Corner shop advice

[paaaaaaaaaa]

Hello everyone.

I'm looking for some advice in starting up running a corner shop. I have found a nice little local shop that in my eyes is in the ideal situation. The lease is pretty cheap and I know someone who has worked there so they know it's a good little earner. I'm new to the whole trade though and it will be the first time I have run a shop so I need as much advice as possible.

What are all the costs?
What questions should I be asking the agents about the lease?
What legal requirements are there?
Anyone know of good wholesale suppliers?
Any more advice.

I would love to hear the experiences from someone who has been in the same situation.

Thanks

 

[Philip Hoyle]

It's not clear from your post whether you're buying an existing going concern or seeking to re-open a shop that's closed down, nor what it's going to sell.

If it's a going concern, then you need to see their accounts for the past three years to determine whether its a "good little earner" - lots of shops have a lot of cash passing through their tills but earn little or no profits because of the overheads that the counter staff don't see. The accounts will also show you the running costs, margins, overheads, staff costs, utilities, etc etc. As a going concern, it will already have established suppliers for the products it sells.

If it's a new start up, then clearly completely different and you'll have to do a lot of research relevant to your plans. The biggest cost will be wages. Rates and power can also be susbstantial as you have lights and equipment running virtually all the time. Rent is something you will know in advance as per the lease. Motoring costs will depend on what you do and where you travel for supplies etc. No-one can really tell you any of these costs.

Re the lease, you need to know whether you're liable for all/any property repairs, you need to know about future rental increases, you need to know the length of the lease and whether you or the landlord can terminate it early. There are virtually no "givens" in a commercial lease - virtually everything is decided by what the lease says and everything is negotiable. Beware a lease that allows automatic rental increases, beware a lease that requires the tenant to repair everything at their own cost, beware a lease with no tenant early get out clause. Also, the lease will probably require the tenant to pay towards the landlords legal costs for drafting/renewing the lease and a contribution towards buildings insurance and at the very least a contribution towards property repairs and up keep. Best thing is to do some hard talking with the landlord to thrash out the detail before a lease is drawn up - far easier and cheaper for the terms to be agreed beforehand rather than trying to make changes to an existing drawn up lease.

Whatever kind of shop it is, think very carefully about opening hours. There's nothing worse than a shop not having a displayed opening hours sign or having haphazard opening hours. Be consistent and be open when you say you will be, whatever the circumstances. You need loyal customers who come regularly - they'll never come again if you disappoint them by them having a wasted journey when they expect you to be open. Make sure you're open when your customers expect you to be - i.e. peak times are lunchtimes, early morning (work & school run) and early evening (home from school/work etc). That's true for any trade but especially true for convenience style stores.

 

[gordano]

The "corner shop" business is a tough market for most sectors and locations. I have a corner shop that I lease to a tenant in Croydon (South East). The last tenant didn't even trade for a year - we gave them a 1 year break clause subject to our getting a new tenant.

You need to take great care in signing the lease, try not to put yourself down as liable for the rent, do this in the company name so that if things don't work out you lose the company and not the shirt on your back.

You need to think through your business plan, costs for the premises are simple, rent, rates, insurance and utilities plus a small amount of legal services. Your main other costs will be for stock and possible employee if you cannot cover the hours.

It is too complex to list everything here but you should start with a business plan, research the local area to see the business is viable, then take care in the terms of lease that you sign - so that you have an exit strategy.

 

[vikki1975]

Hi,

I have a convienience store which I bought 4 years ago.

My advice to anyone considering it is, think long and hard about the commitment involved, shops like these are a way of life !! When i first bought mine I was working 15 hours a day, 7 days a week. Opening at 7am and closing at 10pm. Even though I now have staff, its a big responsibility. I am an off licence aswell, so there is all the work involved with overseeing the selling of alcohol ect.

I would be wanting to find out why it closed down ?? The accounts for my business from previous owner were dismal but they had lost commitment due to the long hours and lack of freedom. Previous staff may well have seen large amounts of cash coming through the till but profits are limited, I am a payzone merchant (top ups for gas and elec, mobile phones ect) but the profits for these services work out about 0.5%. On average I take £3500 on top ups a week but only get around £40 in commision for doing so !! It costs near enough as much in bank charges for paying the cash into the bank for them......but it attracts footfall.

Take a look round some suppliers, bookers cash and carry have an online website so you can see what margins are in goods. Do remember the VAT element though.

A good shop can make money but the work involved is endless and you have to be prepared for whats involved. Im 4 years in to mine and just incorporated into a LTD company as its finally paying me the rewards but there has been times I have felt like selling up and going back working for someone else !!

 

[paaaaaaaaaa]

Thanks for the excellent advice. The plan is to reopen the convenience store shop that has been closed down. I'm not certain on the exact resaons why the shop closed in the first place yet but I will try to find that out.

Here are some details on the property.

The property is available by way of an assignment of the existing 10 year lease, with approximately 4 years remaining.

The property is sold with the benefit of any current Premises Licence.

We have a viewing tomorrow. So are their any key things to look out for or ask for?

Vikki, You say you saw the books of the previous owner will I be able to ask to see the books for the previous owner of this property?

 

[Philip Hoyle]

will I be able to ask to see the books for the previous owner of this property?

You can ask, but there is absolutely no compulsion for the previous owner to provide them, especially if there's nothing in it for them. Who are you "buying" the shop from? Are you going direct with the landlord or are you "buying" the lease from the past shop-keeper? If you're buying a reassignment from the past shop-keeper, presumably they'll be keen to do a deal so that they get off paying the rent for the next 4 years - in that case, they'd bend over backwards to be helpful - including providing their accounts! If not, then there's nothing in it for them - why should they help you at all?

The shop has closed - no doubt they tried to sell it but no-one wanted to buy it - closing down a shop is the last resort. It probably closed because it wasn't profitable. You really need to have some good ideas and plans to make it viable - working hard isn't enough - you need to be planning new product lines, far longer opening hours, and paypoint and cash machine are essential to get punters through the door - a lottery terminal is the icing on the cake. Also think about a post office counter if there isn't one close by - Post offices are still opening new offices/counters where there is a demand and you can meet the criteria.

 

[vvaannmmaann]

Take a look at the empty shops in the area.Anything that may be of interest to Tesco Express or similar operations?

 

[paaaaaaaaaa]

We will be buying the lease from the previous shop keeper. So it's up to them to sell the idea to us. I'll ask for as much detail as we can get. I also have knowledge that an offer was made before me and that it fell through and now I'm the only one showing interest. I'll have to try to find out why the first deal didn't pan out but this could defiantly work to my advantage.

Currently it looks like the legal fees will be passed onto us. Any idea what I'm looking at here? I'll see how much momentum I have and see if we can split these kind of costs though.

There is only one other shop within half a mile radius. Also this shop is right next to a popular playing field and part of the school walk route. Good points about the lottery and paypoint. I'll defiantly take that into consideration if I go ahead with the lease.