Who has owned their own retail business?

[BLAKE]

I'm keeping the type of store under wraps for now, but my wife and I are thinking about opening a one-off retail store.

She would run it, I know she's capable. Hire one full time employee. With that in mind, what kind of start up funding do you think we would need?

The way I figure, it'd need less than $5k to build out and furnish the right location. Rent would be less than $2k/mo. Less than $5k to stock it full. I know that doesn't sound right, but this is something similar to a resale shop, so it wouldn't require lots of expensive inventory.

I have a spread sheet going of all expenses, (fixtures/POS system/security cams/etc.) though I know I'm missing some stuff.

Is there a hard and fast rule like "must have x-amount to cover x-number of months operating cost" or something like that?

Thanks in advance for any light y'all may be able to shed on this for us.

[talisman]

Better to hire two part timers than one full timer I would imagine, but I'm not current on the laws with the new healthcare for businesses with that few employees. I think you guys can pull it off on another note. Pick a gooood location.

[slow99]

Be very conservative with estimates as to how much cash you think you'll need to complete the first cash conversion cycle and all startup costs - then 3x that number. Cash flow is the killer to a startup.

[BLAKE]

Better to hire two part timers than one full timer I would imagine, but I'm not current on the laws with the new healthcare for businesses with that few employees. I think you guys can pull it off on another note. Pick a gooood location.

Good points all around. Just doing some location scouting, I've found one good location for $10/sq ft and a pretty great location for $16/sq ft. Both in target rich environments for retail.

[BLAKE]

Be very conservative with estimates as to how much cash you think you'll need to complete the first cash conversion cycle and all startup costs - then 3x that number. Cash flow is the killer to a startup.

I like where you are going there. Based on research so far, most things would turn over pretty quickly with bigger ticket items ($100-$500) sitting 6 weeks at most. So based on the numbers so far do you think that I'm looking at 30-40k?

[inline 6]

It would help volumes if we knew the buisness....

[8mpg]

6 months reserves would always be a good idea. That being said, make sure you look at a contract for your lease. Id hate to be in a 3 year lease and be out of business in 6 months. They will take you to court to recoup the other 2.5 years of lease money. My fiance works for a property management company in Grapevine and we have seen lots of retail go in an out on downtown Grapevine. Retail business is hard. Also, dont forget CAM charges in addition to rent.

[Scott Mc]

Be very conservative with estimates as to how much cash you think you'll need to complete the first cash conversion cycle and all startup costs - then 3x that number. Cash flow is the killer to a startup.

Exactly what I was going to post. Depending on what it is start smaller than you would like, then build from there. If it works great, if not, then you don't lose your ass. Where do you live again?

[BLAKE]

We live in Fort Worth. I don't think the kind of business would help much. It's a pretty untapped market. Plus, I really can't say yet.

[slow99]

It isn't a "months of expense" exercise - it's how long it takes to convert resources to cash inflow. I can't say without knowing your payment terms to suppliers, payment terms from customers, and inventory levels. Being new, of course you'll have to estimate these numbers ... be conservative. It sounds like you've thought of the inventory portion of the equation - you also have to think about days to collect payment after sales and days to pay your bills:


Cash conversion cycle = Days Sales Outstanding + Inventory Days - Days Payable Outstanding.

Days Sales = (Accounts Receivable/Credit Sales) X Days in Period
Inventory Days = (Inventory/COGS) X Days in Period
Days Payable = (Accounts Payable/COGS) X Days in Period

Here's a good read:

http://www.investopedia.com/terms/c/cashconversioncycle.asp

[BradM]

Double your estimates.

[BLAKE]

It isn't a "months of expense" exercise - it's how long it takes to convert resources to cash inflow. I can't say without knowing your payment terms to suppliers, payment terms from customers, and inventory levels. Being new, of course you'll have to estimate these numbers ... be conservative. It sounds like you've thought of the inventory portion of the equation - you also have to think about days to collect payment after sales and days to pay your bills:


Cash conversion cycle = Days Sales Outstanding + Inventory Days - Days Payable Outstanding.

Days Sales = (Accounts Receivable/Credit Sales) X Days in Period
Inventory Days = (Inventory/COGS) X Days in Period
Days Payable = (Accounts Payable/COGS) X Days in Period

Here's a good read:

http://www.investopedia.com/terms/c/...rsioncycle.asp

Excellent. This is the kind of gold I'm looking for.

Sales would be on the spot. Point of purchase, no accounts receivable. Most inventory after start up would be walk-in used items. New items would be low volume bought online, clearance type items.

[Scott Mc]

We live in Fort Worth. I don't think the kind of business would help much. It's a pretty untapped market. Plus, I really can't say yet.

I have a friend that rents a shop off 26 across from Orielys in Richland hills that gets lots of drive by traffic and has cheap rent. Just a thought man.

[BLAKE]

I have a friend that rents a shop off 26 across from Orielys in Richland hills that gets lots of drive by traffic and has cheap rent. Just a thought man.

Good to know, thanks man!

[ELVIS]

I'm keeping the type of store under wraps for now, but my wife and I are thinking about opening a one-off retail store.

sorry bro, but you missed the boat on vape shoppes. best of luck!

god bless.