Shop Keeping

[PopGun]

Does it still pay to be a self employed proprietor?

And if so, what king of store would you set up?

[200p]

Good topic.

A Fruit machine shop has always interested me, but I have not got round to looking at it closely.

Or a laundrette.

The shop looks after itself while you have time to set up more.

[Gone baby gone]

I think these days, you ideally want to be selling something that (i) supermarkets don't sell and (ii) you can sell online as well as via your bricks and mortar shop.

[Patfig]

I think these days, you ideally want to be selling something that (i) supermarkets don't sell and (ii) you can sell online as well as via your bricks and mortar shop.

Our bricks and mortar shop shut down ages ago

[md23040]

It’s hard to make a living in retail since overheads tend to be quite large and competition in many sectors continues to suffer from online operations exapnding with cheaper cost bases. The best brick and mortar busineeses at the moment would be outside fashion since this is exposed to seasonality and having to carry stock of various sizes etc, and food since this is perishable etc.

Good businesses should have high gross profit without much money tied up in current or forward inventory. A small coffee shop selling cakes and biscuits springs to mind, in a decent location (GProfit through the roof), but then again on the downside there is loads of competition from pubs etc tuning into the game, as well as Mc Cafes, Starbucks, Costa Coffee etc giving strong chase for the same customers. Online cafes ditto, around student area's primarily, since again the main income derives from coffee sales, although again on the downside, this is a pretty saturated marketplace.

Bookie shops are also a way to make money especially located beside pubs with strong sales (not necessarily prime location). These are easy, cash cows if managed correctly. Also on the plus side off-centre working class area's with cheaper rents/rates are not as affected from the onslaught of online, since many punters are uneducated unfortunately in the use of internet and opt instead for the traditional route without need for a credit card etc.

edit add~on On the downside for certain locations, there maybe the need to pay protection money to some local hoodlums.

[GloomMonger]

Guns n Ammo

[winkie]

Milkshake/smoothy/coffee, snack bar, sit down/takeaway near a university/office blocks.

[CokeSnortingTory]

Guns n Ammo

Yes. I think a shop selling the above items, plus baked beans and advice on how to identify the illuminati would do brisk trade these days.

[winkie]

Pest control.

Rats

mice

fleas

bed bugs

ants

wasp nests

pigeons

cockroaches

house clearance

medical waste

fumigation

environmental waste.

[The Masked Tulip]

Type your town in here to see what is for sale in your area and consider why they are for sale?

http://secure.businessesforsale.com/

[swissy_fit]

Does it still pay to be a self employed proprietor?

And if so, what king of store would you set up?

Something on a Scottish island, anything with a Tescos in reach is doomed.

[Gone baby gone]

Our bricks and mortar shop shut down ages ago

Depends what you are selling I guess, but some things can benefit from the kudos of having a real physical shop. Other things don't. I buy all sorts of motorbike parts online from companies that are probably based out of someone's garage or an industrial unit and I have no qualms.

[cells]

I think most people here would cry if they actually new how hard it was to run a modest small retail outlet. Lets give an example of a small café or sandwich bar.

£175,000 turnover inc (£3.5k/pw), most will be between £2k and £4k

-£48,000 food

-£25,000 rent

-£10,000 rates

-£70,000 wages (£52k if you do it “under the table”) 3FT plus yourself

-£5,000 utilities

-£5,000 other (insurance, accountants, lawyers, theft, etc)

-£10k VAT (near zero if you fiddle the books)

= a whole £2k per year profit for what will be 60 hour weeks!!!!!!!!

Of course the government isn’t stupid so it turns a blind eye to these small businesses and allows them not to pay the full VAT and allows them to hire people in the black economy. The alternative is that 90% of them go bust. That way such a modest shop would not turn a £2k profit for 60h work but would turn about £30k profit which is more reasonable.

But IMHO that is still terrible wages considering you probably need a £30-70k investment and take quite a big risk.

The reason immigrants seem to own many small businesses isn’t because they are entrepreneurial or extra skilful or have some business spirit above and beyond the locals. It is simply because the natives are unwilling to work 60h weeks to earn only £30k and having to breaking the law. Immigrants too would rather have a risk free £20-30k average office job but probably due to a combination of poor language, few contacts and racism no one hires them so they do this kind of work.

I helped someone set up a small retail unit and worked for free there for 10 days and god it was difficult. We basically lived that shop, 12 hour days 7 days a week, he now works a good 80-90 hour week and pulls in around £25k a year. I would never work that hard for so little (well I would if I had to but fortunately I don’t). I feel sorry for him but needs must.

If the next government whoever it is clamps down on the black economy to try and raise more taxes expect a lot of failed small businesses (hell 90% will go under if they were forced to pay full dues) and a lot more on the dole and out of work.

[Patfig]

Depends what you are selling I guess, but some things can benefit from the kudos of having a real physical shop. Other things don't. I buy all sorts of motorbike parts online from companies that are probably based out of someone's garage or an industrial unit and I have no qualms.

