Thursday, January 5, 2012

When Do You Know?

Q: There are so many things that go into this one question but I'll try to make it simple, I know you are a very busy lady. My question Is, how do you know you are ready to open a store?

I feel the only thing that is holding me back is MONEY. My mother and I have had numerous antique sales, we now have a booth at a home furnishings store that sells new and antique items. We have a business plan written, and we have done lots and lots of research. What do you think, If we had the money should we do it, and how much money is enough? Any help will be appreciated.

A: This is a loaded question with a lot of answers.

You are ready to open a store if:
You have to open the store when the desire to do it is greater than the fear of failure.
You are certain you have something special.
You are certain your sales will support the store. (maybe not you, but the store's expenses)
You have gotten some experience similar to what you want to do (already in a mall, worked in a store, been a buyer, etc.)
You have carefully thought through the worst case scenario (your sales cannot pay your expenses for two months or more) and the best scenario (you are sold out of nearly everything the first week and when it comes in, it goes out again; you're so busy and tired from customers, you have to hire but cannot find anyone....) etc.
These are just a few.

There is NEVER enough money but here is a formula:
If the space you are leasing is 1,000 square feet you should have at least $40,000 of inventory in the store when you open and be prepared to sell and replace that amount 4 more times. approx. ($175,000 a year). In a perfect world you should also have 4 months of overhead in the bank to prepare you. Do the math, do the math, do the math: Salaries, rent, utilities, accountant, phone, insurance, income tax, sales tax, employee earnings tax, workmans comp, landlord fees and dues (if any), supplies (sacks, tags, tissue, cleaners, toilet paper, paper towels, flowers, music, light bulbs, POS or cash register), advertising, delivery & shipping fees, truck rentals, travel expenses, furniture repair, glass cut, lamp repair, postage and oh yea, the merchandise.... Like I said, there is never enough money.

I know there are a million other things, but this is at the top of the list.

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