Opening a shop good move or bad?

[Renniwano]

I think that has been extended then Pisquee.. as I believe it used to be 2014.. and if so that's fab news for those looking to start up..

My problem is that it's a cycle of need more room than my house.. but don't have the finances to quite yet get a shop.. need more awareness locally, for those who don't even know who I am.. and then would need more room anyway to deal with that.. so kind of feel stuck in the house..

It was mentioned to maybe look into a small light production unit first in the area.. just for the extra room.. but really don't know if I would benefit..

[James990]

Does your local council have property that they at present can't let out? Often if that is the case they will let people rent it for a much reduced rent!

[purpledragon]

Does your local council have property that they at present can't let out? Often if that is the case they will let people rent it for a much reduced rent!

rent is very often not the problem i negotiated a 6 month rent free shop the problem was the rates at a couple of grand per month its still way over the top . you may get further with a council owned property though . The way rates work is even if the building is empty then the landlord must pay the rates so empty or occupied rates are being paid which is why the gov or who ever controls rates have no incentive to help out with rates why should they ....they get paid anyway empty or full. BUT if its a council owned building then you may have more of a chance in negotiating a rate free period . But i cant stress this enough you must do your sums even if you get a rate /rent free period you need to work your finances out on the assumption you are paying full rent and rates or else after 6 months you will be shutting the shop . I dont think rate relief is thge issue here or the lack of it its the fact that rates are stupidly high in the first place.
Now heres a thought to throw in the mix . Rates we last fixed during the boom times when property prices were high and the highstreet was buzzing , but there may be many factors which could see your rates bill reduced for example haverfordwest chamber of commerce successfully negotiated a 20% reduction in some parts of the town based on the fact that boots had moved out of the town centre they could show that this caused a 20% reductyion in footfall in the town ergo rates were reduced by 20% in some parts although each individual business had to apply for this . So its worth applying to the rates office for having your building re rated it may see a reduction in rates . or you could use the chamber of commerce way if a big name has moved out of your town you may well be able to negotiate a rate reduction that way .

[JMugs]

Another factor is time. Customers want to chat, when you are busy that is a problem, cut them short and they don't come back, chat and you are loosing time.
Break in....yes it happens twice in 27 years in my last business and it really was a problem, paperwork, replacing stolen items, missed orders and the more premises you have the more chance of it happening.
You will need your turnover to go up to cover the extra costs. This can and probably will take you into VAT registration if you are not already. The effect of VAT registration takes away another chunk of your profit, hence your turnover needs to go up to cover that. You need to get to your shop, probably means driving that means increased fuel, hence more profit required....so let's put this into a list..

You need to cover these items to earn the same money....YOU NEED TO WORK HARDER
Rent
Rates
Electric
Water
Insurance
Maintanence
Cost of getting to work
VAT Bill
Increased accountants bill

When you have covered these items you start too earn extra money...but now you need a member of staff...so you need to get more business to cover the cost of the member of staff before YOU earn extra money. I have run businesses through a couple of recessions. I have had years where I broke even....no income for me..my staff were still paid, the recessions did not touch them.

When it runs smooth it's great, when it doesn't it's a bitch.

But it can't be all bad...both me and Mrs Janners work for ourselves with our own businesses...or are we just mad.....

Janners

[pisquee]

But i cant stress this enough you must do your sums even if you get a rate /rent free period you need to work your finances out on the assumption you are paying full rent and rates or else after 6 months you will be shutting the shop

Or work on the assumption that you will be shutting shop after March 2015 (unless the rate relief period is extended again) unless business picks up enough as a result of having the shop front - it's like a trial period.
Looking at what's available here, it does seem that landlords are negotiable and also open to 6 and 12 month contracts.
I'd rather see all the empty shops in this town full again (they were when I was a kid.) even if there is a 6 month turnover of new businesses having a go - not much different from a market - make it easy for people to "have a go", if their business works they will stick around, if not, someone else will come along and have their turn.

[GoonerGary]

If you were forced out of business after six months you didn't have much of a business plan. Divide those thousands you ploughed into trying to make it work by six months and you realize what an expensive mistake you made.

I spent almost six months on a business plan to take my business to the next level; went to the bank who turned me down, but that was at the beginning of the recession when it emerged that banks wern't lending money to anyone. If they had I would be almost bankrupt.

We are still in a recession. A recent little 5 live news article went to the high street and spoke to shoppers, none of them said they are spending money. So how much trade will the general public in your small town actually give you?

My current business is working from a small store room attached to the flat, I'd love to move out for more space and employ staff. I'm still looking for a small enough unit tucked away somewhere for the cheaper rent. There is enough business online and supplying retailers, do you really need the glossy high street shop? I would leave it until there is confidence in the high street.

