Page 1 of 2 12 LastLast
Results 1 to 10 of 15

Thread: Expand or Close???? Consignment Shop

  1. #1
    Member Array
    Join Date
    Jul 2010
    Posts
    9

    Default Expand or Close???? Consignment Shop

    Haven't posted on here in a while but here it goes again.


    My wife and I are 23yr old entrepreneurs.

    My passion is real estate selling/investing. The wife hates dealing with the lack of structure, the stress, and chaos of being a realtor.


    My dad handed off a failing Brokerage that he opened in 2008 before the bubble burst. Since taking control we have cut cost dramatically. The real estate business is about as streamlined as humanly possible.


    During the process of cutting cost we eliminated a 120K annual lease (WTF he was thinking I don't know) and purchased a strip mall that is now cash flowing approximately 36K per year. (It was easy going behind my dad and cutting cost lol)


    The real estate office is just paying it's way and allowing me to retain 100% of my commission, and find great investment opportunities. (Not enough money to pay another salary)


    When we first purchased our mall, the previous owner was doing a horrible job managing it. (50% vacant)

    We didn't figure it would fill up quickly so my wife decided to open a consignment shop in one of the vacant units.

    Going into it there were known CONS
    1) Small space (800 sq/ft)
    2) Not a tremendous amount of traffic (more service oriented than retail)
    3) No way to estimate demand


    The PROS were obvious
    1) No binding lease
    2) Little startup cost
    3) Brought some life to the building (People don't want to lease in a dead mall)



    6 Months into the Consignment Venture and we are at a cross road.
    1) Building is now at max capacity and the joining tenant is wanting to expand her salon.
    2) The store has been well received, but the revenue just isn't there in our current location.
    3) The store is just too small. We need at least 1500 sq/ft


    We are either going to shut the door and lease the space to the tenant next door or go all out and open up in one of the seldom available spaces in the Mega mall.


    The store in it's current location usually has sales averaging from $150-300 per day. Profit is 50% (Not counting lease 650month, utilities, phone, tags etc)..

    In other words it isn't making crap today. My wife is basically working for sub minimum wage when all things are considered. But she likes the work and wants to succeed, the money is a goal, but not a necessity at this time.

    Here are the numbers on the space we are looking at...

    1,700 sq/ft
    $2,000 per month including utilities

    Due to mall policy we will have to be open 7days a week 10-9
    At least one worker will have to be hired to work afternoons (5-9) 4hr x 8= 32x30=660 per month.


    We will be looking at 3K per month in fixed cost. My wife would like to make 3,000 per month for her time.

    Gross income would need to be about 15K per month. I would say that is about minimum considering my wife isn't going to want to work 7 days a week for the rest of her life. (more help will be needed). 20K would probably be a long term goal.


    That works out to 500 bucks a day in total sales. It seems that by doubling the store space, doubling the hours of operation, and quadrupling the foot traffic that this would be a obtainable goal..


    It's just a bit of gamble being tied down to a lease (Even though it is only 6 months).

    It just seems like this may be our only opportunity to try this business venture for real. Space in the mall doesn't open up often, and we already have a very devoted following of customers..


    Just looking for some pointers from people who have worked in the mall retail scene, or who have been in the consignment business... Also just wanted to get it all out of my head and onto paper.....

    Thanks for any guidance, support, or constructive criticisim!

  2. Web videos for your business starting at only $109
  3. #2
    Post Impressionist Array vangogh's Avatar
    Join Date
    Aug 2008
    Location
    Boulder, Colorado
    Posts
    13,631

    Default

    I don't have experience with this so can't offer pointers and take what I say with a grain of salt.

    If I'm hearing you right the reward seems greater than the risk. It doesn't sound like money is an issue and you can afford to take a chance on the store. Given the revenue the store is taking in at it's current location $500 a day seems reasonable as a goal. Yeah a lease is a commitment, but 6 months isn't a long time. At $3k a month absolute worst case is being out $18k, but realistically even if things don't go well you're going to bring something in.

    $150/day for 180 x 50% = $13,500

    which is an obviously low, low estimate of what the store could make. It seems like the realistic worst case you're going to be able to meet expenses. Odds are you're going to do better than the realistic worst case. Is it possible your wife doesn't earn the salary she wants the first 6 months? Sure, but something tells me she will.

    Nothing is guaranteed and like you said it's a bit of a gamble, but it doesn't seem like much of a gamble. The risk don't seem great and well worth the reward.
    l Search Engine Friendly Web Design | Vanseo Design
    l Design, Development, Marketing, and SEO Tutorials | Steven Bradley's Notebook
    l Custom WordPress Themes |Get my book about Design Fundamentals

  4. #3
    Super Moderator Array Dan Furman's Avatar
    Join Date
    Aug 2008
    Location
    Kingston, NY
    Posts
    1,236

    Default

    I agree with Vangogh - this doesn't seem like a huge risk, and your projections seem very reasonable (well written, too!)

