How do I start a retail shop?

RoseburgHelpDesk

RoseburgHelpDesk

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I am going to go with a question here. I have been on my forum topics here. I want to start this to get input from shop owners new and old. Given that it would be a small shop, husband (tech) and wife (clerical). My location (city) is better off with some sort of storefront. Even though I work for an appliance company, I am a sub contractor with my own business, people just don't want to drop their stuff off there. I do little work on the computer side but I would love to do this more full time. I work as an appliance tech and make a living but it leave little money to invest on my computer business. Having a storefront with my wife would and/or should not require employee costs. She already is a partner in the business. but I could do in shop and calls but still have someone manage the shop while I am out. I can do PC computer work, networking, appliance repair, appliance board repair, other computer related stuff. I just basically have a cash flow that supports my current bills plus a little extra. That little extra would take a long time to accumulate into good usable capital. So I listed a few questions that I need help with.

1. Where would be the best place or way to get capital to go into retail?

2. How much capital does one need to get?

3. How many months should be in reserve? (3, 6 , 9, 12 months)

4. Good place to get inventory for a small shop and good prices?
 
I share my opinion on this topic. BTW you are sure to get varying opinions on this.

1. Where would be the best place or way to get capital to go into retail?
Do not borrow money to start. It takes very little money to get started especially if you start with services and
hold off on trying to fully stock a store. Take baby steps and expand as you grow.

2. How much capital does one need to get?
Hard to say. There's no magic number. Again baby steps. I started with two customers and $250. I'm not suggesting this
will work for everyone.

3. How many months should be in reserve? (3, 6 , 9, 12 months)
This is the most important question in my honest opinion that you asked. I would say at least six months buffer. Don't touch it. If the
business fails, you have a safety net.

4. Good place to get inventory for a small shop and good prices?
Newegg, Amazon, Ebay. Start small. Don't worry about getting accounts with wholesale distributors yet. Just get the basics.
A couple power supplies, hard drives, cables, etc. I assume you already have a supply of tools. Each time you get the impulse
to order more stuff just remember baby steps. Don't get in over your head. Leave room to breathe!
 
frostbyte5014 said:
I share my opinion on this topic. BTW you are sure to get varying opinions on this.

1. Where would be the best place or way to get capital to go into retail?
Do not borrow money to start. It takes very little money to get started especially if you start with services and
hold off on trying to fully stock a store. Take baby steps and expand as you grow.
Click to expand...

But I will need rent and utilities for 1 month.

frostbyte5014 said:
2. How much capital does one need to get?
Hard to say. There's no magic number. Again baby steps. I started with two customers and $250. I'm not suggesting this
will work for everyone.
Click to expand...

How can you pay rent that way?

frostbyte5014 said:
3. How many months should be in reserve? (3, 6 , 9, 12 months)
This is the most important question in my honest opinion that you asked. I would say at least six months buffer. Don't touch it. If the
business fails, you have a safety net.
Click to expand...

That's what I thought.

frostbyte5014 said:
4. Good place to get inventory for a small shop and good prices?
Newegg, Amazon, Ebay. Start small. Don't worry about getting accounts with wholesale distributors yet. Just get the basics.
A couple power supplies, hard drives, cables, etc. I assume you already have a supply of tools. Each time you get the impulse
to order more stuff just remember baby steps. Don't get in over your head. Leave room to breathe!
Click to expand...

Baby steps I get. :)
 
But I will need rent and utilities for 1 month.

So work out of your house/mobile till you have 1 month, although usually you will need 1st and last for rent.



How can you pay rent that way?

I don't think he started out of a shop


Baby steps I get. :)

Do you though? You want to setup a retail shop with out an established business. Start small doing mobile jobs, have people meet you at your house/public and then once you have a decent business look into getting a store front.

I would also suggest that you not work with your wife.
 
Best place to get money: Save for it. Loans are bad.

How much?: $50,000 minimum. Can be done for less, sure, but prolly the best starting point.

How much buffer: 6 months of your usual income, minimum. May or may not be included in that $50k, kinda up to you. Not included is safer, but included is easier to stomach.

Inventory: If you have the afore mentioned $50,000, then get in with a Distributor right off the bat. Your first order will easily be $5-7k, which is a really nice place to start off with a distributor. But I will mention the double-edged sword: you can't buy from distributor until you have a store, you can't have a store until you buy your merchandise. Make of it what you will. Otherwise, Amazon and Newegg are your best friends. Oh, and Monoprice, can't forget their cables...

Basically, I'm saying what others have said, only backward. Start small, baby steps, a little at a time.
 
Your town/metro area doesn't appear very large. And it seems, based on a quick Google, that you already have several competitors including one or more storefronts.

What kind of evaluation have you done that suggests there's room for another storefront computer shop in your town?
 
jbartlett323 said:
Best place to get money: Save for it. Loans are bad.

How much?: $50,000 minimum. Can be done for less, sure, but prolly the best starting point.
Click to expand...

I'm considering this as well. There is a brilliant location available right now (in the middle of a strip with a series of big name, well trafficked stores and restaurants), but I need to figure out how to go about opening the shop.

