Tuesday, 12 February 2013

Setting up shop.

I have always had a desire to have my own beautiful shop.  This started when I was at primary school and a friend and I used to make little things and bring them to school to "sell" (actually, give away).  My "shop" was a cardboard toy suitcase and I used to make tiny gonks out of sponge with drawn-on felt pen faces  (I was a child of the 60s) and other funny homemade things.  My friend's shop was better stocked, as her dad owned a toy store and got proper toys to stock her shop-in-a-suitcase.  And for a while, I have considered having my own shop, but not yet been brave enough to take the leap.

I am sure that many of you trading successfully at fairs have a dream of opening a shop as the next step in your business.  The happy medium is to find an antiques/vintage centre or arcade where you can rent a space or unit.  A shop within a shop.  This is a much less risky way of trying your hand at shop-keeping and can be a great way of selling to a wide customer base.  Sadly,  the number of antique and vintage centres is falling - the recession has taken its toll. Towns like Dorking and Petworth once noted for their plethora of antiques shops, have seen many of these close down in the past few years.  As business rents have increased, traders have been priced out of the market; footfall in many places has declined and online selling has changed the face of retailing.  However, many people who buy vintage and antique goods still like to examine and handle items before buying. 

With the explosion of interest in the vintage lifestyle and interiors, some new centres have opened for business moving away from the traditional antiques centre model to offer a brighter and more attractive alternative.  If you are a collector or love decorating your home with old bits and pieces, you probably already know the best local centres and even thought about taking space.  BBC Home and Antiques magazine and other interiors/design/collectors magazines, publish features on "vintiquing" in particular towns or regions, including information on the best centres and shops to visit.  If you already frequent centres you will have a good idea about where your merchandise might fit in best.  I love places where I may unearth a bargain - a bit chaotic, lots of stalls and a regular turnover of stock and these rummage-y places seem to be popular with buyers, too.

gorgeous display at Country Artisan market

I used to sell at a monthly market and many of my regulars were traders in a particular antiques centre.  It soon occurred to me that I could cut out the middleman, get a unit in the same centre and sell my stock direct to their customers at a better price.  Like many popular centres, this particular place had a waiting list so I called in or phoned each week until I secured a space.  A very small space, but it got me started and established.  Since then, I have tried several different centres, even having two on the go at once for a few weeks.  It sounds strange, but not every centre will work for you.  You may have to try a couple before finding the one that's best for you. I have no explanation for why this might be - just personal experience.  I prefer to be in a dedicated antiques/vintage centre and not one where there is a mixture of craft and antiques.  A cafe on site can be a bonus, although some people will only visit the cafe and spend little or no time exploring the stalls. 

Selling from a centre might involve having to staff the shop for a day or half-day on a regular basis.  Many centres are operated by traders taking turns to run front of house. Whilst this can be enjoyable it can be an unwelcome constraint if you have to juggle family life or other work to accommodate it.   I used to work full-time and had to do my day on a Sunday, often with my small daughter in tow.  Some centres are owner-operated or have a full-time manager to take care of things.  In this case, you can just price and display your stock and they do the work of selling, keeping records and accounts and paying out.  This can be a real bonus as it frees up your time to go out buying and to work on displaying your space to a high standard.  Every centre will vary so if you are planning to take up space, find out what is expected of you in terms of time commitment within the shop.

Rent is the biggest overhead and you need to evaluate what you can realistically afford.  If the rent is too high, all your profits will just be sucked back into rent and you will have no money to reinvest in the business.   Some centres allow you to rent a few shelves or a cabinet and this can be a gentle way in if you are cautious. A few centres will sell on a commission basis and take a % of the sale price;  some may also take a percentage if the customer makes a credit or debit card payment.  If get the chance, talk to other traders in the centre to find out if it is well organised and has a steady flow of customers.  A centre that is visited by the trade and the public is ideal - the trade will buy regularly from you if they like what they see.  Easy access for unloading and delivering stock is desirable, particularly if you are selling large or heavy  items.   Also check out how the centre advertises and markets itself either in print, through social media and via a website.  Ideally, a good centre will advertise widely and regularly to draw in new customers.

