Thinking Of Starting A Business In The New Year!

[Hip to be bear]

I'm sure that there are better times to start up a business. Like most on here I do not have a great deal of faith in Mr Darling's forcasting, but I can see an opportunity and am sorely tempted to go for it. We sold a restaurant business earlier in the year and are keen to move onto something new.

It is a retail wine business / off licence. (Something I know a fair bit about.) The demise of First Quench (Threshers etc) has left thousands of shops closed across the country. The shop I am looking at was profitable under the previous ownership, with a T/O in excess of £500,000. Admittedly much of the T/O was fags and beer, which doesn't excite me as I am a bit of a wine nerd, but there is scope in the local market for selling some decent booze as well as doing some wholesaling to some of the decent local restaurants. I am also keen to build an online business, which I have been mulling over for a few years and is (IMHO) unique and different to what is out there online at the moment.

Despite the fact watching the demise of First Quench over the last few years was like watching a car crash in slow motion, I believe that there is a real opportunity for us. If we can pick up much of the previous business (admittedly in fags, beer and cheap wine), it will give us cashflow, the staff resources and premises to allow us to do the other things.

I am concerned about the double dip etc, and a further weakening in sterling will make imported wines more expensive, but on the whole independent wine merchants have done well in the recession as people are not drinking so much in pubs, bars and restaurants.

Anyway, I though I would put my head above the parapet and see if my fellow HPCers can shoot me down!

[Y-QUERK]

You're crazy.

[Dubai]

I think people will generally be drinking more alcohol in the next year or so......

[grey shark]

you will have to deal with plenty of low life , like local p1ssheads who come in and have barely enough to buy just one can of special brew , small independants are often easy targets to steal , rob or assault staff , then there will be plenty of rules and regulations .

The margin on a packet of fags is pathetic as well ........ easier ways to make a living imo

[benthebuilder]

I'm sure that there are better times to start up a business. Like most on here I do not have a great deal of faith in Mr Darling's forcasting, but I can see an opportunity and am sorely tempted to go for it. We sold a restaurant business earlier in the year and are keen to move onto something new.

It is a retail wine business / off licence. (Something I know a fair bit about.) The demise of First Quench (Threshers etc) has left thousands of shops closed across the country. The shop I am looking at was profitable under the previous ownership, with a T/O in excess of £500,000. Admittedly much of the T/O was fags and beer, which doesn't excite me as I am a bit of a wine nerd, but there is scope in the local market for selling some decent booze as well as doing some wholesaling to some of the decent local restaurants. I am also keen to build an online business, which I have been mulling over for a few years and is (IMHO) unique and different to what is out there online at the moment.

Despite the fact watching the demise of First Quench over the last few years was like watching a car crash in slow motion, I believe that there is a real opportunity for us. If we can pick up much of the previous business (admittedly in fags, beer and cheap wine), it will give us cashflow, the staff resources and premises to allow us to do the other things.

I am concerned about the double dip etc, and a further weakening in sterling will make imported wines more expensive, but on the whole independent wine merchants have done well in the recession as people are not drinking so much in pubs, bars and restaurants.

Anyway, I though I would put my head above the parapet and see if my fellow HPCers can shoot me down!

Soaring crime on the way and off-licenses perfect for armed robbery. One near me last year got done by 4 blokes with machetes. Nice part of town too.

Fags have a sh1te margin and your insurance will be a killer. Supermarkets are getting keener with the wine now as they know people have higher expectations that a bottle of Blue Nun. Suppose a lot comes down to location, your faith in the business model and your drive to push it through.

Go for it...what have you got to lose??

[Jimbo]

I agree with the other poster, it's not going to be the state of the economy that will most affect the likelihood of success, but rather the retailiers. I can see you're going for a niche market, but these are served by some very professional multi-million pound businesses with a strong reputation/snob value in the business.

