Retail Bathroom Showroom

[DDPlumbing]

Hi all,

I am just putting figures together to expand my current bathroom supply and installation business into a retail/trade outlet.

I have found a suitable unit (industrial complex) I am not sure what planning I need (A1,2,3,4,5 etc tbh. Not researched that bit yet as other units are retail already)

I have a 10 mile radius with only 1 competitor who is aiming at the opposite end of the market.

Running Costs I have thought of so far are:

wages
rental
Rates
Utilities
Insurance
Advertising
Maintenance
Phones
Current fitting overheads


I have added these all together to come up with a figure that I need to bring in just to run the business. (100k)

Have I missed anything glaringly obvious? I have run my current business for 4.5 years with an average t/o of £65k, profit being 26% (but when I say profit, its all been mine as was a sole trader until 6 months ago)


I have negotiated a 6 year lease, 1 year FOC, 3 year break. Does this sound usual or not?

I am currently working on Profit/loss and turnover projections (5 year low/mid/high)

Sorry for so many questions but when I set out in my current business it was out of necessity rather than planning (Laid off)

So I may need some help pointing in the right direction.

Many thanks

 

[davezzr]

sounds like your making a rod for your own back. you say you turnover £65k as a sole trader and make a profit,and now you will need to turnover £100K just to break even.Will your market allow you to increase your turnover in excess of 100K?
as a sole trader im guessing you did most of the work yourself and now you will need fitters for the extra work and be able to offer good runs of work. what about showroom staff? you cant run a showroom on your own and you can leave someone on their own,so you will need two people in the showroom at any one time.you will also either be in the showroom while one has a lunch break or shut up shop while the two have a break at the same time.
I know when i sold bathrooms and kitchens i couldnt afford to go big but as an alrounder i made a good living,selling,fitting. I did consider a small shop but with the increased overheads and logistics i declined to take it to the next level.

 

[DDPlumbing]

That 100k includes paying myself what I get currently. Its a massive decision, I know! I have self employed fitters lined up begging for work and plan to run the showroom myself..... whats a lunch break anyway?

Everytime I look at the figures I cringe..... I have a large market where I am, I just dont know how big a gamble it is to have a stab, as it were!

 

[GeorgeStrait]

Alarm System

 

[DDPlumbing]

Alarm System

Security, Thanks

 

[Lee Jones Jnr]

Hmmmmm.

If you are turning over £65k and taking home 26% of that then you are earning £16'900 a year - do I understand you correctly?

How big is the showroom that you are looking at? To bring in £2k a week selling bathrooms is a pretty modest target so I wouldn't feel unduly concerned about that if I were you, assuming that you have some kind of sales ability.

What have you decided to do regarding staff? Are you going to man the showroom and sub out the fitting or are you intending to hire someone to sell whilst you continue doing the installations? If it is the former I would imagine that you have not considered the cost of a member of staff who is capable of actually making sales. Cheap and good value are not the same thing when it comes to sales staff.

With regards planning permission, bathrooms are pretty easy to get around proper retail planning in most areas. Retail planning is very difficult to get for most industrial units but you can get away with trade counter status by virtue of what you will be selling.

 

[davezzr]

That 100k includes paying myself what I get currently. Its a massive decision, I know! I have self employed fitters lined up begging for work and plan to run the showroom myself..... whats a lunch break anyway?

Everytime I look at the figures I cringe..... I have a large market where I am, I just dont know how big a gamble it is to have a stab, as it were!

so your going to run the showroom on your own,what happens when you go on a sales pitch(office hours)? you lock up and any footfall while your out goes elsewhere? i know most of your sales sits will be evenings but there will be times when day sits will need to be done
maybe your looking at commision only sales rep to take on the sales or if your like me you prefer the selling so you will need staff,remembereing the two man law
I too had fitters of all trades lining up for work,until i actually needed them then they were gone and i was offering good money(some people just dont need the work i guess). And if your only taking £19000 wages whats the point? all the grief for little return.
as you say its a big decision and a lot of cash for a suck it and see approach

 

[davezzr]

Hmmmmm.

