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post #1 of 21 Old 02-02-2004, 3:57 PM Thread Starter
 
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Small Business Question

A few of us are looking into trying our hand at a small family owned startup business. I need to know a whole lot more about how retail stores decide to pick up products from manufacturers, what sort of margins are typical, how invoicing is generally done, and whether it is common to house the products at the actual retail location or JIT (Just in Time)? If someone has, or does, own a retail store I would GREATLY appreciate some insite on this.

Yes, I realize this seems like a rather random location to ask this sort of question, but there isn't a great deal of information floating around (at least that I can find) about this sort of thing. Well that, and I'm really striving to get my posts up to the Figment, Booth, Bake range
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post #2 of 21 Old 02-02-2004, 4:10 PM
 
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Re: Small Business Question

I think the margins are going to vary, depending on product, category, region. I purchase direct from manufacturers to get the best possible discount. In my business, freight can be expensive, so I always try to qualify for free freight terms. Most importantly is inventory turnover. If you have 30 day terms, It's best to sell the product before you need to pay. I now have 30 days of inventory on hand paid for and can replenish when necessary. In my industry it's important to have everything in stock since our products tend to be "hard on" purchases. I little better description will probably help.
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post #3 of 21 Old 02-02-2004, 4:10 PM
 
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Re: Small Business Question

In addition to whatever advice you might get here, you might consider befriending a successful, local retail business owner to get some really good "hands-on" insight.
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post #4 of 21 Old 02-02-2004, 4:14 PM Thread Starter
 
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Re: Small Business Question

Quote:
Originally Posted by BillAce
I think the margins are going to vary, depending on product, category, region. I purchase direct from manufacturers to get the best possible discount. In my business, freight can be expensive, so I always try to qualify for free freight terms. Most importantly is inventory turnover. If you have 30 day terms, It's best to sell the product before you need to pay. I now have 30 days of inventory on hand paid for and can replenish when necessary. In my industry it's important to have everything in stock since our products tend to be "hard on" purchases. I little better description will probably help.

Thanks for the info BillAce. I'll ping you through PM!
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post #5 of 21 Old 02-02-2004, 4:14 PM
 
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Re: Small Business Question

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Originally Posted by BillAce
In my industry it's important to have everything in stock since our products tend to be "hard on" purchases.

Yeah, but if you're NOT selling Viagra.....



Seriously, what segment of retail are you thinking about? There's a lot of difference between how much high end stereo equipment vs. sporting goods you'd want to stock.

Abtech, how many letters are in the word "partner?"
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post #6 of 21 Old 02-02-2004, 4:16 PM Thread Starter
 
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Re: Small Business Question

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Originally Posted by CBRVFR
Yeah, but if you're NOT selling Viagra.....



Seriously, what segment of retail are you thinking about? There's a lot of difference between how much high end stereo equipment vs. sporting goods you'd want to stock.

Abtech, how many letters are in the word "partner?"
High end specialty furniture mostly. The idea is to branch more into services as we get our footing, but for the time being this is a pilot effort to see what sort of market there is for this type of product(s).
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post #7 of 21 Old 02-02-2004, 6:45 PM
 
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Re: Small Business Question

Quote:
Originally Posted by CBRVFR
Yeah, but if you're NOT selling Viagra.....



Seriously, what segment of retail are you thinking about? There's a lot of difference between how much high end stereo equipment vs. sporting goods you'd want to stock.

Abtech, how many letters are in the word "partner?"
four and believe it!
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post #8 of 21 Old 02-02-2004, 10:38 PM
 
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Re: Small Business Question

JIT inventory is a load of crap if your trying to run a buisness. "Just not in stock and wont be for a weeks" is typical, especialy when your dealing with vendors.
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post #9 of 21 Old 02-02-2004, 10:39 PM
 
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Re: Small Business Question

I've been in retail since I was eleven, funny I don't ever remember being eleven, I currently have two retail endeavors(hardware stores) and would be happy to discuss this with you either here or pm me with your phone #. I know nothing of the furniture business much less "high-end" other than seeing several start-up and fail here in Spokane. If you are buying into a franchise...watch your ass. You are often not as independent as you think you are. The partner issue...four of them, is a whole different subject...you guys/gals better know each other...really know and then S-P-E-L-L everything, (duties, responsibilities, expectations, rights, etc, etc) out in detail in well drafted legal document...Good Luck! If it works it can be Great, but...


J
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post #10 of 21 Old 02-03-2004, 2:06 AM
 
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Re: Small Business Question

(pssst, fumbducker, I think Abtech was saying that "partner" is a four letter word.)

Symonjester, I can't offer too much insight here but I am really interested in the advice you receive. I'm also interested in the on-going lessons you learn through your endeavour so please keep us (and me!!) up-to-date. This is something I will eventually look into when the time is right so every bit of knowledge helps.

Good luck!