I would look very carefully at the competitors, their strengths and weaknesses and then decide if you can provide a USP (Unique Selling Proposition - not Selling Point as people often mistakenly state).

If you can see a gap in the market, then yeah go for it, otherwise look at other business ideas.

I've run my own business for a dozen years, it is at recessionary times the weakest fail leaving better future opportunities for those left in the game.

Good luck and if you go for it, get the backing of your family and some good advice - ideally from someone already running their own business. This ain't no 9 to 5 nor romantic journey, every day is for tough, but for me the only way I want to live my life.

[Hip to be bear]

Can you compete with the supermarkets? Not on price......many of their special offers are below cost price loss leaders. But the shop we are looking at is just over the road from the towns supermarket (Somerfield) and is well patronised by the locals as they can't be bothered to queue in the Supermarket. As the wine retailing world gets more and more homogonised (big chains selling only big brands) there is room for small independents selling an interesting range of wines, often made by smalle producers who could never supply the supermarkets.

True margins on fags are pitiful, but the GP that we would make on fags there would pay the rent, the business rates and one wage. Seems worth the hassle.

Thieving etc could be a real potential hassle.

[Lambie]

Can you compete with Sainsbury and Tesco? In our local S, massive piles of wine at cheap prices - may well be very cheap wine at cheap prices, we dont drink much wine. But rather than go to the local offie I see many people buying 6 packs of wine plus a weeks beer as part of the weekly shop - maybe just for the Nectar point! Also I believe that Tesco wine is good quality from what I have read so I would view the supermarkets as the main competition.

and they'll viciously undercut you - taking a loss if they have to - to put you out of business. Where I live there are 5 tesco's within 2 square miles - and no independent food / drink retailers left.

Unless you can offer something the supermarket's can't - i would think again.

[juvenal]

What can you offer that the supermarkets can't?

Apart from this, the following site will tell you all about crime in your chosen area, if you type in your postcode.

http://www.themissinglist.co.uk/search/location?page=3&op0=5&filter0=BH15

[benthebuilder]

Can you compete with the supermarkets? Not on price......many of their special offers are below cost price loss leaders. But the shop we are looking at is just over the road from the towns supermarket (Somerfield) and is well patronised by the locals as they can't be bothered to queue in the Supermarket. As the wine retailing world gets more and more homogonised (big chains selling only big brands) there is room for small independents selling an interesting range of wines, often made by smalle producers who could never supply the supermarkets.

True margins on fags are pitiful, but the GP that we would make on fags there would pay the rent, the business rates and one wage. Seems worth the hassle.

Thieving etc could be a real potential hassle.

Yeah, having a sawn-off thrust in your face can really be a pain in the ar5e.

[Hip to be bear]

I agree with the other poster, it's not going to be the state of the economy that will most affect the likelihood of success, but rather the retailiers. I can see you're going for a niche market, but these are served by some very professional multi-million pound businesses with a strong reputation/snob value in the business.

I would look very carefully at the competitors, their strengths and weaknesses and then decide if you can provide a USP (Unique Selling Proposition - not Selling Point as people often mistakenly state).

If you can see a gap in the market, then yeah go for it, otherwise look at other business ideas.

I've run my own business for a dozen years, it is at recessionary times the weakest fail leaving better future opportunities for those left in the game.

Good luck and if you go for it, get the backing of your family and some good advice - ideally from someone already running their own business. This ain't no 9 to 5 nor romantic journey, every day is for tough, but for me the only way I want to live my life.

Cheers Jimbo,

Having run our own restaurant business for the last 3 years, we understand the ups and downs of working for ourselves, but like you, I would not go back to employment. One of the major plusses of this compared to the restaurant is that if the SHTF I can run the place singlehanded....compared with the massive overheads and annaul wage bill of over £100k that we used to have.

[grey shark]

True margins on fags are pitiful, but the GP that we would make on fags there would pay the rent, the business rates and one wage. Seems worth the hassle.