If you are turning over £65k and taking home 26% of that then you are earning £16'900 a year - do I understand you correctly?

How big is the showroom that you are looking at? To bring in £2k a week selling bathrooms is a pretty modest target so I wouldn't feel unduly concerned about that if I were you, assuming that you have some kind of sales ability.

What have you decided to do regarding staff? Are you going to man the showroom and sub out the fitting or are you intending to hire someone to sell whilst you continue doing the installations? If it is the former I would imagine that you have not considered the cost of a member of staff who is capable of actually making sales. Cheap and good value are not the same thing when it comes to sales staff.

With regards planning permission, bathrooms are pretty easy to get around proper retail planning in most areas. Retail planning is very difficult to get for most industrial units but you can get away with trade counter status by virtue of what you will be selling.

2000 mite not seem all that much to pull in a week. 2000 profit on one bathroom or 1000 each on two. that will keep one fitter working,but we are missing the competition side,myhammer,mybuilder and the like. more and more potencial punters are looking at the labour only cheap works whilst suppling their own materials. so not only will he need to be competative on fitting but supply only needs to be competative with b&q,wickes etc. not that he isnt aware of the market having been doing this for 4.5 years i wont teach him to suck eggs

 

[Lee Jones Jnr]

2000 mite not seem all that much to pull in a week. 2000 profit on one bathroom or 1000 each on two. that will keep one fitter working,but we are missing the competition side,myhammer,mybuilder and the like. more and more potencial punters are looking at the labour only cheap works whilst suppling their own materials. so not only will he need to be competative on fitting but supply only needs to be competative with b&q,wickes etc. not that he isnt aware of the market having been doing this for 4.5 years i wont teach him to suck eggs

I know how the numbers work, I sell kitchens and bathrooms. Seems odd that someone who couldn't make the business work would think they were qualified to tell someone who can how difficult or easy it is to spin £2k a week.

 

[DDPlumbing]

Yes, You are correct with the earnings.

I intend to man the showroom and sub the fitting (unless It really takes off, then i'll play it by ear)

I have 8 years retail, 2 years sales in bathrooms (on the road £1.2M month t/o) and 7 years fitting.

I can sell ice to Eskimos as the old saying goes ;-) and currently do all the sales in my business, 80% of bathroom job that I fit, I supply. I have a 76% quote conversion.

 

[DDPlumbing]

ANd as for earning 19k, Thats not all though, as the business picks up so much more of my day to day costs, without fiddling anything and runs my vehicle (double cab vans are so useful)

 

[Lee Jones Jnr]

Yes, You are correct with the earnings.

I intend to man the showroom and sub the fitting (unless It really takes off, then i'll play it by ear)

I have 8 years retail, 2 years sales in bathrooms (on the road £1.2M month t/o) and 7 years fitting.

I can sell ice to Eskimos as the old saying goes ;-) and currently do all the sales in my business, 80% of bathroom job that I fit, I supply. I have a 76% quote conversion.

I see.

In which case, assuming that you are right about your ability to close sales even if you decide not to open a retail outlet you would be well advised to pack up the business and get a job in sales - you will earn more.

 

[davezzr]

I know how the numbers work, I sell kitchens and bathrooms. Seems odd that someone who couldn't make the business work would think they were qualified to tell someone who can how difficult or easy it is to spin £2k a week.

uuuur before you get your knickers in a twist, i still sell kitchens and bathrooms buddy, as well as other interests. thank you.

 

[Lee Jones Jnr]

uuuur before you get your knickers in a twist, i still sell kitchens and bathrooms buddy, as well as other interests. thank you.

Knickers in a twist? Not me petal, I don't give any weight to anything said on here.
I assumed that you were telling the truth in this post:

"I know when i sold bathrooms and kitchens i couldnt afford to go big but as an alrounder i made a good living,selling,fitting. I did consider a small shop but with the increased overheads and logistics i declined to take it to the next level."