The shop I work at now is stand alone by itself with nearly no walk-by traffic or reason to come here besides us, and still the amount of business we do here would pay for the location mentioned above within a week, rent and electricity. Thats just on the low margin break/fix stuff we do here.

So what makes loans a bad idea, besides the obvious "it costs more" reason? And what factors into the $50,000 calculation? I feel like I could get away with a lot less, as I wouldn't immediately need walls full of stocked accessories and parts on day one, and could for the first few months do part orders per job and just stock the super common stuff like HDDs. Is it typical to have the money for multiple months of rent up front, is that why you recommend $50k?

I've got a lot of services I could provide immediately, and am working on MSP plans which in this area could do very well. The type of people who would be walking near the storefront would be reasonably wealthy (there's a Tesla Supercharging station like 100ft away), and likely many business owners would be about.

At my current job there is no way I could save up $50,000 in the next 5 years as I'm living paycheck to paycheck basically at this wage. I should finally have enough saved for a 6-month living expense fund soon though. So I am considering trying to get a loan to be able to open up the storefront.
 
Krynn72 said:
I'm considering this as well. There is a brilliant location available right now (in the middle of a strip with a series of big name, well trafficked stores and restaurants), but I need to figure out how to go about opening the shop.

The shop I work at now is stand alone by itself with nearly no walk-by traffic or reason to come here besides us, and still the amount of business we do here would pay for the location mentioned above within a week, rent and electricity. Thats just on the low margin break/fix stuff we do here.

So what makes loans a bad idea, besides the obvious "it costs more" reason? And what factors into the $50,000 calculation? I feel like I could get away with a lot less, as I wouldn't immediately need walls full of stocked accessories and parts on day one, and could for the first few months do part orders per job and just stock the super common stuff like HDDs. Is it typical to have the money for multiple months of rent up front, is that why you recommend $50k?

I've got a lot of services I could provide immediately, and am working on MSP plans which in this area could do very well. The type of people who would be walking near the storefront would be reasonably wealthy (there's a Tesla Supercharging station like 100ft away), and likely many business owners would be about.

At my current job there is no way I could save up $50,000 in the next 5 years as I'm living paycheck to paycheck basically at this wage. I should finally have enough saved for a 6-month living expense fund soon though. So I am considering trying to get a loan to be able to open up the storefront.
Click to expand...

You sound like your in the same boat as me. I know a shop that sells LED stuff and he is in a about a $500 shop with utilities. Its the perfect size for me. He just had a good day that paid his storefront bills. He is considering moving if he had more days like this consistently. I have some customers but again a storefront would give me more customers since I get the feeling that people would rather go to a physical place then a mobile one.
 
Krynn72 said:
I'm considering this as well. There is a brilliant location available right now (in the middle of a strip with a series of big name, well trafficked stores and restaurants), but I need to figure out how to go about opening the shop.

The shop I work at now is stand alone by itself with nearly no walk-by traffic or reason to come here besides us, and still the amount of business we do here would pay for the location mentioned above within a week, rent and electricity. Thats just on the low margin break/fix stuff we do here.

So what makes loans a bad idea, besides the obvious "it costs more" reason? And what factors into the $50,000 calculation? I feel like I could get away with a lot less, as I wouldn't immediately need walls full of stocked accessories and parts on day one, and could for the first few months do part orders per job and just stock the super common stuff like HDDs. Is it typical to have the money for multiple months of rent up front, is that why you recommend $50k?

I've got a lot of services I could provide immediately, and am working on MSP plans which in this area could do very well. The type of people who would be walking near the storefront would be reasonably wealthy (there's a Tesla Supercharging station like 100ft away), and likely many business owners would be about.

At my current job there is no way I could save up $50,000 in the next 5 years as I'm living paycheck to paycheck basically at this wage. I should finally have enough saved for a 6-month living expense fund soon though. So I am considering trying to get a loan to be able to open up the storefront.
Click to expand...

So my number is primarily based on experience.
My partner and I open my store 5 years ago. He invested about $30k into opening. This covered rent, signage, advertising, merchandise, store fixtures, build-out, and everything in-between. That $30k went fast, very fast. We both worked the first 2 years with a $0 paycheck. I nearly went broke at home, he was older and had some fluff saved, but not a lot that didn't go into the company. He ended up selling his truck to afford the main sign out front. If we had had $50k, I probably could have drawn a small salary and made ends meet. Definitely would have done more advertising and bought better shop equipment. Now he has left the company and I am on my own.

My number was definitely a "This is how much to have a solid start" as opposed to "lets just get this going". Obviously, you don't have to start that big, you can certainly take the baby steps and do a little on the way. But OP seemed to be interested in a "Whole Hog" approach, so I shared my experience with that. And of course there are many, many variables to base your decisions on, perhaps my rent is higher, same with Ins, utilities and other stuff. Perhaps you don't want to carry 5k in inventory, but only want to stock the bare minimum, etc, etc. In the end, only you give yourself the right number in these matters...

