Need Advice on How to grow my Small business

[JONAZAX1717]

Hi UK business forum, I am a new member and looking for Some advice. So any Wise words would be good.


I Run a Small Bespoke Sports Store, Currently All online. After taking a risky decision and quitting my graduate job, (just before lockdown 1.0) to pursue this business full time which i had started part-time at university. Despite the rough year of last year where most sports were halted. Since September 2020, and despite Lockdown 2.0 which may be affected for maybe a month of Sales, Revenue has doubled this year, and i am on track to do 130/140k by September 2021. I run my business from my Flat and am very fortunate that my parents have a garage that I use for storage for Stock for free. My business Model means I carry very little stock, as most stuff is bespoke made to the customer so it comes from the manufacturer, i don't make anything, I outsource everything, that's why I can work from home, which has great tax-deductible benefits.


However, the reason for the post is that I have reached a crossroads on my journey. The council has built new workshops at very affordable prices (288£ a month). This Means I could then move storage there, but also create a showroom where customers could “try before they buy” from the surrounding area, however, this would require stock in excess of 10k + ( which i am happy to invest) , but it doesn't fit my business model, i have no doubt I will need to invest in storage space at some space. By the Time you add rent, stock insurance it's probably 400£+ a month plus which isn't a lot, but just doesn't fit my business model, however, i want to continue to grow the business and feel this would add revenue through the showroom and give me a bit of space to grow.


My question is what would you recommend or do yourself continue to grow with the current business model, no overheads, no massive risk, good margins or invest in the showroom, more risk but more rewards with regards to scaling business, however, the sport i work in is seasonal so i have months where I sell very little, and months where its crazy business. I like being not tied to any contracts and working from my flat is great, but I miss human interaction and feel my brand goes under the radar so lots of competitors have retail space that you can visit.

I have the Aim of reaching 250k in the Next 5 years.


Any advice would be great?


Cheers Jon

 

[MarkOnline]

Well done on what you have achieved so far. Its difficult, without knowing where your potential for more margin lies, to offer anything specific.
Your 5 year T/O target looks to be low, maybe aim higher. Look for areas in your business where you can squeeze more percentage margin out of what you do if you can increase your nett margins then the cost of adding turnover doesnt look as daunting.
Good luck

 

[WaveJumper]

Welcome to the UKBF and well done on getting where you are now. Cash is probably king at the moment so the more you can keep your overheads down the better. It’s not just the cost of the unit don’t forget heating, lighting, insurance and even internet costs the latter will be a business connection probably a lot more than you’re paying at home. If you could guarantee a walk-in trade that would cover all your costs maybe, but I would think twice before committing. Best of luck with your venture

 

[Mark T Jones]

I'm a huge fan of cashflow projections - not for the 'numbers in boxes' aspect, but because they are a fantastic tool to challenge and juggle all of your variables.

The cost of moving - including business interruption - is nearly always higher than anticipated - whist the mid-term effect might be good, that is no use if you run out of cash in month 2!

 

[MBE2017]

Only the OP can decide what he is happy with but I would throw my 2p into the mix.

I would consider taking the unit for storage, but forget the showroom side. That gives your parents the garage back, you get your flat back, and keep concentrating with online sales. You have done very well so far, but I never regretted getting my home and family space back to it’s true purpose.

As Mark suggests above, run the figures to help make a decision.

 

[japancool]

And don't forget, if you had a showroom, you need public liability insurance.

I'm in the same position, and if units were available at that price, I'd snap one up straight away.

 

[JEREMY HAWKE]

Only the OP can decide what he is happy with but I would throw my 2p into the mix.

I would consider taking the unit for storage, but forget the showroom side. That gives your parents the garage back, you get your flat back, and keep concentrating with online sales. You have done very well so far, but I never regretted getting my home and family space back to it’s true purpose.

As Mark suggests above, run the figures to help make a decision.

Exactly what I thinking too !
You have done really well Jon
I would just consider just a basic storage unit to control the cost for a while
What sort of products are you selling

 

[SillyBill]

Crossroads most one man band enterprises will typically have to consider. Sure you will do but do your sums and do them again. You could easily find you hit your £250k and make exactly what you make now given your cost base will shoot up to swallow the increased turnover. I agree with MarkOnline if you're at at £140k now, £250k with the potential development you are mooting is pretty unambitious IMO. I'd personally need to be convincing myself there was more than £20k/year growth on the table to bother risking a fairly comfortable set-up (presuming you are making a decent living with low aggravation, low obligations). Is the juice worth the squeeze? It ought to be.