    The only thing I would think of is realistically, what's your best case scenario? Off the top of my head, I do not know all that much about consignment shops, so I'll just ask: is it a business that can really provide a decent income, and be worth the effort to build? Again, I don't know much about them - I can only go by the ones that I've seen, and I haven't been all that impressed with them. Lots of junk, and it didn't seem like anyone was making any real $$.

    Just by your writing, I would guess you'll run yours better than the ones I've seen, but still, is the upside decent?
    Dan Furman - Copywriter, Business Author, Entrepreneurial/Business Consultant
    Business Writing Services | Website Copywriting Services | Blog here
    Check out my books here

  5. #4
    Member Needs New Keyboard Array
    Join Date
    Oct 2008
    Location
    rochester indiana
    Posts
    2,149

    Default

    i deal with some great consignment stores.... and i would be real positive about a bigger space...it does take a lot of room.....and like they said above , it doesnt sound like a huge risk...the ones i know that are making money are in good towns and are very picky about what they let in....the more upscale the better i guess...
    sounds like you are doing great on the real estate....getting a mall all leased has to be pretty hard in todays economy...
    good luck...
    ann at greenoak www.greenoakantiques.com

  6. #5
    Member Wearing Out Keyboard Array AaronConway's Avatar
    Join Date
    Sep 2010
    Location
    New Hampshire
    Posts
    76

    Default

    You need to make sure you can renew your lease at the current terms. You wouldn't want to go in for six months and then when it comes time to renew your lease the landlord doubles your rent. Also with malls, you need to find out if they're going to charge you more for the three Christmas shopping months. A few years ago I looked into renting a cart in a popular mall for $1500/month but during Oct, Nov & Dec rent went up to $8000.

    Good luck,

    Aaron

  7. #6
    Super Moderator Array
    Join Date
    Aug 2008
    Location
    Chicago
    Posts
    1,343

    Default

    I'm going with the crowd here. From what you have laid out, there seems to be minimal risk of losing money. As I see it, the real risk is that you are devoting time, energy and money to a business that may not offer any real long range upside. For that, all I can say is if you have another alternative today then the "opportunity cost" is relevant. Chasing this keeps you from chasing something else. If there are no current alternatives for your wife today, then it seems that the opportunity cost is little or nothing.

    One other thing to keep in mind is whether once you put in the effort to build the consignment business will you be able to walk away if it isn't giving you a good return not only on your capital investment but also on your wife's time. It is well documented that people don't like to take a loss. Stock investors don't sell their losers; gamblers don't want to quit while they are down. Will you always feel that success is just around the corner and not be willing to pull the plug?

  8. #7
    Member Needs New Keyboard Array
    Join Date
    Oct 2008
    Location
    rochester indiana
    Posts
    2,149

    Default

    thanks for putting that so well david.... i never thought of opportunity cost exactly....but
    'chasing this keeps you from chasing something else'
    sure hits some nails on the head....
    sometimes i need to just putter around for mental health!!! but really my main job has to be choosing what to work on and what everyone else should be working on....
    the consignment store could be a good supplement income but probably not the income the real estate building might become...stilll that might be just perfect and way better than working in some unwanted job...if she could even find one she liked...
    Last edited by greenoak; 05-07-2011 at 01:29 PM.
    ann at greenoak www.greenoakantiques.com

  9. #8
    Member Needs New Keyboard Array huggytree's Avatar
    Join Date
    Dec 2008
    Location
    Mukwonago, WI
    Posts
    3,043

    Default

    quadruppling your foot traffic sounds unrealistic to me.....your rolling the dice if this is your goal and necessary to success

    i dont see a huge profit in resale/consignment.

    id move on to the next idea and see if it works better

  10. #9
    Member Needs New Keyboard Array
    Join Date
    Oct 2008
    Location
    rochester indiana
    Posts
    2,149

    Default

    there is a huge amount of business in resale....and in consignment you dont have to buy inventory.... its not so different than selling anything else....
    it doesnt have to be small and takky...i know at least a couple who sell over 500,000 a yr....
    any retail is pretty hard tho....
    ann at greenoak www.greenoakantiques.com

  11. #10
    Member Needs New Keyboard Array huggytree's Avatar
    Join Date
    Dec 2008
    Location
    Mukwonago, WI
    Posts
    3,043

    Default

    Quote Originally Posted by greenoak View Post
    there is a huge amount of business in resale....and in consignment you dont have to buy inventory.... its not so different than selling anything else....
    it doesnt have to be small and takky...i know at least a couple who sell over 500,000 a yr....
    any retail is pretty hard tho....
    im thinking about the antique consignments shops ive been to...tons of Hummels and smalls.....im always against making $1-$3 profit per item....

    id rather make 1 $100,000 sale than 100,000 $1 sales....i would think most consignment shops are closer to the $1 range than the $500-$1000 range per item

    if they can get larger furniture items then yea, make $100 profit per sale....but if they are selling $20 items and making $3 per item than skip the idea and move on

Page 1 of 2 12 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •