Completely lost in the process - how to go retail?

[sfauth]

Hello All,

This is my first post at RDO.

My goal is to open a retail location that specializes in Exotic Marine livestock and high-quality equipment.

I have a strong background in both retail (lots in the aquarium industry) and B2B enterprise sales environments. I am also a seasoned aquarium hobbyist with a resume that includes designing and maintaining systems for large reef aquaria and exotic freshwater fish.

I am looking to get out of the corporate world and fill a need that exists in my area by opening a retail location. However I need some help/advice in getting started.

Can anyone point me to resources that I can reference in the planning stages of this Endeavour?

In the interest of receiving the most relevant help possible I will be very candid and honest. I am at square one and need to understand how to go about identifying the rights steps to take in this process for - writing a business plan, securing loans, engaging vendors etc etc...

I can not seem to find anything specific to the industry?

Any help or guidance is greatly appreciated.

Thanks
Steve

 

[dizzy]

You can start by going here: http://wetwebmedia.com/AqBizSubWebIndex ... 0index.htm

 

[JennM]

Welcome to the forum!

The site Mitch referred you to is a good one - when I wrote my business plan I did a lot of research, much of it on that site. Make sure you have a solid business plan and a good cash reserve before you begin. The running joke is this:

Q: How do you make a small fortune in the fish biz?

A: Start with a large one.

I usually recommend that people work in the trade first - you appear to have done that - good

The only thing I will say is this - if the long hours of the corporate world wore you out - be prepared - business ownership (any business) will run you ragged too. 4 years in and I'm still working 70 hours a week or more, and I can never "shut the place off". It's always something.

Having said that, I love what I do, and that makes the long hours easier than spending 40 hours in something I didn't like as much. Most of us in this business are in it for the love of it, not for the fortunes we're making. I don't know too many folks at the retail end of this trade making bags of money. If we're fortunate and we're sensible, we will make a decent living at it, but in my short tenure in this industry I've seen quite a few shops fail, and a bunch change ownership, just locally here. I never figured that in the 4 years since I opened, that at this point I'd be one of the 'long timers' in this market, but I am - and so is Kalkbreath. He and I have seen about 7 stores change hands in the last 4 years, and a few others fold.

It's a difficult business, but IMO very rewarding if you do it right.

Good luck on your new venture

Jenn

 

[sfauth]

Jenn - Thanks for the warm welcome.

The good news is that the long corporate hours have not gotten the best of me! I've grown quite accustomed to the 70 hour work week.

dizzy -I have referenced wetwebmedia quite a few times already and am glad to see you reference it here so I know I am on the right track.

While I do like the joke - it is one of the main reasons I've inquired here. I am trying to understand the true costs to get up and running. I don't have much to start with and am currently trying to identify ways to secure funding.

The good news is that I am a single guy, my cost of living is very low and do not need much to support my day to day life.

Could you help me to understand the initial investments made on a modest sized business driven mainly by saltwater dry goods and livestock?

Any suggestions based on experience for securing a loan? (home equity loan not being an option)

 

[tinyreef]

Any suggestions based on experience for securing a loan? (home equity loan not being an option)

a business model/plan showing you can make money is probably the most critical piece of info imo. the more info you can provide the bank showing that you can generate sufficient cash-flow and profits, the easier it'll be. (e.g. price comparisons, high margins, low-competition, high-demand, low overhead, etc.)

hard assets are a plus but the type of asset preferred really depends on the specific lending institution (real estate friendly, inventory friendly, business model/goodwill friendly, A/R friendly, etc.).

i'd also research into your highest controllable costs (rent, utilities, pricing). a significant part of the labor will be free (i.e. you) so i wouldn't worry about that yet unless there's high competition for labor (beverly hills?). a reserve like jenn suggests can't hurt (6-month cushion?). good luck!

 

[JennM]

Securing funding is probably the main reason why "everybody" isn't in their own business. It is a chicken-and-egg quandry. You need money to start a business, but you need to be in business to borrow money against it.

We had our own funding to start, and since I opened I've been able to get credit for the business but in the first 2 years it's very difficult. Banks aren't willing to take a chance on something if the would-be business owner isn't willing to risk their own assets first.

I was dealing with a large bank, and a year after opening, I wanted to apply for a credit card with a $1000 limit. Deposit wouldn't have been a problem either - and I have excellent credit, both personally, and in the business. Big bank I'll call "Walk over ya" declined. Told me to come back when I was in business for 2 years. So I did and they walked over me again. I walked over to a community bank where they were happy to have my business and gave me a line of credit - a lot more than the piddly little $1K credit card I was wanting. Bank manager knows my name, she visits me from time to time, I'm a somebody in their bank Having a good relationship with your financial institution is extremely important.

Do good business and you'll be able to get funding for upgrades and such, but I think you're fairly on your own for startup. If lenders would loan money to everyone with a business idea, they'd be losing money all over when so many people defaulted. It's much easier to play with somebody else's money, then declare bankruptcy if things don't work out. If you're gambling your own money, it's another story.

The SBA can be helpful, but again, you need to have established yourself first, at least in my experience.

I believe Fenner's site stated that to start a 1500 square foot store, you need about $150K. I'd say that's about right. My store was a bit smaller and we started on less than that but I was lucky and was able to buy up fixtures, dry goods and equipment from 2 stores that were closing down locally, and I've managed to accumulate more things from more stores either downsizing or closing since then. I'm a smart shopper but I don't have shiny new stuff.... over time I've managed to expand the shop to twice its original size, and upgrade stuff here and there, but 4 years in it's still a struggle and there's still stuff to upgrade and tweak - I'm sure it will always be a work in progress. Starting with less has made it hard - you really need a cushion for unforeseen expenses, slow sales periods etc. Sales may fluctuate but your fixed costs are always there, regardless of how much (or how little) you sell.

Check out your local SBA. Here where I live, the SBA runs courses at the local university, and you also get access to their resources, business advisors, attorneys and such. I took a $30 course on starting your own business, and was able to have them look over my lease before I signed it, helped with articles of incorporation and stuff like that, and all it cost me was the tuition for the one course I took. They have other courses too, but that was the only one I took. I haven't really drawn on the other resources in a while but I sent my neighbour there when he started his own business, and he goes there frequently to receive help and advice for his business (in a different trade totally unrelated to the fish biz). Some of your tax money goes to the SBA - might as well get a return on your investment

HTH

Jenn

 

[Rascal]

Steve - Welcome to RDO.

Jenn - How the heck are ya. Hope sales are brisk in your neck of the woods.

For the record, I've been in business for 13 years and still have days where I'd rather be having a tooth pulled. That being said, I can't see myself doing anything else. Best of luck in you endeavors.

 

[sfauth]

Rascal - Thanks. Funny you mention the dentist as I had a root canal today and the whole time all I could think about was planning out my business!

 

[pactrop]

I think one of the best sources for your start up has already been mentioned but has only been mentioned in passing.

Look for a store that is going out of bussiness. even if it means you have to rent a truck and drive to another state to pick up the equipment. you will get your stuff for a HUGE discount.