My apologies for not realising that you were not being truthful or accurate.

 

[davezzr]

Knickers in a twist? Not me petal, I don't give any weight to anything said on here.
I assumed that you were telling the truth in this post:

"I know when i sold bathrooms and kitchens i couldnt afford to go big but as an alrounder i made a good living,selling,fitting. I did consider a small shop but with the increased overheads and logistics i declined to take it to the next level."

My apologies for not realising that you were not being truthful or accurate.

my apologies i was refering to a few years ago when i considered the option of a small shop and the market at the time.although i do still sell and fit both kitchens and bathrooms i dont consider it a huge part of my interests although i still get work quite regularly i havnt advertised the service for atleast a year,yellow pages still working in the background.
we all three have experience in these home improvements so lets be friendly

 

[DDPlumbing]

Yes, Stop sparring in my thread

I dont want to sell for some one else, I enjoy being my own boss, It just appears that I am so close to being in need of the better trade prices a shop would get. I dont get very good trade terms due to lack of competition where I am. This increased profit margin would give me an extra 25%+ straight away. (when I used to be in shower sales I often supplied at list less 56%. whereas I currently get half that or less)

I would be running a trade supply also as there are a number of plumbing business that have to travel to get supplies from near me. So this would be a second string to my bow.

Cheers for being a sounding board.

 

[Nick Dougan]

Hi DD,

Three thoughts:

I worked with a client for some months who had a great showroom on an industrial esatate. The rent and rates was relatively low - but the footfall was non-existent, and meant that he always had to have staff manning the fort when he was out on a site. So are you chosing the location because it's cheap, or because it'll support the business?

A £65k turnover's not bad, but could you not increase it quite a lot before you invest in a showroom. Quite a number of businesses in your sector seem to manage without showrooms at all, especially if they can rely on past customers giving good testimonials.

P&L - good, but really think through the cash flow forecast!

Nick

 

[Lee Jones Jnr]

Hi DD,

Three thoughts:

I worked with a client for some months who had a great showroom on an industrial esatate. The rent and rates was relatively low - but the footfall was non-existent, and meant that he always had to have staff manning the fort when he was out on a site. So are you chosing the location because it's cheap, or because it'll support the business?

A £65k turnover's not bad, but could you not increase it quite a lot before you invest in a showroom. Quite a number of businesses in your sector seem to manage without showrooms at all, especially if they can rely on past customers giving good testimonials.

P&L - good, but really think through the cash flow forecast!

Nick

Hmmmmm.

Something like buying a new bathroom is not something that is usually done because someone happens to have wandered past a shop on a high street and decided to buy one. People will travel specifically to such a business, so whilst a highly visible location is always desirable, it is certainly not necessary in this case. There are many factors involved in choosing a location of course, but you don't seem to have grasped that a new bathroom suite is not an impulse buy and therefor footfall is not nearly as big an issue as in many other retail markets.
I am also mystified as to what footfall has to do with staff being required when the OP is not on the premises.

Your summary that £65k isn't a bad turnover is also a little confusing. Firstly, turnover is really neither here nor there. The money you make is important, the money you take is incidental. In this case we know that the OP is barely making a living, but even if we didn't know that, we would know that the very limit the OP could be making is £65k and assuming that the OP is in business to make money, one would have to assume that his ambitions were somewhat higher.

You claim to have quite a thorough knowledge of the bathroom retail industry. Your knowledge is clearly far superior to mine, would you be so kind as to furnish us with some names of the 'quite a few companies' which are trading at a level one would hope to emulate without any showroom at all?

 

[Lee Jones Jnr]

Yes, Stop sparring in my thread

I dont want to sell for some one else, I enjoy being my own boss, It just appears that I am so close to being in need of the better trade prices a shop would get. I dont get very good trade terms due to lack of competition where I am. This increased profit margin would give me an extra 25%+ straight away. (when I used to be in shower sales I often supplied at list less 56%. whereas I currently get half that or less)

I would be running a trade supply also as there are a number of plumbing business that have to travel to get supplies from near me. So this would be a second string to my bow.