Having a unit in a centre is like having a full-time stall at a fair. And it saves you the effort of a lot of lifting and transporting stock to and fro; plus your stock is on show all the time, not just one or two days a month.  Statistically, this gives it a better chance of being sold. Once in a centre, it is really important to keep your unit or space looking fresh, tidy and well stocked.  Even if you just move things around and re-display a few bits it gives the impression that new stock has arrived.  I often find that "old friends" sell when I re-arrange my stall - things come to light and are snapped up.  If you leave your stall untended for several weeks, its appearance will suffer and so will your sales. Left alone, stock gets damaged and dirty and often moved from your space to another.   If you can't visit the centre regularly, at least leave stock priced up and ready to go out so that the staff or manager can replenish any gaps.

Styling your unit with attractive fixtures and fittings, good lighting, seasonal displays, clear and informative price labels on a  range of interesting stock all helps to generate interest and sales.  The same tricks for styling your stall at a fair apply to a unit - vary the height and layout of items; group colours together or go for a packed, busy and interesting display that hints at undiscovered treasure.   Be original about your displays - take a theme or colour and build your display around that.  In the past, I have themed my unit in
keeping with events such as the Jubilee; Trafalgar Day; Easter and of course, Christmas.  If you are creative, this is an excuse to go over the top and make your space stand out from the crowd.  You can create quite a following by having an interesting stall and attract regular buyers who appreciate your unique and eye-catching stock display.

Jubilee styled shop window for an opticians in Kent

You should gradually start to see a pattern in your weekly turnover figures and get a feel for how much you might sell in a week or month. Sales may not be consistent at first, as it takes time to find out what sells well and what is less popular.  Some weeks will be slow and then it will suddenly pick up.  Like most retailers, your sales will be affected by all kinds of external factors such as the weather, the time of year, the school holidays, the economy....I could go on!    Customers often have other pressures on their purses and vintage items are in the "nice to have" not "need to have" category.   You may be lucky enough to be trading in an affluent area or one where tourists visit and the recession has less of an impact.

Your centre will provide you with a sales record and you can marry this up with your stock book and track your profitability.  Some centres pay out "on demand" so you can go in any time and collect your takings.  Others pay out on a set day of the week or month.  It is up to you how detailed your accounts are and if you track profitablity on every sale. I will cover keeping accounts in a later chapter.

Having a unit is a relatively low-risk entry point into running a shop.  Most centres require either a weekly or monthly payment of rent and a month's notice, so you are rarely committed for a long period.  Allow two or three months to "bed-in" and to assess your sales and profits.  The manager or other traders may be able to advise you on how to improve sales if you are not doing so well.  Be open to advice from those with more experience.  You may have to experiment a little with stock and try out different items and displays to get sales.  There is often a first flurry of sales when you first open your unit as your stock will attract interest from the regular customers. Your best pieces will probably go very quickly - you may want to review pricing in line with other traders if your prices tend to be lower or higher than others.  If after 4-6 weeks things are very slow, you may need to re-think your strategy.  If you are still doing fairs as well, perhaps you are holding back your best stock for fairs?  In which case, the sales in your unit may be slow because you are not updating stock with your prime pieces.  In the past I have been tempted to change direction on my stock, thinking it would improve sales in a particular centre.  However,  it didn't work for me and meant I ended up with stock I found hard to shift elsewhere.  Mostly, trial and error will determine what works best for you - there is no magic formula.

Networking and making friends with other traders and customers is an added bonus.  Having a good network can be useful if you need information about a specific fair, auction or a second opinion on an item or price.  There is a camaraderie in the trade and you will meet many fascinating and friendly people.

If you do a rip-roaring trade in your unit and have masses of stock stashed away, you may be tempted to open a shop of your own.  This can be a highly costly and risky exercise and there are many pitfalls.  But retailers such as Cath Kidston and Cabbages and Roses started with one outlet and a lot of passion and commitment. 