I thought as housebuilding has ground to a halt thats why no one was buying bricks and mortar anymore

[winkie]

I think most people here would cry if they actually new how hard it was to run a modest small retail outlet. Lets give an example of a small café or sandwich bar.

£175,000 turnover inc (£3.5k/pw), most will be between £2k and £4k

-£48,000 food

-£25,000 rent

-£10,000 rates

-£70,000 wages (£52k if you do it “under the table”) 3FT plus yourself

-£5,000 utilities

-£5,000 other (insurance, accountants, lawyers, theft, etc)

-£10k VAT (near zero if you fiddle the books)

= a whole £2k per year profit for what will be 60 hour weeks!!!!!!!!

Of course the government isn’t stupid so it turns a blind eye to these small businesses and allows them not to pay the full VAT and allows them to hire people in the black economy. The alternative is that 90% of them go bust. That way such a modest shop would not turn a £2k profit for 60h work but would turn about £30k profit which is more reasonable.

But IMHO that is still terrible wages considering you probably need a £30-70k investment and take quite a big risk.

The reason immigrants seem to own many small businesses isn’t because they are entrepreneurial or extra skilful or have some business spirit above and beyond the locals. It is simply because the natives are unwilling to work 60h weeks to earn only £30k and having to breaking the law. Immigrants too would rather have a risk free £20-30k average office job but probably due to a combination of poor language, few contacts and racism no one hires them so they do this kind of work.

I helped someone set up a small retail unit and worked for free there for 10 days and god it was difficult. We basically lived that shop, 12 hour days 7 days a week, he now works a good 80-90 hour week and pulls in around £25k a year. I would never work that hard for so little (well I would if I had to but fortunately I don’t). I feel sorry for him but needs must.

If the next government whoever it is clamps down on the black economy to try and raise more taxes expect a lot of failed small businesses (hell 90% will go under if they were forced to pay full dues) and a lot more on the dole and out of work.

I thought they set it all up then put in a couple of hardworking, trustworthy people to work on the minimum wage + bonus incentive?

[cells]

I thought they set it all up then put in a couple of hardworking, trustworthy people to work on the minimum wage + bonus incentive?

Nope the vast majority of small shops are run by the owner and sometimes a husband/wife/family team. The sums simply don’t add up to either do it all legit or pay someone to run and manage a shop.

I’m sure there will be exceptions but the vast majority of small shops if run fully by management would return nearly zero.

As an example I know a husband and wife who run a small catering outlet leaving them about £800pw profit. Even if you paid two people minimum wage to replace the husband and wife the profits would fall to just £200pw. That sounds decent but its not worth the risk to run such a business. If the outlet turnover falls by even 10% they would be making a weekly loss and you can bet general workers wont try as hard hence the taken will fall somewhat.

The majority of small retail only works because they are largely in the black economy and even so the wages are quite poor. Im sure if you offered most small business owners the option to trade in their job for a £25-30k office job they would bite your hand off (esp husband and wife teams who work really hard for only the equivalent of £20-25k each.)

[md23040]

I thought they set it all up then put in a couple of hardworking, trustworthy people to work on the minimum wage + bonus incentive?

This is my experience of these types of businesses too. As long as rigorous inventory systems are in place to reduce staff theft.

Know of an attended car washing business at a disused forecourt making £100k net profit for the owner with the employees all minimum wages on incentives.

[md23040]

£175,000 turnover inc (£3.5k/pw), most will be between £2k and £4k

-£48,000 food

-£25,000 rent

-£10,000 rates

-£70,000 wages (£52k if you do it “under the table”) 3FT plus yourself

-£5,000 utilities

-£5,000 other (insurance, accountants, lawyers, theft, etc)

-£10k VAT (near zero if you fiddle the books)

= a whole £2k per year profit for what will be 60 hour weeks!!!!!!!!

Gross profit for coffee shops is about 3.64 times cost price. But as a rule of thumb turnover should be ten times rent. Therefore turnover for this type of rent should be in excess of £250,000 and acheive £55k profit, or £39k with another fulltime staff member.

Or, rent at £17.5k would yield £7k profit which admittedly is not great. Many commercial rents are presently being assessed down (by up to 30% ~ even with upward only leases). The reality for many landlords is a business in place paying rent is better than getting nothing at all.

[cells]

Gross profit for food is about 3.64 times cost price. But as a rule of thumb turnover should be ten times rent. Therefore turnover for this type of rent should be in excess of £250,000 and acheive £55k profit, or £39k with another fulltime staff member.

Or, rent at £17.5k would yield £7k profit which admittedly is not great. Many commercial rents are presently being assessed down (by up to 30% ~ even with upward only leases). The reality for many landlords is a business in place paying rent is better than getting nothing at all.

Well I can’t say I have experience in hundreds of these places but I know about 5-10

The majority of small catering outlets turnover between £2.5-3.5k pw and I doubt many would turn a reasonable profit if they paid full tax and reasonable wages rather than black market wages.