You're dreaming mate ..........

[Hip to be bear]

What can you offer that the supermarkets can't?

Apart from this, the following site will tell you all about crime in your chosen area, if you type in your postcode.

http://www.themissinglist.co.uk/search/location?page=3&op0=5&filter0=BH15

Interesting link Juvenal. Checked it out. It looks like I'm in one of the safest parts of the country....though there was a hit and run by a pensioner on a motability scooter in 2007!

[Caribbean Beauty]

Hi Hip

I agree with the others re robberies, shrinkage (aka shoplifting) and supermarket competition.

But your unique selling point could be to offer rapid (instant?) delivery service if you team up with a reliable local recession-hit taxi service and negotiate discounted contract rates for delivering booze to folks' houses. What you could do in your online store bit of the business is to offer a regular slow delivery charge (of free above x pounds) which you or your family do in spare time. Then additionally offer an express same day delivery charge (which will cover the discounted taxi fare).

Set your laptop up on the counter and set your email to bleep when one comes in, so you will instantly be notified of an online order, and can see if it is express or not. If express, payment would have been made via your online store merchant account, so you simply call up your taxi account company and box it up and hey presto, your local yuppie pissheads get their booze without having to go out in the cold or leave the summer BBQ!

A good USP if you do not mind the work. Taxi firms are struggling for sure and will be pleased with the work, especially as they won't be talking to vomiting lunatics (I have just launched a rural north norfolk private hire business with no nearby competitors and am doing pretty well in week 9 so there is hope, if you have a niche).

Good luck

[Hip to be bear]

You're dreaming mate ..........

Bizarrely no!

The now ex manager showed me the figures as it was....Much of the T/O was fags at a profit margin of 10.7%

If we made £20k p/a profit on cigarettes that would cover the rent at £7500, rates £3-4K and leave at least £8k for a part time salary.

[Caribbean Beauty]

Bizarrely no!

The now ex manager showed me the figures as it was....Much of the T/O was fags at a profit margin of 10.7%

If we made £20k p/a profit on cigarettes that would cover the rent at £7500, rates £3-4K and leave at least £8k for a part time salary.

Forget about paying anyone a salary - in this recession it is not necessary. Why not accept the Newlab intern invitation to businesses and exploit the unemployed graduates who are desperate to get some work experience on their cvs - take on an intern! It's all the rage amongst capitalists looking to slash their wage bills to 0. Not sure how it works mind you, might be something on the DWP website if you check (the intern gets state support of some kind).

Just be sure you do not treat your female teenage interns the way Bill Clinton did - or if you do, make sure the CCTV or wife is not watching. At least you will have the cigars handy

[Hip to be bear]

Hi Hip

I agree with the others re robberies, shrinkage (aka shoplifting) and supermarket competition.

But your unique selling point could be to offer rapid (instant?) delivery service if you team up with a reliable local recession-hit taxi service and negotiate discounted contract rates for delivering booze to folks' houses. What you could do in your online store bit of the business is to offer a regular slow delivery charge (of free above x pounds) which you or your family do in spare time. Then additionally offer an express same day delivery charge (which will cover the discounted taxi fare).

Set your laptop up on the counter and set your email to bleep when one comes in, so you will instantly be notified of an online order, and can see if it is express or not. If express, payment would have been made via your online store merchant account, so you simply call up your taxi account company and box it up and hey presto, your local yuppie pissheads get their booze without having to go out in the cold or leave the summer BBQ!

A good USP if you do not mind the work. Taxi firms are struggling for sure and will be pleased with the work, especially as they won't be talking to vomiting lunatics (I have just launched a rural north norfolk private hire business with no nearby competitors and am doing pretty well in week 9 so there is hope, if you have a niche).

Good luck

Cheers CB,

You always have an interesting angle and an eye for an opportunity! We are in a fairly touristy.....(second home and holiday lets area), so we would look to sell in to tourists online before they arrive and effectively stock their fridge before they arrive....One local company is already doing this successfully with local food products.

