Thinking of starting a small business...need advice

[danacara]

Try and look at it objectively. Design a spreadsheet and run the economics. Start with the amount of money you'd need to make each year to be happy. Set that against the costs of a business: initial deposits, rent, inventory carry costs, shipping, financing, utilities, employees, decor, start-up (sunk) costs, insurance, taxes, annual reinvestment into the business, etc. Don't forget to tack on the cost of health benefits for yourself if you're not on your husband's plan. Try to estimate everything on the high side. Add the amount of money you'd need to be happy to that total, call that the total profit you'd need to bring in through this business, and calculate profit per day, assuming you're open five or six days per week year-round. Then, search the web to figure out average markup (profit margin) on book sales (I would guess maybe 20% for a chain store, 30-40% for a boutique? I might be too low). Whatever the average markup is, set your profit per day equal to that margin, and from that solve for the total revenue you would need to make to survive.

Let me try out an example. I am totally guesstimating on the numbers, by the way:
The amount of money you'd need to make each year to be happy = $30,000 (pre-tax)/year
initial deposits = $5000/year
rent = $1000/month, $12000/year
inventory carry costs = $500/month, $6000/year
shipping = $500/month, $6000/year
financing = $500/month, $6000/year
utilities = $250/month, $3000/year
employees = assume 0 for now, but that means you're working all day, every day
decor = $200/month, $2400/year
insurance = $300/month, $3600/year
taxes = $2000/year (miscellaneous)
annual reinvestment into the business = $5000/year
health benefits = $300/month (COBRA), $3600/year

So you'd need about $86,400/year in profit to break even for yourself and your business. If you're making a 30% margin on the books, you'd need sales of $X per year, such that
X = (86,400/0.3) = $288,000.

You'd need to sell $288K in books per year. If you were open 5 days per week year-round, you'd need to average about $1100 in sales per day to pay yourself and break even. This is of course an estimate with a lot of room for error, so I'd want to build in some safety.

Try replacing those numbers with better estimates for Missouri and then see if you think you could do it.

 

[katerkat]

Originally posted by danacara
Try and look at it objectively. Design a spreadsheet and run the economics.

That's what I would do, too. I have a source on some really nice candles and was looking into wholesaling them on eBay. I ran the numbers and figured the price I'd have to set in order to make a decent profit (minus fees and whatnot). Unfortunately, the price I'd have to sell at is too high for eBay - most other 22 oz jar candles are selling below $15 (and that's only giving me a profit of $1.70 per candle!)

 

[kadaten]

Originally posted by septbride2002

Does anyone else find it kinda sad that discount stores are king? Makes me want to buy from independent stores more often.

~Amanda

Yes, I do find it sad. I try to shop independent stores whenever possible. Mostly because the independent stores are able to offer different things than mass-market stores.

But my reality as a SAHM is that I must watch every dollar very carefully, and if it's available elsewhere for less, it will be gotten elsewhere.

Whenever I'm looking for a gift, I go to a local boutique that carries things I've seen nowhere else. I love their selection, I love their products, and I love that I'll be the only one putting that gift on the table Unfortunately, books are available everywhere, so it doesn't apply to books.

I do try to go to special things...puppet shows, book readings, etc. and am known to buy things when I'm there, even if they're not at rock-bottom prices. But for my regular shopping, I go to Books-A-Million (for a $5 membership every year you get 10% off everything, plus they run sales) or Borders. I know it'll be there 9 times out of 10, there's something for everyone, and it might be on sale.

There is an independent book shop we used to visit in Old Town Alexandria, VA. It's in a shopping district with lots of other upscale shops, lots of tourists, lots of foot traffic, plus it's been there for eons and many families have been going there for years. All those factors help keep them open. Would your store have some supporting factors like that? They may be different ones, but reasons you would naturally do well rather than die on the vine? Something to think about....

Good luck with whatever you pursue!

 

[tinksgirl]

I took a risk 4 years ago by opening a baby boutique in our resort town.The buildings used to be fish shacks in the 1800s.Tourist think its a cute area but the cute building i began in had stairs problem with handicap and strollers.my second year i got a better location but had trouble with insurance because i was to close to the water i finally got it.I have worked for 4 years
with no real profit i work 7 days a week in june thru august these are 12 hour days at the store.I have missed family outings partys you name it i couldnt go because you cant close your store for these reasons(well now i actually do!!).I cant really afford help although this season i will have a older woman i used to work with working 1 day a week so i can spend some family time in the summer with the kids.I want to tell you i love kids i have a 18 year old 14 year old and 8 year old,but what i have found true in my shop over the years is most parents have no control over their kids.Things that happen daily in season parents offering a gund stuffed animal to a toddler-hello i must sell that without your childs spit! kids trying to get in my front window mom doesnt bother to tell them no! kids coming behind my counter where i keep shipping supplys moms think its cute! kids with lollypops in a childrens store !!!!!no please get out --but you cant say that you have to be nice i have a toy box for kids to play with while moms look around when its time to go most mothers cant get their own kids out of the store so i have stickers i will give the kids to bribe them.keep in mind in the summer this is all day every day.Now the best part is sahm are not in the position to spend so it is alot of time with these people that =very little money.If by chance 2 or 3 moms of young toddlers end up in my store at the same time they forget where they are start comparing the kids while they talk the kids take over my shop
if anyone else comes in they dont want to stay so i loose even more sales.I do say things to people in a nice way but sometimes its just constant.The people who really spend money on kids are grandparents aunts uncles not the parents because they are busy buying alot more important things when you have little ones.

Now the good I have met some of the nicest people in the world
one family comes for 2 weeks in the summer we spend the 4th of july with our familys together i have some elderly customers that are just wonderful one came in the other day and brought me a coffee she thought i might be cold!. whatever you decide to do good luck i just wanted you to know some of the hard parts of childrens retail. every year i say if i dont make more thats it and every year im back doing what i love and hate 7 days a week.

 

[Hillbeans]

bump

 

[LOVETHATMOUSE]

I go to our local bookstores (one adult, one child) more often than the bigger chain stores. I find them more appealing - and my daughter loves them too. They have a nice club you can join (for free of course). For every 10 books you buy, they add them up, divide by 10 and that's a store credit for you. They punch a card and also keep it updated in their computers. They also send out coupons once a month for us. Nice touch - it does get me to buy more.