But yes ask the council, a mate opened a bike shop in a disused room in a multi-storey car park, plenty of passing trade!

[arthur.daley]

Don't hold your breath waiting for some where cheap or even just somewhere reasonable in Cambridge ;o)

I don't believe for one moment that people are not spending money - it just rather depends on who you ask and where. If Channel 5 went to Toxteth or Moss Side, or perhaps somewhere around the Rhonda, bits of Brum and the midlands, bits of Bradford - you get the picture, oyu would probably get a very different response if asking the same questions in the center of Cambridge, Oxford, small Cotswold towns etc.

A bike shop doing good trade in the center of Cambridge - who would have thought........ ;o)

I think you are well out of it re a studio in Cambridge. I have watched quite a few people set up in Cambridge over the last 30 years and most of them packed it in because they just couldn't cover the overheads. The same also applies to those who have set up in studios in the surrounding villages. The social togs, other than the Dumbletons, Lafayettes and JETs, who have kept their businesses going longterm are those who have built on converted spaces into studios within their residential properties. Of course most of them set up before the property boom and could afford properties big enough and in the right location.

A couple of guys I used to know when I was at college had an excellent arrangement with a village hall which they used to hire one weekend a month and would set a studio up for booked sittings they had sold over the previous month. They would then go to the sitters homes and sell the photos - pre digital. I think the scope to run the same kind of operation is still there especially if there are two of you and one can shoot while the other deals with downloads and does the sales - village hall with a side room (and a kitchen) would be ideal. The only obstacle is the age old one of getting the punters through the door in the first place - if the photos are any good they will sell themselves.

Just my ten pennoth or with inflation my quids worth ;o)



Arthur

[pisquee]

My point (which i didn't explain as was in a hurry) was more to go in and make as much money as you can in the 12 months that are rates free. If you can build a business that can cope with paying proper rates and rent and the rest after your trial year, then great, that's awesome, if you don't then at least you've had a go.
There's no pretence that your business will grow enough in itself just because you're on the high street, you're gonna have to work bloody hard to make sure you can keep going after the 12 month period, and that should be the aim.

[GoonerGary]

I wasn't setting up a high street photography studio back, I wouldn't pay those university rents!! But the idea of setting up a workshop in an upstairs back street is still my goal for my graphic design/ manufacturing business.

It's true that different areas are affected by the recession, but it is still a trend where low cost shops are doing better than your upmarket stores and 2nd car dealers are doing well. But 5 live drive radio run these stories all the time, people don't have spare cash after they've paid their energy bills and the 30% increase in their food shopping bills. I sometimes think that opening a high street shop is just an exercise in vanity, too many fail when there are bigger markets to explore.

[arthur.daley]

My point (which i didn't explain as was in a hurry) was more to go in and make as much money as you can in the 12 months that are rates free.

I knew exactly what you meant and I am with you on this. Regard it as a short term business opportunity, suck it and see. If 4 months in it looks like a viable business review your business plan, put in the real figures - by 4 months in you ought to know what your overheads are really going to be rather than an educated or otherwise guestimate. If the numbers work - great, if not don't be afraid to pull the plug on the shop and move on. Of course if you have sunk everything you have and a lot that you don't have into the business (popular scenario would be someone who retires early from a well paid profession or comes into some money and has always fancied the idea of having a shop and sinks their redundancy, inheritance, lump some etc into the idea) - there would always be the temptation to throw good money after bad to try and ride it out until you can make money. Trade is very much like making love to a beautiful woman, no thats not it, what I meant to say is that its like playing cards in the pub on pay day - never gamble with more than you can afford or are prepared to lose especially if you don't know any of the people round the table. There will of course always be exceptions to this you just have to do more than convince yourself that you are the exception!

I was mainly trying to point out to Gary that you are more likely to make money in Henley on Thames High Street than in Hessle Road in Hull - question of disposable incomes.

I don't think there is such a thing as a rent or rate free shop in Cambridge and if there were it certainly wouldn't be 'on the High Street'.

I think it was mentioned earlier in the thread that the Gov are looking to change the law whereby, at present, a landlord can rent an otherwise unoccupied property to a registered charity and avoid paying rates on the building. This means it makes sense to have a charity move in on a short renewable possibly rent free or just a peppercorn rent as the business rates can be eye watering, especially if you have no income on the property. It will be very interesting to see what happens on the High Streets of small towns up and down the country if the charity shops suddenly find themselves having to trade on a commercial basis. Many people regard charity shops as a blight but they'd generally be the people who don't have to use them.

With a national high street littered with empty shops costing the landlords money maybe things will improve for start ups.

Arthur