Oh Boy…Start-up, my second favorite sport
When you say in an office building does that mean just another
office on say the third floor? or something ‘retaily’ in the lobby?
I’ve had four incarnations as I refer to them. They ranged from
successful to disastrous.
If you already have a sizeable, loyal following of retail type
consumers the office maybe and that’s a very big maybe, could
work(better check your zoning regs). The main traits of these people
would be that they adore you and spend on your work and like to
spread the word. Even if this is the case, take into consideration
how many they are. If its less than some number of hundreds you face
an uphill battle. How often do you see these people now and what kind
of business do they bring you? Do they bring you lucrative
work/sales or routine stuff? Will they pay your most likely higher
prices? Can you count on expanding your customer list to several
thousand in a reasonable time? That is to say…before you run out of
The retail spot. If its good, you may be able to get along without
huge advertising. The price you pay for a retail space should be
consistent with the traffic you can reasonably expect. Talk to your
prospective new neighbors. What kinds of biz do they run
(complimentary to your own?) and are they happy with the location AND
the landlord? After inventory you will likely pay your landlord more
money than anyone else. Your lease is your single largest fixed
recurring expense. Your lease is absolutely critical to your
success. I cannot emphasis that enough.
Also look at how much you have to invest in both locations. I
thought I found a nifty location once. Until I contacted a contractor
who did several fit outs in the center. Seems the landlord did not
disclose some important things. Like I would have to pay for
sprinklers, run electric some 100 feet from the meter plus local
wiring, air ducts, etc etc. What the landlord was doing was to use
his first tenants to finish HIS work at their expense. He probably
wouldn’t care if the new biz failed, he got his space fitted out for
free. Sharks, there are sharks in the water, don’t go overboard!
What you pay for space should be somewhere under 7-8% of total
sales, assuming healthy biz practices. That may not sound like a lot
until you assign some real numbers to that. See if you can build a
financial model around the proposed rent. Factor in ALL costs.
insurance, payroll, fitout etc etc etc. there are always more etcs
than you first think. Does it make sense? Can you be reasonably
assured of doing the volume needed not just to cover costs but to be
profitable? Never lose sight of profit. That is your purpose. You
may think now that “Hey this sounds like a nice way to spend my
time”. But if you cannot be profitable it will fall apart, sooner or
later, and perhaps very painfully.
I know I may sound like a pessimist but part of the way to assure
success is to eliminate risk.
I’ve paid as much as $6K month rent for a very visible location,
with staff and all the bells and whistles. If I told you my current
rent you would not believe me, its so ridiculously cheap. Its off
street but uncannily busy. But I have that loyal following I
mentioned earlier. I agonized over whether this spot would be any
good. Sure I have less traffic, but the differential between
costs/volume is much better than a ‘traditional’ retail jewelry
So yes, either spot may work for you but be certain about how you
construct your business model. Perhaps instead of giving yourself a
spring deadline you could construct the ideal business model on
paper. Then shop to see what fits it. Don’t just look for a place to
land, look for a place to thrive!
Feel free to pick my brain offline, its on sale this week.