Cheers for being a sounding board.

If you are not concerned with income and simply want to be your own boss then why not stay exactly as you are?

Why does the lack of competition have anything to do with the prices you can get from your suppliers? That seems a little unusual to me. Do you actually mean that you are currently a plumber using trade counters?

 

[DDPlumbing]

Yes, I use trade counters.

 

[DDPlumbing]

Doh! just going through my cash flow charts and found a large error which puts money back in my pocket!

Restored a bit of sanity.... but only a bit lol.


On the subject of location, From my research/experience people will travel to a showroom, They dont "usually" rely on passing foot traffic.

 

[MASSEY]

There must be some good profit in it there are quite a few around. Im considering getting a little shop to display kitchens in. You can advertise on the front window all the services you offer etc, on a busy road i could see it being worthwhile. Worst case if it don't work out you can shut it.

 

[ServerFactory]

May I ask what do you have in mind for sales, marketing and PR?

 

[DDPlumbing]

MArketing is what I am currently working on.

Local papers
Radio
www
Big launch day (blimp etc)
Have had some good offers from suppliers for opening month which will enable me to do good opening incentives

I currently operate with a single advert in my local community paper.

I have spoken with a few other local business about banners on their premises. Some have offered me space free, others at a good cost.

This is one area I am unsure about currently as I have no experience with it.

 

[MH1]

FWIW I see the attraction of a showroom, but doubt it will increase your profits enough to pay for the facility.

I would recommend concentrating on good quality testimonials, photgraphs and videos of previous work, all of which could be loaded onto a laptop, and spend the money on generating inquiries.

Even if you spend a lot of money on getting people to your showroom, unless you have a lot of mock ups which then requires yet more investment, space etc, you will still need to sell a design service. Half of the people who visit will simply be browsing for ideas and will leave thinking they can save money by finding someone without the overheads.

The generation of inquiries and the quality of the design service is the important factor, along with the sales ability to close the deals.

 

[MASSEY]

FWIW I see the attraction of a showroom, but doubt it will increase your profits enough to pay for the facility.

I would recommend concentrating on good quality testimonials, photgraphs and videos of previous work, all of which could be loaded onto a laptop, and spend the money on generating inquiries.

Even if you spend a lot of money on getting people to your showroom, unless you have a lot of mock ups which then requires yet more investment, space etc, you will still need to sell a design service. Half of the people who visit will simply be browsing for ideas and will leave thinking they can save money by finding someone without the overheads.

The generation of inquiries and the quality of the design service is the important factor, along with the sales ability to close the deals.

A small showroom in a fairly decent location could cost as little as 12k a year. You can get the mock ups free from your suppliers.

I wouldnt say 50% of the people that visit will think they can get it cheaper elsewhere, it's all about price, if you offer them a price they like they will use you.

 

[Lee Jones Jnr]

FWIW I see the attraction of a showroom, but doubt it will increase your profits enough to pay for the facility.

I would recommend concentrating on good quality testimonials, photgraphs and videos of previous work, all of which could be loaded onto a laptop, and spend the money on generating inquiries.

Even if you spend a lot of money on getting people to your showroom, unless you have a lot of mock ups which then requires yet more investment, space etc, you will still need to sell a design service. Half of the people who visit will simply be browsing for ideas and will leave thinking they can save money by finding someone without the overheads.

The generation of inquiries and the quality of the design service is the important factor, along with the sales ability to close the deals.

You don't understand bathroom retail I'm afraid.

It is much much easier to sell something like a bathroom suite when the customer can physically see and touch the product. Prices can be the same or lower as you can shift more product. A bathroom or kitchen is a big purchase for most people. A properly fitted showroom instills confidence in a way that a man with a van and a catalogue does not.

 

[Lee Jones Jnr]

A small showroom in a fairly decent location could cost as little as 12k a year. You can get the mock ups free from your suppliers.

I wouldnt say 50% of the people that visit will think they can get it cheaper elsewhere, it's all about price, if you offer them a price they like they will use you.