[I'veAlreadyLeft]

You should go for it if that's what you want to do.

Despite my username, I've actually just arrived back in the country after 3 years abroad and I'm doing the same thing. The big meltdown that I was anticipating was avoided at literally the last second by gubbernmint intervention. The aim over the next few years will undoubtedly be to make things more stable rather than less stable. I also find Britain more palatable now. People seem a bit less up their own arses. And Gordon did a smashing job of making my Euro's convert very nicely into pounds.

House prices ain't going up anytime soon, but in a few years the whole cycle will start again. If you've got a good business model, then you'll probably be able to get some money, and if you need to rent a business premises you've probably got a very good hand during negotiations.

But yeah, when you're dealing with the Great British public, you're gonna have to accept that there is a section of said public that are rotten to the core, and you will probably have to interact with them.

Good luck though!

[Caribbean Beauty]

Cheers CB,

You always have an interesting angle and an eye for an opportunity! We are in a fairly touristy.....(second home and holiday lets area), so we would look to sell in to tourists online before they arrive and effectively stock their fridge before they arrive....One local company is already doing this successfully with local food products.

Good idea. Although some cottage renters travel with their Tesco stuff in the car boot, there are increasing "ethical tourism" trends which encourage middle class tourists to want to support the local businesses like yours and not the huge corporations.

PS - make sure your online website store system is the latest generation and compatible with mobile/Iphone/PDA type screens and applications (as well as PCs), this is the current boom area and you will save yourself the aggro of upgrading your old fashioned online store-front later on if you start with the web 2.0 version from scratch)

[OnlyMe]

Prospective turnover to fixed costs certainly looks attractive compared to many other types of business.

Bet there are a lot of companies working on the same or lesser margins with much, much lower turnover.

[ken_ichikawa]

The Sun Tzu of business one of my old professors who had a mental break down running his business and decided to do his PhD instead was these golden rules (ACCA book agrees too):

There are TWO AND ONLY TWO methods to compete any other method of competition will fall under the subsets of the below, there are no other methods.

Price

Differentiation.

Supermarkets, and such like already hold the price bases firmly and cannot be competed on unless you start selling samogan which is moonshine and illegal. You cannot ever ever compete on price due to supermarkets being able to sell at a massive loss.

Differentiation means exactly what it sounds like , you have to offer what the supermarkets do not.

Differentiation cannot be played on price, or service or anything which is easily replicated and copied, stuffed crust pizzas and square pizzas as well as small form news papers are easy examples of this, if it can be copied it will be.

Hence you have to run on something like a wine nobody else on earth can get or very few people can get, my business in the 1990s was so sucessful because it was ME and ME alone who could get things from Japan. Then Tony a bigger company cottoned on and destroyed my differentiation advantage.

The key thing to ask yourself is this: Why should people use your service other than another one, discount ANYTHING which can be easily copied if you still have 3 decent items then you maybe onto a winner.

In that effectively you want to build yourself a small niche which the big companies will not want to compete with you because it is not worth their while or they percieve you as not a threat.

You must be careful to preserve your niche, there was a company that ran booze deliveries to parties late at night middle of London, they charged cost +30% , supermarkets cottoned onto this and do a delivery service as it is easy to copy.

The Chinese used to hold the monopoly on paper and silk, nobody knew how to make it (then a dumb Han princess smuggled silk worms and paper out of China) and if you wanted silk or paper you had to go to China. Then other people found out how to make it and the monopoly was crushed.

I can't really see any uncovered angles in Wine distribution tbh, express delivery , cheapness, rare wines, etc its all been tied up, so unless you have a wine that nobody else on earth has AND this wine has demand, forget about it.

Edited December 22, 2009 by ken_ichikawa

[fallingbuzzard]

Too much competition in beer and fags and too little demand for wines. A hobby or passion more than a cash cow. Beer and fags still a loss leader for the food chains. Can't see that changing.