 

[patientlady]

My initial thoughts are do you have any intention of moving from your flat?
If so you could pay the £400 per month towards a mortgage and perhaps get your own garage rather than pay a landlord ...

 

[cjd]

Really well done!

What is your gross margin on your current sales?

Do not spend anything that you don't actually have to, you're doing fine - really fine! - don't make things more complicated and expensive. More storage space when you have to but not before.

Your instinct is to stick to your current business model and I think you're right. I think I'd be focussing my attention on how to fill the seasonal gaps - seasonal businesses are a problem.

And forget 5 year plans; nobody is ever in the second year of a 5 year plan.

 

[Lucan Unlordly]

Is this for a niche sport, a particular product within a niche sport or a more general sports related product?

 

[Socio South West]

Its a fairly simple equation... You have to add £288 plus costs of premises to your monthly margin to stand still financially.
Thus at 50% margin you need probably £800 worth of additional sales per month to carry that cost... maybe a bit more, depending on the bills.

I would share others opinion that you have done well to date, but your five year target is not very ambitious. It's a big step to move a business into a location away from 'Bank of Dad' but it's a necessary step to grow the business: There are intangible benefits to getting the business out of your bedroom and garage that you won't realise until its not there any longer.

My other piece of advice is not to burden yourself with a long or complex lease: These sound like Council starter units so are hopefully easy in/easy out.

 

[Southerna]

We started our business from home, similar to you, used parent's garage to store stock until we moved out to a small unit after 18 months. Was a good decision for us - that was some 20 years ago and we've grown year on year since.

However, I'd argue you might be better not having a showroom for 'try before you buy' and instead stick to mail order only. If you have 5 customers in the shop to try out kit/products/equipment maybe 2 will buy (at a guess) - work out how much time you've spent servicing those 5 to get the 2 sales, then add the square footage costs of a showroom/shop. You'd likely be better investing that time building your brand online (forums, blogs etc) or website work.

Buying stock is a good idea especially if you get a better discount from your supplier for buying in bulk and if your insurance covers the extra.

Just a thought.

Well done getting this far!

 

[FromWorkerToOwner]

I think you've done great and even more great to come on here and ask people for their opinion what you should do. I myself built some income selling items from home and ended up going into a small unit where I expanded slightly.

I covered the costs of my rent and bills easily but as you said your business model is only seasonal. Depending on your expenses, that will definitely be a problem if somehow, your sales just drop and stays low throughout the year. This could happen quickly if you do nothing to increase sales or if competition dips in.

I am currently in a position where my business is losing sales rapidly and it's getting difficult to figure out what's the best step for my career. Eventually, I'm going to think of something different for the meantime and it's not a good position to be in. It does however, force you to become more creative and determined to fix it if you see it possible. If you can't keep sales up year in year out, you will run into problems eventually.

You need to be sure you can afford the added costs and make sure you have a plan to scale bigger and build more relationships with other businesses/customers.

In the meantime, I would say the most important thing for you right now is to stay where you are, keep rolling in the money and save the money - don't spend recklessly like I did whenever I made profits. I tried to expand into more items and didn't care about the costs because I was desperate to increase sales. What happens? You make low or no sales through those items and lose precious capital.

If you're planning to inject a lot of cash into another potential idea within the business, try to think of other ways where you can decrease the required capital and think of ways where you can increase traffic without spending so much £.


Until you have a very clear and straight forward plan (WHICH YOU MUST AND WILL EXECUTE) on how you will scale without wasting any time throughout the year, stay at home and keep what is going good for now. That is what I would do personally after 5-6 years selling online wasting nearly all my profits on failed projects, ideas, products that nobody wanted, etc.

 

[Stuart_Walker]

That's really good performance so far.

So as an ex-retailer what I would say is that you need to be aware how expensive having physical premises is. You always underestimate the costs and over estimate the benefits.

You also need to be aware that opening a showroom will tie either you, or a full-time member of staff to the premises, even if the customers aren't visiting in the depths of winter!

From a strategic pov i'd say you are doing really well and need to think more about scaling your current business model. You need to sit down and have a good think about what you want in the next 3-5 years.

Are you happy just being a one-man-band? Do you have aspirations of growing the business to provide £X amount of income? Do you want to exit the business through sale in the future?

Only when you understand where you are going can you really answer the question of how to get there.