Agreed, the 50% thing is nonsense plucked from thin air.

A new start up will struggle to get free displays these days. Most suppliers will offer the OP extra discount for display sets.

Set out well around 1500 square feet would be fine.

 

[DDPlumbing]

I have used my previous contacts in the industry to negotiate quite a few free displays so far. (as an example one supplier has offered me 3 displays in return for 52.5% discount) Others are offering 80% discount for displayed items. Some are even going to fit it themselves in my pre-prepared setting.

The unit I am looking at is 1700sq ft, with a 1300sq ft Mezz. As I want to operate a trade outlet as well as showroom I feel they are best kept separate.

I Used to build showroom displays for a manufacturer all round Europe so I am not worried about that side (hardest part is choosing what to pick from what manufacturer)

Thanks again for input, Its really helping, Even if you should all be put in a MMA cage

 

[DDPlumbing]

Even if you spend a lot of money on getting people to your showroom, unless you have a lot of mock ups which then requires yet more investment, space etc, you will still need to sell a design service. Half of the people who visit will simply be browsing for ideas and will leave thinking they can save money by finding someone without the overheads.

The generation of inquiries and the quality of the design service is the important factor, along with the sales ability to close the deals.

This is one reason I plan on supplying into the trade too.

I am already familiar with the design side as I use Articad for my current business.

 

[Lee Jones Jnr]

I have used my previous contacts in the industry to negotiate quite a few free displays so far. (as an example one supplier has offered me 3 displays in return for 52.5% discount) Others are offering 80% discount for displayed items. Some are even going to fit it themselves in my pre-prepared setting.

The unit I am looking at is 1700sq ft, with a 1300sq ft Mezz. As I want to operate a trade outlet as well as showroom I feel they are best kept separate.

I Used to build showroom displays for a manufacturer all round Europe so I am not worried about that side (hardest part is choosing what to pick from what manufacturer)

Thanks again for input, Its really helping, Even if you should all be put in a MMA cage

No money in MMA petal, its a mugs game.

What market are you aiming for? Bargain hunters, high end, somewhere in the middle?

If I were guessing who you are going to use based on your %s I would say avoid the 2nd, they don't deliver on time and tell fibs about stock levels - PM me if you like.
The 1st company mainly stock glassware? Shower panels, enclosures etc?
I'll swap supplier info with you if you like.

 

[MH1]

You don't understand bathroom retail I'm afraid.

It is much much easier to sell something like a bathroom suite when the customer can physically see and touch the product. Prices can be the same or lower as you can shift more product. A bathroom or kitchen is a big purchase for most people. A properly fitted showroom instills confidence in a way that a man with a van and a catalogue does not.

I am happy to see such confidence, in my area many bathroom showrooms have closed on a very consistent basis over the last 20 year. Some will survive as in any industry and I wish anyone well, personally selling through a showroom is not in my own experience, but selling direct is, hence my observations.

The showroom will need to be manned etc adding to the costs, I imagined the cost of the final product needs to reflect that. Regarding confidence instilled, that all comes down to amny factors, poor quality staff in a showroom will instill much lower confidence than a true professional on the road.

If a showroom sells so much better I wonder why so many close?

 

[Lee Jones Jnr]

I am happy to see such confidence, in my area many bathroom showrooms have closed on a very consistent basis over the last 20 year. Some will survive as in any industry and I wish anyone well, personally selling through a showroom is not in my own experience, but selling direct is, hence my observations.

The showroom will need to be manned etc adding to the costs, I imagined the cost of the final product needs to reflect that. Regarding confidence instilled, that all comes down to amny factors, poor quality staff in a showroom will instill much lower confidence than a true professional on the road.

If a showroom sells so much better I wonder why so many close?

Thats because you haven't thought it through. You need to compare like for like petal. For example, if you personally are a good salesman and can sell with a catalogue and a smile, don't you think that you could sell more with a range of displays and POS material to show people?
A showroom alone sells what? Nothing. There are any number of failures that lead to retailers closing down, bathrooms and kitchens are affected by online sales of course, but due to the nature and significance of the cost to most people, there is a certain level of immunity as it is the kind of thing that people want to see and touch before they buy.

