Opening a 2nd shop ... is it worth it?

[daisy13]

Hi all,

After running my B&M gift shop for just over three years I'm starting to think about opening a second shop. Is this complete madness or should I invest my time in increasing sales in my existing shop? Has anyone out there opened a second shop and regretted it? What are the pitfalls that people have come across?

All advice welcome.

Thanks in advance.

 

[Billmccallum]

Will the benefits outweigh the risks????

How much will you invest in the new shop?

How much can you save by having two shops?

How much profit will it generate?

Usually the numbers will speak for themselves, in general practice, having two units means you can reduce costs by buying larger quantities, spreading management across both units, etc

 

[Root 66 Woodshop]

Another aspect to look out for is the fact that you'll have to have another staff member that you trust to run the second shop.

We use to have two shops, the second was left to the "then" Manager who either got bored of it or simply couldn't be bothered to work. Ended up ruining the business in the other town and it's reputation. It took my Director an additional 2-3 years to get that reputation back.

 

[David1962]

Usually the numbers will speak for themselves, in general practice, having two units means you can reduce costs by buying larger quantities, spreading management across both units, etc

Have to disagree with that. Two shops won't generally increase your spending enough to attract buying discounts. Management costs will increase, I presume you are managing the shop at present, as you will need at the very least a supervisor in the 2nd unit and at least a couple of part time staff as you won't be there to cover holidays, sick etc (actually it would be better to put a supervisor/manager in your first shop so you can be in the new unit as much as possible).

Also keep in mind you will lose you small business rates relieve on shop one, this is not an insignificant figure.

Basically two shops don't mean double the profit or anywhere near. And there is the risk, especially in the current climate, that a new shop will fail and drag shop one down with it.

Billmccallum, out of interest what are the "etc" savings you are thinking off?Because for the life of me I can't think of one genuine one. Unless they are close and can share broadband and the kettle.

 

[mhall]

Some suppliers might give you better deals and you do have slightly more say and clout with them. If you opened the other shop as a seperate Limited Company you would still retain any Business Rates benefits.

But those benefits are far outweighed by the hassles that the staff will bring you. The price gun that you have used in your shop for many years will be trashed in weeks, as will anything else you supply. They will take advantage, ring in sick and not check deliveries off properly. They will not inform you of damages, they will leave all the lights running, they will double your heating bill in winter whilst they just sit there instead of working to keep themselves warm. They will not treat the customer the way you want them to be treated. It is YOUR dream, not theirs and you can't expect anything else from them.

Once you get the staff you want, it becomes easier, but you still increase your workload by spending time checking and re-checking everything that happens. You will need a totally new set of skills.

It's hard work, much harder than you think - but get it right and it's worth it.

 

[mitch@volume]

How much of your current business success is you? your time, effort, skills, knowledge and passion, because after all its your business.

If the current store runs well but its all because of you, then you might find it hard/not a successful opening another store. you cant be in two place at once.

could you leave your current store for a month only doing the main management from afar and a few visits here and there?

 

[warnie]

We had two running together, but only for 5 months. I would, and do want to open up another, but when and only when we have got everything we can out of this one. I also want to get the formula spot on, so it can be repeated easily in any location.

Cost is a big issue as there's no way I'll have major start up costs hanging over me again. Next month we make our final payment on our initial business loan, which we have aggressively paid off, probably at the cost of growing the business, but it's nearly done now so we'll reap the benefits of the extra cash each month to really kick on.

So to answer the question then yes I do believe it can be worth it but only if your truly ready and have the cash in the business, so it will not affect your current shop. Also it's a given that it's only worth it for the right location. As for staffing it, well we had family who worked for us and we had no problems. If I was employing from the outside I would worry that much that it would kill it for me as I struggle to fully trust people. I have learned many tricks in my time in sales as an employee, and presume everyone else knows the same

Good luck with whatever you decide.

 

[Philip Hoyle]

All I can say is that all the clients I've had who've had one shop and then opened another have regretted it, lost a lot of money, and ended up shutting one or both within the year.

If you're running your own shop, you have to have a different mindset to open another - i.e. the entreprenneurial mindset, and sadly, most sole traders do far too much themselves, don't invest enough to get decent staff - they work "in the business" rather than "on the business". They do too much themselves, which is just about doable for one shop, but it's impossible to spread yourself over two or more shops, made even worse when inevitably your staff phone in sick.

The biggest problem is not taking on proper managerial staff for both shops - yes, both, so that the owner can properly overview both shops and cover when one manager is sick or on holiday. Ideally, a manager should be appointed for the existing shop many months ahead of opening the second so that they can bed in properly and potentially be replaced if not up to standard.

Sadly, most small shops can't afford a decent manager, and that problem is only magnified with a second shop. With one shop, the owner can act in dual role of owner and manager, but with a second shop, they can't and something has to give.

 

[warnie]

All I can say is that all the clients I've had who've had one shop and then opened another have regretted it, lost a lot of money, and ended up shutting one or both within the year.

If you're running your own shop, you have to have a different mindset to open another - i.e. the entreprenneurial mindset, and sadly, most sole traders do far too much themselves, don't invest enough to get decent staff - they work "in the business" rather than "on the business". They do too much themselves, which is just about doable for one shop, but it's impossible to spread yourself over two or more shops, made even worse when inevitably your staff phone in sick.

The biggest problem is not taking on proper managerial staff for both shops - yes, both, so that the owner can properly overview both shops and cover when one manager is sick or on holiday. Ideally, a manager should be appointed for the existing shop many months ahead of opening the second so that they can bed in properly and potentially be replaced if not up to standard.

Sadly, most small shops can't afford a decent manager, and that problem is only magnified with a second shop. With one shop, the owner can act in dual role of owner and manager, but with a second shop, they can't and something has to give.

Makes a lot of sense. The only reason we had two or are thinking about another is down to the fact I run it with my sister. So we would have/did have one of us concentrating on a shop each. She does the gift side of things I do the buying. We work well together in our own little way, so for us it's little easier.

 

[groovyjon]

But those benefits are far outweighed by the hassles that the staff will bring you. The price gun that you have used in your shop for many years will be trashed in weeks, as will anything else you supply. They will take advantage, ring in sick and not check deliveries off properly. They will not inform you of damages, they will leave all the lights running, they will double your heating bill in winter whilst they just sit there instead of working to keep themselves warm. They will not treat the customer the way you want them to be treated. It is YOUR dream, not theirs and you can't expect anything else from them.

Not to mention theft. Those one or two items of a delivery that don't get added to stock and walk out the door. The "refunds" and "discounts" to friends. The stock that is unaccountably no longer on the shelf and must have been "shoplifted". The shortages in the till when cashing up.

Getting the right staff will be absolutely crucial to the success of the shop.

 

[Talay]

If your current shop is your job then the probable answer is no, as you can't be in two places at one time. If however, you own a shop and have it managed by staff, then you have moved on from a hands on job to management of resources and in this case, adding extra outlets should not be that difficult.

If you haven't ironed how to avoid the pitfalls mentioned in previous posts, then you'll need to do so before expanding.

 

[daisy13]

Thanks everyone. Food for thought.

My main stumbling block to setting up a second shop is staffing, getting the right people is crucial.

Thanks for the heads up re Business Rates and setting up a separate Limited company, that I did not know.

 

[rambofen044]

before yo could start that make sure you have right man, who is trust worthy and who can deal with patience in any conditions. No matter how many shop u open, if have the right product and right people it's always going to work...
Good luck..

 

[DenisAd]

I don't think it's a bad idea. You have to be aware that you can't be everywhere, so hire a manager for one of them could be a good help.

Good luck!