Advice on opening a gift shop

[LiamC]

Hi guys

Hoping for as much advice as possible, so if anyone would take the time to give me some it would be much apreciated.

I'll explain the situation first. Basically the owner of a local gift shop is retiring. At first he was selling the shop as a going concern, but he was asking a lot for it and I don't think he had much interest. So now the landlords are offering it 'to let'. Basically the store owner now wants to just retire, and he wants whoever takes over the premises to make him an offer for the fixtures, fittings and remaining stock. I haven't quite worked out what to offer yet, there's only a bit of stock left as he has obviously been selling through and not ordering any more in anticipation for leaving.

So basically I'd be taking on the rent & rates, and buying the fixtures/till/CCTV from the current occupant for a nominal fee.

I'll obviously need a business banking account, so any suggestions on a goof bank to try would be great. I don't think I'll need a huge cash injection for this, but I might need to borrow a tiny bit from the bank just to but my initial stock, is this usually easy to arrange when opening a business account? And is a business loan the best way to finance initial stock?

The store is in a very good location in a seaside town. I'll be looking to sell a variety of quality gifts, and also introduce postcards etc.

 

[tyro1979]

Ask to see the books prior to placing a bid for stock. If the previous tennant is unwilling I am sure their final figures are obtainable from the Government. Either way get a good few years worth. I recall being advised this at College though it is apparantly seldom used; I'd have thought everyone would be checking eachother out yearly.

 

[deniser]

Alarm bells start to ring. It may not be a viable business.

 

[UKcentric]

Sounds like a possibly good business (look at the accounts to check on this) but the circumstances on which it's being sold are favourable to you.

I would consider this a very interesting opportunity, and well worth looking at the figures in fine detail.

Business loan could be the way to go - that's what they're there for.

 

[GeorgeStrait]

The lease will almost certainly be coming to an end, just wait a bit longer and take a new lease from the landlord ignoring the current tenant.

The stock that is left will pretty worthless, you yourself have said as much "there's only a bit of stock left as he has obviously been selling through and not ordering any more" - your will be left with the tat that doesn't sell.

Fixtures & fittings are off very low value and not worth making a deal over.

So all you need to do is approach the landlord/agents, find out when the current lease expires and put an offer in, that could all be now so your ready to move in as the current tenant moves out.

 

[mhall]

George is exactly right- it sounds like the previous owner has just given up and wants out of his lease.(something to think about in itself - if the business was thriving and he wanted to retire he could just hire a Manager)

If his landlord tied him up nice and tight the previous owner will be tied in till the end of the lease. If you talk direct to the Landlord you could be doing everyone a favour as well as be able to negotiate your own lease

Incidentally, is there really such a thing as a "business loan" anymore? As the banks will take a personal guarantee on anything they lend you, calling it a business loan just allows them to charge extra interest. I hate banks

 

[LiamC]

Thank you kindly for your replies so far, they've been a huge help.

For me, there haven't been any alarm bells so far, as the current owner has been running it for years with a pretty average stock range, and he has closed it for four months during the winter. So I think if I took it over with a much better product range and open all year round (it's surely worth opening during the winter, the adjoining shops don't close for the winter, there's a busy cafe next door and Christmas is a fairly busy time for the town), it should work out. Although of course I'll ask the current owner for as much info on his figures as possible.

And thanks for the advice on the stock and fixtures. I wasn't planning to offer much at all for the stock. Apart from the usual range of candles, figures etc the remaining stock is mostly handbags which is obviously something he tried which never really sold well. If he gives me the handbags for next to nothing, I'll keep them, condense them down to a corner and half price them. If he wants proper cost price, he can take them with him as they're not something I'd order personally.

With regards to the fittings, the landlord seemed to think he'd only want a nominal fee for them. That said, he has some really nice looking chrome wire racking that the gifts look fantastic on. They look almost new, so he might want a bit more for those.

As for the lease, it has another 5 years left on it yet. And I don't think it thrives enough to pay staff, it would be more of a family business.

 

[JamesCartwright]

Have you set up a company for the gift shop already?

I'm just thinking that most online formations agents will help you set-up a bank account, they can often fast-track your application. So this might be relevant/worth thinking about if you're yet to set up the company.

Best of luck nonetheless

James

 

[GeorgeStrait]

As for the lease, it has another 5 years left on it yet. And I don't think it thrives enough to pay staff, it would be more of a family business.

There's the worry, the current owner isn't retiring he's getting out. If he was retiring he would have negotiated the lease to expire/break when he planned to retire.

I would suggest you therefore proceed with extreme caution.

 

[warnie]

There's the worry, the current owner isn't retiring he's getting out. If he was retiring he would have negotiated the lease to expire/break when he planned to retire.

I would suggest you therefore proceed with extreme caution.

What George says, plus I think your biggest hurdle will be to raise the finance, as from what you've said thats not in place.

