Eye opening breakdown, for the revenue £280k to achieve minimum wage earnings for the owner, that requires taking over £5000 per week, £900 per day for a 6-day opening week. Simply averaged over the whole year so there will be the greater sales weighted in Q3 & Q4 if a gifting retailer, however that would require some amazingly big sales days to account for slow summer days. I just can’t see £900 being achievable for most of the shops in my small town. Will be thinking differently next time I’m browsing local shops, thanks for a thought provoking article.
What a great article, Ian. I’ve spent a great deal of my retail career opening shops and indeed, starting retail channels from scratch for online retailers (The White Company and Pure Collection being two examples). Getting the numbers to stack up before doing anything was tough and I’m talking about at least 20 and 10yrs ago respectively when we were starting out in those businesses. I remember trawling round potential towns, coming back with details of sites that I thought would suit us perfectly only to find that when we ran the numbers through our feasibility model (a spreadsheet guarded by the Finance Director!) the computer said ‘No’ far more times than ‘Yes’.
In today’s retail world it’s even harder but we persevere (thankfully) and I’m pleased to see small retailers still doing exactly that - one of them being Naturalmat - a wonderful mattress and bed business based in Devon - who I had the privilege of helping open their first showroom in the north (Knutsford) last summer. They did their due diligence, adopted a model that mitigates some of the risk you cite in your piece, and, I understand, are doing well. Long may that continue for them and for others who are taking their own leap of faith. High streets shouldn’t just be a full of retailers with deep pockets - what a boring high street that would be!
Excellent piece Ian. It pretty much matches the numbers we were working with on our gifting business. The only numbers missing I can think of would be
* bank costs: Servicing any borrowing and of course charges for credit/ debit cards. The latter could be as high as 1% of vatable turnover.
* If you are in any kind of shopping centre there will be service charges, which could be high if it’s indoors.
* Setting up a website. Probably about £2k, but remember that the margin for online sales will be a lot lower if you take into account the labour cost and delivery.
It’s highly unlikely you’ll find a full time member of staff in small towns. We never could and part time staff are generally restricted in when they can/ want to work.
And the elephant in the room is the lease: you are on the hook for the whole term. You may have a break clause, but you will probably be writing off your fit out cost unrecouped.
Eye opening breakdown, for the revenue £280k to achieve minimum wage earnings for the owner, that requires taking over £5000 per week, £900 per day for a 6-day opening week. Simply averaged over the whole year so there will be the greater sales weighted in Q3 & Q4 if a gifting retailer, however that would require some amazingly big sales days to account for slow summer days. I just can’t see £900 being achievable for most of the shops in my small town. Will be thinking differently next time I’m browsing local shops, thanks for a thought provoking article.
Yes, the numbers are scary when you unpack them like that, aren't they?
What a great article, Ian. I’ve spent a great deal of my retail career opening shops and indeed, starting retail channels from scratch for online retailers (The White Company and Pure Collection being two examples). Getting the numbers to stack up before doing anything was tough and I’m talking about at least 20 and 10yrs ago respectively when we were starting out in those businesses. I remember trawling round potential towns, coming back with details of sites that I thought would suit us perfectly only to find that when we ran the numbers through our feasibility model (a spreadsheet guarded by the Finance Director!) the computer said ‘No’ far more times than ‘Yes’.
In today’s retail world it’s even harder but we persevere (thankfully) and I’m pleased to see small retailers still doing exactly that - one of them being Naturalmat - a wonderful mattress and bed business based in Devon - who I had the privilege of helping open their first showroom in the north (Knutsford) last summer. They did their due diligence, adopted a model that mitigates some of the risk you cite in your piece, and, I understand, are doing well. Long may that continue for them and for others who are taking their own leap of faith. High streets shouldn’t just be a full of retailers with deep pockets - what a boring high street that would be!
Thanks Ingrid, I appreciate the feedback and your personal experiences. Good to see a mattress and bed business expanding, too!!
Excellent piece Ian. It pretty much matches the numbers we were working with on our gifting business. The only numbers missing I can think of would be
* bank costs: Servicing any borrowing and of course charges for credit/ debit cards. The latter could be as high as 1% of vatable turnover.
* If you are in any kind of shopping centre there will be service charges, which could be high if it’s indoors.
* Setting up a website. Probably about £2k, but remember that the margin for online sales will be a lot lower if you take into account the labour cost and delivery.
It’s highly unlikely you’ll find a full time member of staff in small towns. We never could and part time staff are generally restricted in when they can/ want to work.
And the elephant in the room is the lease: you are on the hook for the whole term. You may have a break clause, but you will probably be writing off your fit out cost unrecouped.
Thanks for that - those are some really interesting additional points, I hadn't realised it was so hard to get full time staff in a small town.