 

[japancool]

When I had a premises, it was mainly used to store stock and for order fulfilment.

However, I also set it up as a "showroom" where customers could come and browse the stuff on the shelves. Visits were by appointment only, so we didn't have to have staff in there full time.

It worked for us, because we were more or less the only place in the country where people could do that, but it may not a suitable strategy for you.

But yes, as everyone has said - a physical premises is expensive. Think carefully before you decide to take the plunge.

 

[Washington]

As mentioned by many above, getting premises can be expensive and can tie you to it with associated costs

If you need more interaction, are there any business hubs near you where you can work from with like minded people ? This could give you added inspiration if you are with like minded people

 

[Wealth Agofure]

I just recently started a merch business I design all kinds of merchandise

 

[kjay]

Great work so far,

I’d stay put as long as you can as it can be expensive renting and you can get tied in to 3-5 years, always agree a break clause in your lease so you can try it out. Premises does mean more costs but it does allow you to grow and hold stock which means that you can also drive your costs down as you can buy in bulk. Depending on what you’re selling I think your insurance costs maybe high we hold tonnes of clothing stock and didnt pay anything near £400 when we were smaller in a 500sqft unit. I’m not sure if customers in premises are the way forward our business is purely online our returns rate is 5% and it means that we can open and close when we want and not have to worry about customers coming in.

1) stat where you are to keep costs down until you absolutely have to move. If you’re not holding too much stock all year then definitely leave it.
2) cost of premises rent, insurance, public liability, employers liability, rates (maybe), lease length, rate reviews, fitting out the shop, WiFi, landline, fixtures and fittings, fire alarm and extinguisher, fire points, health and safety, risk assessments especially if opening to public (if it’s just you then it’s up to you) gas and electricity these places get cold as insulation isn’t great so it’s costly to keep them warm and lit, water, kitchen, W/c unless it comes fully fitted.

3) customers buy in to the experience and convenience, it’s much cheaper to pay for postage and have an item shipped then it is to visit and pay for parking etc, but the biggest factor is your personal touch which represents your brand. It can be great or bad face to face it via the internet and that’s the most important.

4) if your gonna grow to that 250k target your gonna have to move purely for stock handling it’s hard to visuallise how much space you need and can be very costly to you if you can’t access your stock and organise it easily so maybe it is worth the move in the long run and you’ll just have to absorb some of the cost now. To grow you have to scale everything up and when you have a business like yours you will need staff at some point to shift that amount of stock. You will get to a point where you’re just working in your business and not on it so won’t grow as much and at that point youll need to recruit.

best of luck.
K

 

[The Byre]

Here's a thought for all to ponder - a business is an organic human manifestation. It is an organism that moves and breaths. Small businesses are like bumblebee nests of just a handful of bees. Large businesses are like giant anthills.

And like any organism, they either shrink or grow. You decide!

 

[HR Generalistt]

Hire great talents to grow your business. Besides that, eliminate manual processes (especially HR) so that you'll have more time to focus on growing your business, networking etc.

 

[Lucan Unlordly]

Another spoof post. Joined on June 18th, made one post on June 18th ......never to be seen again.

Who's writing these Ozzy?

 

[Rob Barry]

Hey Jon,

Congratulations on building a successful start-up!

It really depends on what you want out of the business at this moment in time - i.e. if you want to generate a income for yourself that's steady and reliable then keep doing what you're doing, if you want to begin building a successful business empire then take on the investment whilst being aware of the risks.

Personally, I would keep doing what you are doing right now and try and save much cash as you can over the next few years so you have a much better chance of surviving the times when orders are low when you are ready to take the business to the next level.

Best of luck!
Rob

Hi UK business forum, I am a new member and looking for Some advice. So any Wise words would be good.


I Run a Small Bespoke Sports Store, Currently All online. After taking a risky decision and quitting my graduate job, (just before lockdown 1.0) to pursue this business full time which i had started part-time at university. Despite the rough year of last year where most sports were halted. Since September 2020, and despite Lockdown 2.0 which may be affected for maybe a month of Sales, Revenue has doubled this year, and i am on track to do 130/140k by September 2021. I run my business from my Flat and am very fortunate that my parents have a garage that I use for storage for Stock for free. My business Model means I carry very little stock, as most stuff is bespoke made to the customer so it comes from the manufacturer, i don't make anything, I outsource everything, that's why I can work from home, which has great tax-deductible benefits.


