you think of the plan of attack?
 

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The Yaz Man said:
Does anyone have experience with this line of attack? If so please share. Or generally what do you think of the plan of attack?
It's over my head, but it sounds exciting as hell! Can't wait for you to begin and keep us posted.:thumbsup:
 

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Mike's pretty much saying what I was pretty much thinking.

Sounds like it would be hard to go wrong with that 'attack'.
 

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I think a store front WITH PROPER SIGNAGE on a major street in your target area is a great way to build name recognition. It's part of my long term business plan to setup a couple of these across the city area. They will be nothing more than sales offices... and I prefer to OWN not RENT. Bah humbug to the renting.

This whole idea of multiple offices probably won't happen for quite some time.
 

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Grumpy, One has to weigh the tie-up of working capital in the downpayment of ownership, vs. other good uses of the money -- particularly in ways to reduce start-up risk.

Yaz - I did a whole lot of business reselling high-end tech equipment in the telecom world, and to sell some of them, you really had to bundle it with integration services. So, with your products, I'm sure a high percentage of buyers will also seek installation and follow-on services. In your revenue models you need to consider how you'll follow-through on the work. If you're successful, you may very likely want to make alliances with your competitors -- either through subcontracts (though this adds incredible management overhead on you), or through partnership programs, where you give them a percent of the material sales as commission. Also, if you find the work, you can take a commission off the top, and forward the lead to "preferred installers", who are gradually acquired based on some qualifying criteria.... You'll probably want to move this earlier in your business plan, rather than later, since the issue would at first glance appear to be one that will enhance or throttle your sales.

Also - what percent of your manufacturers sell direct to contractors? Will you be able to gain wholesale margins at your new location? If so, be prepared to set aside some working capital for acquisition and management of inventory. Be careful to pick manufacturers that prefer not to open the floodgates on channel partners, or your margins will plummet.

Curious - to get in a strip mall did you have any percent-of-revenue (triple net) terms in your lease?
Cheryl
 

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Discussion Starter #7
Okay firstly we will be subleasing to suppliers in regards to the space and sample space taken. Meaning that the supplier, say Forrest Kitchens, will take 200s/f of the floor to set up a full working kitchen. Complete with all the bells and whistles, granite, vent-a-hood, etc.

This is essentially eye-candy for the foot traffic to oooh and aaah at. It also helps me to subsidize the cost of monthly lease payments. Though Forrest has the space, I am not obligated to use him, though since he is local and a good guy and I make good money off his product I probably will.

That is to say these suppliers, whatever their wares, will be a display of our resources. I have nothing to do with his stock and inventory. I get their product at my price and mark-up based upon the depths, or percieved depths, of the mark's pockets in front of me.
 

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Ahhh..... this is quite a different model. It was unclear that your suppliers themselves were physcially in your location. Yes, you've certainly offloaded all the inventory issues. I hope you realize a percent of all subleasee sales, as opposed to purely flat rate lease terms.

Double check the insurance coverage on these guys, in case they have a fire or whatnot in your space.

Also, if some of these suppliers are small, and/or have a novel product, you may want to negotiate right to first refusal in the event they sell out. This may not mean much to you now, but if one of these guys has great margins and wants to cash out (or sell a product line), you are at least entitled to due consideration.

While you're at it, you might want to offer bookkeeping or advertising services for these guys, or other centralized services.

Right now, I know you're looking it at it based on discounts you get and flat rate payments, but your subleases can also lock in some things that may benefit downstream.


Just some thoughts. It's always good to be the landlord.
 
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