As for Loans, again, your opinion is the only one that counts, loans being bad is just mine. Without the loans, the only obligation I have to my company is the building lease. If it happens to go any other direction than up, I'm not paying for it the rest of my life. Also, doesn't change the fact that you still have to have some saved up; now, instead of just the wages, you have to be sure you have enough put back to cover the loan payment as well if the worst were to happen. If all goes according to plan, loans are great! But the best laid plans are only viable until the battle begins, right?
 
jbartlett323 said:
So my number is primarily based on experience.
My partner and I open my store 5 years ago. He invested about $30k into opening. This covered rent, signage, advertising, merchandise, store fixtures, build-out, and everything in-between. That $30k went fast, very fast. We both worked the first 2 years with a $0 paycheck. I nearly went broke at home, he was older and had some fluff saved, but not a lot that didn't go into the company. He ended up selling his truck to afford the main sign out front. If we had had $50k, I probably could have drawn a small salary and made ends meet. Definitely would have done more advertising and bought better shop equipment. Now he has left the company and I am on my own.

My number was definitely a "This is how much to have a solid start" as opposed to "lets just get this going". Obviously, you don't have to start that big, you can certainly take the baby steps and do a little on the way. But OP seemed to be interested in a "Whole Hog" approach, so I shared my experience with that. And of course there are many, many variables to base your decisions on, perhaps my rent is higher, same with Ins, utilities and other stuff. Perhaps you don't want to carry 5k in inventory, but only want to stock the bare minimum, etc, etc. In the end, only you give yourself the right number in these matters...

As for Loans, again, your opinion is the only one that counts, loans being bad is just mine. Without the loans, the only obligation I have to my company is the building lease. If it happens to go any other direction than up, I'm not paying for it the rest of my life. Also, doesn't change the fact that you still have to have some saved up; now, instead of just the wages, you have to be sure you have enough put back to cover the loan payment as well if the worst were to happen. If all goes according to plan, loans are great! But the best laid plans are only viable until the battle begins, right?
Click to expand...

You have a good point yet this is based also on your area. I do appreciate the input. Maybe since I rent a shop space I can just convert it to storefront. I rent a shop with my father and we pay $1 a Sq ft. I could convert it to a shop on the inside. Right now I use 50% of the total space. Half storage and half workshop. About 125 Sq ft. But I could possible build it out and then be better off. I get utilities and internet too.
 
RoseburgHelpDesk said:
I am going to go with a question here. I have been on my forum topics here. I want to start this to get input from shop owners new and old. Given that it would be a small shop, husband (tech) and wife (clerical). My location (city) is better off with some sort of storefront. Even though I work for an appliance company, I am a sub contractor with my own business, people just don't want to drop their stuff off there. I do little work on the computer side but I would love to do this more full time. I work as an appliance tech and make a living but it leave little money to invest on my computer business. Having a storefront with my wife would and/or should not require employee costs. She already is a partner in the business. but I could do in shop and calls but still have someone manage the shop while I am out. I can do PC computer work, networking, appliance repair, appliance board repair, other computer related stuff. I just basically have a cash flow that supports my current bills plus a little extra. That little extra would take a long time to accumulate into good usable capital. So I listed a few questions that I need help with.

1. Where would be the best place or way to get capital to go into retail?

2. How much capital does one need to get?

3. How many months should be in reserve? (3, 6 , 9, 12 months)

4. Good place to get inventory for a small shop and good prices?
Click to expand...

My question is why have a storefront, the market is changing rapidly.

I started my business more than 12 years ago and everytime I get the urge of opening a storefront I try to remember the many, many other computer business that came and went in all these years even when they had the "perfect" location.

But if you do decide to go that way definitely us baby steps and save up as much as you possibly can, you're going to need it.

In my case I did build a fairly good business with a simple recipe:

2 new clients every week "rain or shine", that equals to 100 new clients every year and after sometime it does add up.

I make a decent living with zero debt, but I live in the "poor" side of town even though I cater to the "rich" side of town.

Wish you well in your endeavors.
 
RoseburgHelpDesk said:
Just wondering why? :)
Click to expand...

* I don't know you or your wife so you guys may be the perfect couple to start a business together, these are just my opinions on the situation based upon mine and others experiences.*


The main reason being I keep my business life separate from my personal life.

Other important reasons:

You state that it will be a small store with you doing the tech work and your wife doing clerical work. As a new business there really won't be that much clerical work to do, at least not enough to justify hiring someone to do it. Sure down the road when you actually need that person maybe look into hiring them but I still wouldn't hire my wife/SO.

You mention she's already invested in the business, another bad idea IMO. What does your wife bring to the table that benefits the business? Sitting at a chair while you are out on repairs isn't bringing anything to the tables.

I'm not sure she is currently working but if she is, leaving that job to come help you start a computer repair business seems like a pretty terrible idea.

If you really are set on hiring/working with your wife at least wait till you actually need her. Is your marriage worth ruining over trying to start a computer repair company?

Again though my number two rule in life is don't mix business with personal relationships.

If you really feel like it's the right thing to do or best thing to do for the business then go for it. I think only you really know the answer to that.

Best of luck and keep us updates!
 
Well I actually got some good news last Friday that may even setback my plans on a small shop for a while. I will be doing more contract work. So I do appreciate all the answers and replies. For now I will just let things be.
 
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