Besides money for stock (I'd double the figure you've probabley got in mind!)you will need your 3 months rent in advance plus hefty solicitors costs. So thats a fair few grand to kick off. It also seems pretty obvious that this guy would have been struggling to make any sort of a wage so I would factor in 6 months to a years worth of money to live off into your start up costs as well.

I'll stop there but I could go on and on, but i'm scaring myself and i've been through it

Don't do anything without seeing those books!

 

[LiamC]

Hi

Thanks everyone for your advice once again.

I don't exactly see why everyone is anticipating such high startup costs though? I don't need to pay three months rent up front, as I'll be taking the rent straight from the current owner, and it's all being done through a local estate agent. The landlord owns the whole row of shops and is known ad the best in the town. I also don't see why I'd need to pay a solicitor.

As for the stock, I have some money put aside and will only need a tiny bit of help from the bank.

I'm not setting this up as a company with staff or anything. It's a small seaside gift shop just to be run by myself. I'll be operating as a sole trader.

 

[GeorgeStrait]

Hi

Thanks everyone for your advice once again.

I don't exactly see why everyone is anticipating such high startup costs though? I don't need to pay three months rent up front, as I'll be taking the rent straight from the current owner, and it's all being done through a local estate agent. The landlord owns the whole row of shops and is known ad the best in the town. I also don't see why I'd need to pay a solicitor.

As for the stock, I have some money put aside and will only need a tiny bit of help from the bank.

I'm not setting this up as a company with staff or anything. It's a small seaside gift shop just to be run by myself. I'll be operating as a sole trader.

No offence, but oh dear.

There will almost certainly be a deposit, likely 3 months, on the lease. One way or another you will have to pay that - either direct to the landlord or to the outgoing tenant as he will have paid it and require it back.

Do not do anything without a solicitor, that is just fool hardy and any contracts you sign will be fully weighted towards the landlord and cost you dearly come exit/repair/review time.

Stock costs, as Warnie says, probably double what you estimate, and as a sole trader your not buying a company so you probably won't get the credit terms the current operator has so will have to pay pro-former for at least the first orders.

Sole trader is absolutely fine though and easiest way to manage a small business.

 

[warnie]

Hi

Thanks everyone for your advice once again.

I don't exactly see why everyone is anticipating such high startup costs though?

I know I didn't either

I'm on my 3rd business now and still got caught out on my present one:redface:

It's hard as we will probabley tell you everything you don't want to hear. My biggest piece of advice which many have said on here and rings true every time, is to double your start up costs and then halve your predicted sales. If it still stacks up go for it. If the figures don't stack up then think hard and ask yourself, can I afford to lose this money?

 

[GeorgeStrait]

I know I didn't either

I'm on my 3rd business now and still got caught out on my present one:redface:

It's hard as we will probabley tell you everything you don't want to hear. My biggest piece of advice which many have said on here and rings true every time, is to double your start up costs and then halve your predicted sales. If it still stacks up go for it. If the figures don't stack up then think hard and ask yourself, can I afford to lose this money?

I'm having a love in with Warnie here!!!

I'll agree again, I even underestimated the costs of moving the business from one shop to another that was just next door.

 

[warnie]

I'm having a love in with Warnie here!!!

I'll agree again, I even underestimated the costs of moving the business from one shop to another that was just next door.

Why is it that we know what we should do but still cock it up?

Sod it I give up!

Liam have you any advice for a sweet and gift shop? :redface:

 

[thebiznizdotcom]

I think George is on the money there.
Check out how much of the lease is left. If it is'nt too long just let it finish its term then try to re-negotiate but leave it with an easy get out term.
Personally though I'd have to agree with a few of the other comments on here and be very careful. If the guy is'nt retiring and getting out then.....why?
Remeber try to run a business with your head not your heart.
Good luck in whatever you do though.
Graham
thebizniz.com

 

[GeorgeStrait]

Why is it that we know what we should do but still cock it up?

Well for me it's because I start off with sensible business head on, then as the refit progressed the "ooh I want one of those" head seemed to be on instead.

That new suspended ceiling and electric awning do look nice though, and I'm sure they were both essentials :redface:

 

[warnie]

Well for me it's because I start off with sensible business head on, then as the refit progressed the "ooh I want one of those" head seemed to be on instead.

That new suspended ceiling and electric awning do look nice though, and I'm sure they were both essentials :redface:

Electric!!!

you lazy sod

 

[GeorgeStrait]

Electric!!!

you lazy sod

It's really cool - press a button it goes out, press it again it shuts.

Yup, that novelty wore off pretty quickly I can tell you :redface:

 

[mhall]

Why is it that we know what we should do but still cock it up?

I think all men do that, it's an ego thing. Perhaps it's why women make better business start ups

 

[poundcoin]

. I wasn't planning to offer much at all for the stock. Apart from the usual range of candles, figures etc the remaining stock is mostly handbags which is obviously something he tried which never really sold well.

Probably not the crux of the matter but you ought to gain some experience in what you are selling before committing yourself .