 

[red-source]

When you are up and running let me know, I need two bathrooms I could also supply you with a large range of far east handles/hardware too !

 

[gr9ce]

From the sidelines...
You say you are dealing within a 10 mile radius? not that large, what is the surrounding housing like? dense/sparse/newbuild/historic? social housing/rentals/monied private?

A showroom is a big step so even before selecting the location consider these things.
How far is the nearest B&Q, Homebase (who are in trouble already)/ Wickes etc
Re the lease what are the implications if you fail before the contracted term?
You say you want to operate on 2 levels..dealing with trade customers upstairs, joe public down? If on your own who do you leave to serve the other or the phone goes? Yes be nice if customers came in one at a time but not always the case.
Agreed, 'what is a lunchbreak' but do you have family? do you aspire to a holiday any decade soon? who minds the stall?
Where are your bathroom suites manufactured? can you compete against cheap imports or are you planning to sell cheap imports and what delivery leeway can you offer?
If you expand and contract out the fitting will one nightmare customer scenario kill your business dead?
Advertising... single ads dont enter the psyche many in your line advertise every week and large eye catching ads...get a quote for this NOW.
Forget radio far too expensive and untargetted.
Banners..check with local council...dont get me started re banners..
Research who in your line has recently shut up shop and why...didn't Focus sell bathrooms?

So far you have been in charge of your destiny, many new business start ups dont even pay themselves a salary for a couple of years.
Also read the retail section here thoroughly.
Will customers visit your showroom, go home check the internet and still return to you? If yes then it might be worth the stress.
If the economy continues to slide, what are people priorities? eating, heating or a shiney new bathroom?

 

[DDPlumbing]

Again, Many thanks for all the input.

I aim to head into the mid/low end sector of the market. My nearest competition is in the high end exclusive European designer sector.

I have done a bit more research and also come to the conclusion that a radio marketing plan is out of my league cost wise and its not targeted well enough for a return.

I have researched two local close downs, One was retirement, The other was bought by a competitor and closed, then his earlier premises expanded!

I have visited around 150 bathroom shops (minimum) over the last few years and tried to get as much information as I could. I am currently using my old sales contacts to glean a bit more info on whats selling and where.
It would appear that the high end is very stable, and always has been, but that is sewn up, if your face doesn't fit, or more, if you wont give us ALL the floor space.... go away! (V&B, Jacuzzi, etc)

Still researching, Still looking at leases, Still building business plan.

 

[johnbones]

This is an interesting read as im currently looking to-do the same, however with one of the higher end brands. Id also be looking to supply trade/contract sales as another string to my bow.

Just to let you know the high end isn't stable at all, its still fluctuates massively and I tend to find that the showrooms in more affluent areas seem steady however there are new promotions being launched all the time to try and generate sales in other struggling areas.

The premium brands do demand certain requirements to be a displayist, ie discounts limited, no online sales, percentage floorspace however these are to protect you and the brand.

You wouldnt except to walk into a Mercedes dealership and find a small ford section at the back it would retract from the brand.

At the end of the day people demand a good price but ultimately service is key also, nothing beats a personal touch and building up a relationship with the client.

Once this is established, you have provided what you said - if there are any niggles with anything they get sorted pronto the customer should walk away very happy. This then should lead onto a very powerful and free advertising tool for you - word of mouth!

On your design side, look into a program called Virtual worlds.

 

[DDPlumbing]

Cheers JB, Currently looking into Virtual Worlds and Articads offerings (BathCad and Bath Cad Lite)

 

[LicensedToTrade]

The industry standard for professional bathroom and kitchen design is Planit Fusion.

 

[Lee Jones Jnr]

The industry standard for professional bathroom and kitchen design is Planit Fusion.

Nope. That is just one of many, it isn't 'the standard'.