I wouldn’t take the risk because the risk/reward ratio is terrible. You invest £50k and risk losing the lot to turn over what is an average modest wage at best.

Of course the story is different for catering shops that turn over 10k-15k/pw plus or more who can make decent profits however those are not really small in the catering world but medium or medium-large and would cost you hundreds of thousands to buy or set up.

As for rents going down, I haven’t heard of that yet in the small shop owners I know (again I don’t know a large quantity). It may be more for the larger shops not the small ones.

Edit:

IMO even if the take in was £250k and the profit was £39k I wouldn’t touch it. Sure a £39k wage sounds reasonable as most people earn less than this but these types of jobs are quite long hours. Your probably looking at 60-70 hour weeks as you will be there 6 days with the other staff but also doing all the shopping/buying/transporting. Plus of course you have put in perhaps £50-150k to set up or buy this business and you risk every day competition destroying your profit, regulations, taxation changes, staff problems, all the crap working in retail and hundreds/thousands of customers brings.

Give me a £30k 40h office job any day over the above.

And I think the vast vast majority of small catering outlets pull in less than £5k/pw this example shows.

[SNACR]

Does it still pay to be a self employed proprietor?

And if so, what king of store would you set up?

The only circumstances I would recommend taking on premises with a storefront would be if you're going to have a strong online presence and the premises can be secured at a not significant cost beyond a small industrial unit.

There might be transient opportunities in things like Cash Converter franchises etc. or some current fad if your timing was right but, unfortunately, leases tend to last longer than these fads.

Over the years I've seen many fresh-faced retail start-ups pay a very heavy price for trying to live the popular dream of running a popular local shop for local people.

My main piece of advice would be, although you might think there's very little to running a shop, make sure you already have good experience. You can't afford to pay for the mistakes on your own learning curve with your own money.

[PopGun]

The only circumstances I would recommend taking on premises with a storefront would be if you're going to have a strong online presence and the premises can be secured at a not significant cost beyond a small industrial unit.

There might be transient opportunities in things like Cash Converter franchises etc. or some current fad if your timing was right but, unfortunately, leases tend to last longer than these fads.

Over the years I've seen many fresh-faced retail start-ups pay a very heavy price for trying to live the popular dream of running a popular local shop for local people.

My main piece of advice would be, although you might think there's very little to running a shop, make sure you already have good experience. You can't afford to pay for the mistakes on your own learning curve with your own money.

Good advice.

I'm always amazed how popular farm markets are, and thought a permanent store offering specialised niche goods (maybe also offering hot food) would do well. However farmer’s markets could be the latest 'fad' as you described above.

Still don't understand why farmers don't get together in their local areas, stick two fingers up at Tesco and set up their own food franchise based on local produce. There are still plenty of people out there who would pay extra for fresh, seasonal and quality goods.

[Gone baby gone]

[stargazer]

How about a fast food outlet?

Traditional fish & chips always seems to undercut Kebabs/Chinese/Indian takeaways and always seem popular round our way. However I guess the regulations would be a nightmare plus lots of evening work.

Or go a step further and operate one of those mobile food caravans seen at various events up & down the country. They seem to be able to charge top prices for food (typically £5 for burger & can of coke) but always have people queing up. No doubt the event organisers take their cut but the overheads must be lower than a high street outlet.

Not that I'd want to try these myself but it would be interesting to see some real figures.

[ken_ichikawa]

Fastfood places are profitable, its 3:1 in that you buy £100 of stock you should be making £300 out of that. It was phenominally profitable in the 1970s 1980s and 1990s, however it is perfect competition and therefore people see the big pies of the current owners and they decided to open up to have a slice of that pie. Consumption hasn't increased to the level of shop growth thus everybody makes less money over time.

The golden period of fast food was 1982-1999 before that take away owners were constantly attacked and robbed, my dad tells me about 1977-1985 where people would come in buy something to eat and then queue up in an orderly fashion to have a fist fight, the window got broken on a weekly basis.

After 1997 lots of immigrants came in and 'bent the rules' and started slicing the pie into ever smaller pieces, in the town I am in right now in 1992 there were 7 take aways of all kinds, today there are about 27.

The hole in the immgration law was this, in that new migrants who legally came here to work on work permits were not allowed to own businesses it was a big restriction on them, so they would work as virtual slaves for the older more established take away places, then after 18 months they would go home and get married and bring their wives over.

Their wives would open up a business nearby and attempt to poach the business from the original one the husband worked from. However they have no business accumen and had an extreme failure rate, quite often they run the place for a year and then run away before the tax man gets them.

There is an article somewhere about this, about the changing language of China town across the countries.

The migrants from 1866 from HK to UK were 1960 Hakka, and Cantonese people or from Guanzhou (the people at this time were subject to mass deportation whenever the bosses thought they cost too much).

The migrants from 1993-2010 are mandarin speaking Fujian and Shanxi people, you can tell by their mandarin accents and the fact that most of them can't read traditional chinese script and can only read simplified Chinese script.

[Pezerinno]

I was thinking about this but it is quite depressing reading. I would miss my social life.