[ken_ichikawa]

I agree with the others re robberies, shrinkage (aka shoplifting) and supermarket competition.

But your unique selling point could be to offer rapid (instant?) delivery service if you team up with a reliable local recession-hit taxi service and negotiate discounted contract rates for delivering booze to folks' houses. What you could do in your online store bit of the business is to offer a regular slow delivery charge (of free above x pounds) which you or your family do in spare time. Then additionally offer an express same day delivery charge (which will cover the discounted taxi fare).

Taxis? , a London firm has a dedicated number of scooters tasked for this job, they have this USP tied down already. Heh you should see the booze shops in Manchester, they are like Russian shops there is a small counter and all the shelves are behind thick plate glass, if you want an item you pick up the tag and put it in the tray where the bloke sitting behind an inch of plate glass picks it up and gets it for you AFTER you pay.

It also requires a different sort of insurance than general taxiing.

[porca misèria]

I'd say if you've done the sums, go for it. You obviously have the retail-customer-facing experience, etc.

One more selling point the others haven't mentioned. If I go into an off-license and find the proprietor to be friendly, knowledgeable and helpful, I'll be a return customer. Less so now than when I was a complete wine novice, but always happy to learn from someone whose expertise and taste I respect.

FWIW, IMO new-world wines are easy: you know what you get. Old-world wines are harder to navigate: some are superb, others can be crap. An analogy I like is lager vs real ale. Can you play the local CAMRA-for-wine role?

[lets get it right]

I'm sure that there are better times to start up a business. Like most on here I do not have a great deal of faith in Mr Darling's forcasting, but I can see an opportunity and am sorely tempted to go for it. We sold a restaurant business earlier in the year and are keen to move onto something new.

It is a retail wine business / off licence. (Something I know a fair bit about.) The demise of First Quench (Threshers etc) has left thousands of shops closed across the country. The shop I am looking at was profitable under the previous ownership, with a T/O in excess of £500,000. Admittedly much of the T/O was fags and beer, which doesn't excite me as I am a bit of a wine nerd, but there is scope in the local market for selling some decent booze as well as doing some wholesaling to some of the decent local restaurants. I am also keen to build an online business, which I have been mulling over for a few years and is (IMHO) unique and different to what is out there online at the moment.

Despite the fact watching the demise of First Quench over the last few years was like watching a car crash in slow motion, I believe that there is a real opportunity for us. If we can pick up much of the previous business (admittedly in fags, beer and cheap wine), it will give us cashflow, the staff resources and premises to allow us to do the other things.

I am concerned about the double dip etc, and a further weakening in sterling will make imported wines more expensive, but on the whole independent wine merchants have done well in the recession as people are not drinking so much in pubs, bars and restaurants.

Anyway, I though I would put my head above the parapet and see if my fellow HPCers can shoot me down!

In the last recession, an acquaintance was made redundant. He worked in sales and was one of those really swarmy, sycophantic types that many people can't stand. The boss who made him redundant was a decent enough bloke and, when the bloke who had been made redundant went back a week or two later and told former boss he was starting up on his own, the boss took pity on him and 'gave' him a few, small accounts that he didn't want.

The acquaintance in question knew my brother through business and I had met him a few times. Enough times to know I thought of him as a bit of a wally and a bit irritating. I bumped into him in a pub when he was in the process of starting up - he borrowed the start up money from his dad - and I said to him 'you're nuts starting up in a recession'.

He's now got a big detached house, drives a big BMW, owns a couple of flats etc etc blah blah - employs about 20 people! I would have rated him as the person least likely to succeed in business.

Just goes to show, I know nothing! You sound to me like you've got your head screwed on. Why not give it a go. Recessions are irrelevant. There are always opportunities if you have the nerve to take them. Look at the people opening shops like Woolworths in Woolworths' old shops.