However, the reason for the post is that I have reached a crossroads on my journey. The council has built new workshops at very affordable prices (288£ a month). This Means I could then move storage there, but also create a showroom where customers could “try before they buy” from the surrounding area, however, this would require stock in excess of 10k + ( which i am happy to invest) , but it doesn't fit my business model, i have no doubt I will need to invest in storage space at some space. By the Time you add rent, stock insurance it's probably 400£+ a month plus which isn't a lot, but just doesn't fit my business model, however, i want to continue to grow the business and feel this would add revenue through the showroom and give me a bit of space to grow.


My question is what would you recommend or do yourself continue to grow with the current business model, no overheads, no massive risk, good margins or invest in the showroom, more risk but more rewards with regards to scaling business, however, the sport i work in is seasonal so i have months where I sell very little, and months where its crazy business. I like being not tied to any contracts and working from my flat is great, but I miss human interaction and feel my brand goes under the radar so lots of competitors have retail space that you can visit.

I have the Aim of reaching 250k in the Next 5 years.


Any advice would be great?


Cheers Jon

 

[Sparetoolparts]

I'm in the same boat, I'm in a seasonable market place, and everything is mail-order. When Covid struck, my wife didn't want any outside materials in the house unless it was cleaned. So for a quick turn around I got a very small unit to simply give me somewhere to pack my orders. 12 months later I'm glad I got this, as it gives me room to get away from the house and room for stock.

It had become hard to store away 2000+ padded envelops in my attic at home. But I will say my rent is very cheap and it isn't open to the public. You could have a virtual showroom and host live Whatsapp/Zoom video calls so your customers could see your products up close without the need to travel and be USP

 

[TeaRoomLady]

I'm reading Company of One by Paul Jarvis and it's proving an interesting read. It's hardwired into us to automatically expand and get bigger; this book suggests otherwise.

 

[ranjiths]

Considering a bespoke sports business, and the revenue figures you have mentioned, along with the fact that you're running completely from home, your business is doing good.

Everyone wants to shift to better from a good state, and that's fine. But this might require a complete audit of expenses that you might be facing while shifting it to the council workshop.

Here are a few checkpoints you shall go for

The total cost of shifting to the new physical premises includes premises rent, maintenance, electricity, designing costs, safety equipment, phone and wifi bills, sales methods, staff, and assets for procurement and sales control.

'try before you buy' kind of showroom could cost you with time issues, if you don't have enough staff to take care. Beware of the consequences of the sales drop.

Based on the estimation from point 1, review your sales target and get an estimate of sales and savings that you can raise based on the previous month's experiences.


You need to get out and have a physical store, no doubt in that, but opt for it now only if you have Plan-B and Plan-C for better sales.


What else can you do?

Have a marketing and branding strategy added to your expenses and continue the same way for one more year and generate extra revenue which can cover up your risks of going and establishing out.

Good luck man!

 

[JONAZAX1717]

Hi everybody, Jon here who made the post. Thank you so much for all the responses and advice, I had completely forgot i made this post in June, and have been reading through it recently, cant thank the people enough who have taken some time to provide me with some advice so thanks , feel free to ask any more questions about the business ill do my best to answer them.

UPDATE
i have decided to stay online and focus on growing the business through its current business model the low overheads and the freedom to do what I want when I want has become addictive. I am aiming to hit between 150k & 175k this year , I will let you know how i get on, the more i go down the high street the more i realise , retail isn't worth its price, as I think most do, i am focusing on scaling the website with traffic to then convert into sales, so my strategy is still low overheads, try and scale revenue thus making larger gross profit , e.g november i did 9.5k in sales , and my overheads where roughly 250£ so i think im very fortunate but have dreams to grow it , so any advice, ps i will respond this time.

 

[Lucan Unlordly]

Welcome back

 

[The Byre]

My question is what would you recommend or do yourself continue to grow with the current business model,

You could always do what I did - marry someone who had been to business school and had industrial admin and buying experience.

I can see the small-ad now -

WANTED - small, dark girl, business grad preferred, poss industrial exp. Outlook - bookkeeping, stock contr. Exchanging body fluids.

Well, it worked for me!

 

[sandcress]

It seems like you're in the early stages of your business, and being a one man band, perhaps it would be a smarter move to not take this opportunity as it means multiple changes to your current business model that may expose you.

This opportunity could be a great investment for your business. I would advise to keep strengthening your current business model or speak to a consultant that can strategically weigh up the pros and cons of this new opportunity if you want to know for sure.