Jordan H.
The three most feared words in racing, "Powered by Honda".
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post #11 of 21 Old 02-03-2004, 3:42 PM Thread Starter
 
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Re: Small Business Question

Quote:
Originally Posted by fumbducker
I've been in retail since I was eleven, funny I don't ever remember being eleven, I currently have two retail endeavors(hardware stores) and would be happy to discuss this with you either here or pm me with your phone #. I know nothing of the furniture business much less "high-end" other than seeing several start-up and fail here in Spokane. If you are buying into a franchise...watch your ass. You are often not as independent as you think you are. The partner issue...four of them, is a whole different subject...you guys/gals better know each other...really know and then S-P-E-L-L everything, (duties, responsibilities, expectations, rights, etc, etc) out in detail in well drafted legal document...Good Luck! If it works it can be Great, but...


J
Hey Fumbducker,

Thanks, I'll PM you shortly with additional details and info - I appreciate any insight you can lend on this matter.

As for the setup - it's not a franchise, I've researched that road to no end and would rather steer clear of the potential hazards presented going that route. It's a partnership. I explored this endevour in some length earlier with different partners earlier last year. Now, a little smarter to the pitfalls, we've documented EVERYTHING. Roles, responsibilities, ownership, succession plans, expectations, decision power, etc...It was an exhaustive process, but I was painfully clear that nothing goes forward without a complete understanding on everyones part. So far so good.

To keep folks (who actually care) apprised of our progress:
1. Finished interviewing User Experience design consultants and made selection.
2. Began work with Mechanical Design Engineer in Houston to begin prototype.
3. Finalizing name and registration forms - (search of state still needed).
4. Working with Real Estate agent to find commercial space.
5. Just drank a diet Coke...mmmmm...sweet caffeine...mmmm
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post #12 of 21 Old 02-03-2004, 5:15 PM
 
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Re: Small Business Question

S -

How did you determine that there was a need for your product / services in your community? Will you carry known brands, or do you intend to build / design your own? What's your breakeven?

Are you going to a bank/ SBA for the capital, or are you and your partner(s) coming up with it? Is there a business plan? Have you had a dispassionate party review it?

Have you searched out the relevant trade jiournals? Are they as full of crap as the ones in my industry? Still, they provide a place to start finding vendors and support..
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post #13 of 21 Old 02-03-2004, 5:24 PM Thread Starter
 
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Re: Small Business Question

Quote:
Originally Posted by CBRVFR
S -

How did you determine that there was a need for your product / services in your community? Will you carry known brands, or do you intend to build / design your own? What's your breakeven?

Are you going to a bank/ SBA for the capital, or are you and your partner(s) coming up with it? Is there a business plan? Have you had a dispassionate party review it?

Have you searched out the relevant trade jiournals? Are they as full of crap as the ones in my industry? Still, they provide a place to start finding vendors and support..
All great questions CBR. The answer(s) are/is yes.

We've performed exhaustive market and competitive analysis research as well as market and industry surveys. Our breakeven calculations have been completed through 2005 - each phase of the company's development has significant impact on the breakeven. For example, initially, most of the actual construction will be outsourced. As the company expands and we determine the true market demand, we'll reassess these costs and make a decision on whether to bring these in-house at that time.

Business plan is (for most intents) completed. All 56 pages of the damn thing. Funding is coming from both, our (the partners) investment capital, and through investors (both private and SBA).

I read all sorts of industry related materials. Entrepreneur, Playboy, Oprah...Seriously though, I am in touch with the Special Interest Groups in the area, journals and trade publifications, other industry players (albeit small ones), and anything else I can find time for these days.

I live by the old adage measure twice cut once. However, lately I've been finding myself measuring 10 times..then measuring again. I'm finally at the stage where I can start making some cuts.

man...I'm turing into a post whore - watch our here I come!
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post #14 of 21 Old 02-04-2004, 1:48 AM
 
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Re: Small Business Question

How difficult was it to come up with enough startup capital? The reason I ask is that I've run the numbers game many times and any way I slice it, I can't find enough non-borrowed cash to get going. I don't know enough about venture capitalists but I know I want to borrow as little as possible from the banks... I also want to avoid borrowing/receiving investment from my own family as I don't want to have any bad blood if things go south. I think the capital issue is a prime deterrent from entering any market and I'm wondering how you overcame that obstacle.

Jordan H.
The three most feared words in racing, "Powered by Honda".
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post #15 of 21 Old 02-04-2004, 4:10 AM
 
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Re: Small Business Question

Quote:
Originally Posted by symonjester

As for the setup - it's not a franchise, I've researched that road to no end and would rather steer clear of the potential hazards presented going that route. It's a partnership. I explored this endevour in some length earlier with different partners earlier last year. Now, a little smarter to the pitfalls, we've documented EVERYTHING. Roles, responsibilities, ownership, succession plans, expectations, decision power, etc...It was an exhaustive process, but I was painfully clear that nothing goes forward without a complete understanding on everyones part. So far so good.
Three words

* GET A LAWYER *

- H (small business owner)
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