You mention handbags but we started selling them when we had our discount store and it was a very easy market to be in .
If you go to the right suppliers , they are easy to order , arrive next day so no need for huge back up stocks and it doesn't cost much to fill a large area ( unless you are selling real top-end stuff ) and ladies like handbags !

In the good old days we used to sell candles by the gross , couldn't get enough but then that market just seemed to dwindle and latterly we sold very few candles just a few of the cheaper perfumed type in glass jars and normal household candles . The sales decline seemed to coincide when the extra duty was added to Chinese imports .

Another thing that went out of fashion for us was figurines....really difficult to sell any in the last few years !

My point is that we took a lot more on handbags than we did on candles and figurines so know your market before committing funds .

To be fair I was at the discount end of the market , in a holiday destination County but not on the coast so that trade may be different .

 

[LiamC]

Hello,

Thanks once again for the advice.

I went to meet the current owners today, had a chat with them and was shown round. Handbags turn out to be one of their best sellers infact. When I spoke to the estate agent, he didn't seem to think they did very well, but they're actually one of their best sellers.

There isn't any kind of deposit required as suggested by most people here. If I decide to take it on, I'll be introduced to the landlord (who is apparently the nicest in the area) and he'll discuss taking directly over from the current owners. He's not worried about deposits, he's happy to support businesses as much as possible in his shops (he owns the whole row).

The current owners want £5,000 for all of the fixtures and fittings (this includes till, counter, 4 bays of metal shelving, slatwalls, 10 chrome gift shelving units, 2 glass cabinets, metal racking, computer and all office equipment, full cctv system, outside awning, inside blinds and more. Plus I think there's probably room to knock him down a bit. In terms of stock, there's not loads left. Probably £1,000 cost price max. They sell seconda wrist watches which apparently sell very well for them, and he's more than happy to introduce me to the rep.

I'm seriously considering it, it's a tidy little shop. I need to act fast though, because right now there's still 3 months left of the town's busy period, and then there's Christmas.

 

[poundcoin]

I'm seriously considering it, it's a tidy little shop. I need to act fast though, because right now there's still 3 months left of the town's busy period, and then there's Christmas.

To be honest you are going to miss most of the season .
I don't know if you even have a business plan but I would imagine with the state of the high street it must be really difficult to get any sort of bank loan at present .

It used to be 50/50...... i.e if you needed £20,000 to open , you would have to find £10,000 yourself and the bank would loan £10,000 and that would have to be secured against (say) your house .

It will take weeks to OK and then you have to find suppliers who will only send first orders after they have been paid for .
Will you then have enough money to manage on for the lean months , if trade suddenly dips .

Also there was an article in this weeks news how stores are going to struggle this September after paying for Xmas stock that has to be paid for early , in order to get seasonal stock on the shelves .

It's a gamble this year how it will all pan out .

May seem hard but all in all , if I were you I would err on the side of sitting this Autumn out and getting ready to pounce next spring when we see what happens with Christmas trade .

Out of it now but after 47 years in retail I couldn't predict how it will go this year .

 

[Palms]

Go to the gift fair in October usually i think in Birmingham. It is really inspiring and you will see all the stuff that is fashionable at the minute.

In general the bigger stores buy their christmas stock in feb/march or at least start looking but you should be able to locate some decent stock now.

I think gift baskets are a great trend at the moment, new baby etc... You could hold the stock and sell seperately or offer a delivery service.

 

[GeorgeStrait]

Your going to miss the main holiday season, I really can't see the solicitors getting things done in less than a month - it's not uncommon for these things to take three months.

Aim for completion in October/November, this will give you time to get the finance sorted, contracts drawn up, stock sourced and in a fit state to start trading. Rush it and you'll be chasing your tail rather than running a smooth and professional outfit.

 

[warnie]

I think all men do that, it's an ego thing. Perhaps it's why women make better business start ups

That last sentence is just crazy talk

Go and have a strong coffee and sober up a little

 

[Nosneb]

buy stock thats commercial not what you think is looks nice

Thank you kindly for your replies so far, they've been a huge help.

For me, there haven't been any alarm bells so far, as the current owner has been running it for years with a pretty average stock range, and he has closed it for four months during the winter. So I think if I took it over with a much better product range and open all year round (it's surely worth opening during the winter, the adjoining shops don't close for the winter, there's a busy cafe next door and Christmas is a fairly busy time for the town), it should work out. Although of course I'll ask the current owner for as much info on his figures as possible.

And thanks for the advice on the stock and fixtures. I wasn't planning to offer much at all for the stock. Apart from the usual range of candles, figures etc the remaining stock is mostly handbags which is obviously something he tried which never really sold well. If he gives me the handbags for next to nothing, I'll keep them, condense them down to a corner and half price them. If he wants proper cost price, he can take them with him as they're not something I'd order personally.

With regards to the fittings, the landlord seemed to think he'd only want a nominal fee for them. That said, he has some really nice looking chrome wire racking that the gifts look fantastic on. They look almost new, so he might want a bit more for those.

As for the lease, it has another 5 years left on it yet. And I don't think it thrives enough to pay staff, it would be more of a family business.