Renting a shop is not a cheap option.  A well located shop in a busy high street might command an annual rent between £10,000-£25,000 plus.  Most commercial tenancy agreements tie the tenant in for at least a year, often longer, although you may find a landlord willing to offer a short lease or a sub-let.  The high streets are full of empty shops, which tells its own story about how difficult retail is at the moment.  Large retailers undertake incredibly careful analysis and market research before renting or building retail space.  If you are going to have a shop, do your homework very carefully.  Is the shop in a busy area with good pedestrian footfall; being close to cash machines, supermarkets or other well-established independent stores is also a bonus.  If your budget precludes being in the main shopping streets, are you in an area that is easy to find, close to cafes and car parks or amongst similar retailers.  It can be an advantage to be near other similar shops, as this creates a destination for customers who enjoy exploring several places in one trip.  Talk to other small shopkeepers about how they find local trade, when they find it quiet or busy etc.  If other independent shops, even vintage and antique shops have opened and then closed, try to find out the reasons.  If they found trade tough, you might too.  The local Chamber of Commerce is a good source of business information and will be able to give you insights into local conditions. 

Bear in mind the outgoings on a shop not only include the rental, often payable in quarterly instalments in advance.  On top of that you will have to pay business rates, unless you are in an enterprise zone where the council waives rates as an incentive to new retailers.  Don't forget the utilities, light, heat and water are also a cost.  And you will need public liability insurance, and also if you employ help, employer's insurance.  All these essential but boring expenses have to be covered each month before you sell one item and in a slow month, this can be a big cost and worry.  Shop overheads (ie all the costs just described) are constant, unlike fairs and markets which can be turned on and off to suit.  A shop can be the death of your dream if you are not prepared for this financial and time commitment.

You may think about sharing the shop with a friend or acquaintance.  My advice is to think very carefully about going into business with a friend -often friendships don't survive.  Even if you think it will work, do have a simple a contract between all parties agreeing setting out roles and responsibilities including financial liabilities.  For example, if you have a lease only in your name you will be liable for the rent, so if you are sharing a shop, make sure both of you are named and sign the rental agreement.  On a long lease, even if your business folds you will still have to pay rent unless the shop can be re-let.

Consider carefully what you and a partner want from setting up a shop - if one of you is more business like and profit focussed than the other, that could lead to conflicts.  Do you have compatible or complementary stock and similar ideas about display and layout.  If you have complementary skills this could be useful - one of you is great on accounts, the other on marketing for example.  Like any partnership, there will be areas of compromise.  If you know you don't work well with other people or have a very strong style that might not fit with someone else, then sharing may not be an option.

You could offer space to invited stall holders - if your potential shop is large enough to split into sections, this could enable you to have a steady cash flow from rent.  Of course, you will need to be sure that your stallholders will pay on time and will run their stalls in accordance with the standards you wish to set.  Ideally, draw up terms and conditions that form a contract stating rent, notice period, requirements for manning, stock management and so on.  Do not be tempted to be casual about arrangements as this leads to confusion and ill-feeling.  Taking on a shop and setting it up as a centre with several traders is quite an ambitious step.  Your work behind the scenes will involve accounts, advertising and marketing and sorting out manning.

If you have a shop, consider how you will staff it day by day.  Ideally, you will want to open 6-7 days a week, but doing this on your own will wipe out family life and the chance of getting out to buy.  If you are sharing manning, then you can work out a rota.  If you chose only to open on specific days, that can work well - I know one trader who runs her shop from home and opens on two weekdays and Saturday.  Her signage is clear about her hours of business and the rest of the time customers can visit her online.  But if you are paying high street rents, you need to maximise your opening hours.

If you take someone on, you need to think carefully about the implications of having an employee. Paying a wage or salary, plus sorting out tax and National Insurance contributions is where it starts.  You are also obliged to meet the requirements of employment legislation covering things like health and safety; maternity or parental leave; sick pay; working hours; holiday pay.  Many councils run services for small and medium sized enterprises to brief them on law, accounting and general business practice.  Most people starting up a business shy away from taking staff on, because it is not a straightforward process.  If you can hire someone who is willing to work on a freelance basis and invoice for their services, this may be a way to go.

Running a shop requires a lot of careful planning, good budgeting and accounting, accurate record keeping for tax purposes as well as the more creative side of buying and displaying stock.

In my next chapter, I will talk about other routes for diversification in your business.

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