How to start up business

Flyonthewall

There's a few different types of items I want to sell. Some easier to post than others, some cheaper to buy than others, but none really getting me a profit that way.

However, it's hard to find the items in shops where I live and they're all things that people are more likely to want to see before they buy or that seeing it on a shelf is likely to make them want to buy it, where as a photo just wouldn't be that impressive. Plus they'd have to search for it online.

Basically, I could sell certain items in store at a more competitive price to draw in buyers and others at more of a profit/average price that would be sold on a more regular basis.

Hopefully it would cover my costs as the regular sales would be on higher priced items that people prefer to buy instore and I wouldn't need to worry about fees and postage on the rest so that's extra sales and profit I wouldn't get otherwise if it were all online.

Savvy_Sue

Flyonthewall wrote: »

I know. I can't possibly say how much them costs would be to know the answer to that. However, the postage costs are stupidly high.

I have to ask, did you read the answers you've been given? motorguy and jm gave actual examples of the kind of costs you will face in a physical shop, if not the actuals. These are all fixed costs, ie you have to pay them every month, regardless of whether you've made any sales or not.

In comparison, you'll find the postage costs are stupidly low!!!

Flyonthewall wrote: »

Ok, I got one item that I wrote down that I was looking at selling and I'd have other similar items. I could get it for £11.99 (that may not include postage). Online (ebay) it sells for £16.99, I think with postage costs. But it would cost me at least £5 to post. So with fees on top I'd be paying to sell that item.

You've absolutely got to know what it's going to cost you to buy something, with and without postage. Will you get a discount for quantity, and what will the postage and packing charges be to get it to you?

If you can't sell it for the same price or less as it's already available for online then true, you'd be likely to make a loss. But selling it in a shop isn't going to help much, because people are going to see whatever price you're charging and think "I wonder if I can get that cheaper online?"

Flyonthewall wrote: »

In a shop I'd make a profit, especially if the buyer saw something else to buy as well. Can't say how many I'd sell or how many I'd need to sell to cover costs, but with that and other things at least I'd be making a profit on the items. I've got more hope of making a profit overall in a shop than selling online at a loss.

You'd only make a profit if you sold enough, consistently, to cover the costs of the item, the charges to get it to you, AND the fixed costs of running your shop.

Also remember that to keep a shop open consistently, you need at least two people, even if one of them is just a casual. If a new shop isn't open consistently, you will lose business.

Let's take motorguy's fixed costs of £4000 per month. Let's assume you can buy for £12, and sell for £17. That's a markup of £5. Divide £4000 by £5, you need to sell 800 items every month TO BREAK EVEN. You still haven't made a profit ...

Also I'm going to ask if you've ever worked in a shop? If you haven't, please try it before you open your own ...

Flyonthewall

motorguy wrote: »

No you wouldnt.

Profit = number of items sold * (Selling price - purchase price) - all costs

not

Profit = Selling price - purchase price.

You're not making a profit if you sell one item in a shop for £5 more than you paid for it, but your overheads are £1000 each week.

You could do some very simple calculations around how many of these widgets you need to sell but it sounds like a lot.

If i were you, i'd be more interested in understanding how your online competitors are making a profit on their items, ie, where are they getting them so much cheaper than you?

I cant emphasise enough how bad an idea opening a retail unit is. You only have to look at your local high street and market trends to see that.

You're aiming to buck that trend with

(a) no experience
(b) no money
(c) a line of items that your internet rivals are clearly buying cheaper?

I heard this recently that sums up high street retail perfectly - "opening a retail unit is a great way to make a small fortune - out of a large one"

I know there's other costs and overall it wouldn't be a profit, but I was calculating that on one item that's awkward to post in terms of purchase and sell price. I'd be selling other things to cover my costs and then the awkward to post things would then be extra items I would be able to sell instore.

A loss online could be a profit instore if I meet the costs through selling other items.

I actually don't think they are buying them much cheaper. Perhaps as a business buying and selling many items they get cheaper postage. I might be wrong, but even buying (possibly) rubbish quality items from China the cost is still pretty much the same and usually China is far cheaper for the obvious reason.

I know the high street is going downhill, but there are certain types of shops that will always have customers and I reckon what I want to sell could be one of them shops so long as I get the word out that it exists.

Flyonthewall

"I have to ask, did you read the answers you've been given? motorguy and jm gave actual examples of the kind of costs you will face in a physical shop, if not the actuals. These are all fixed costs, ie you have to pay them every month, regardless of whether you've made any sales or not.

In comparison, you'll find the postage costs are stupidly low!!!"

They gave me a list of things that costs, that doesn't mean I know how much each of them costs. Someone said about £1000 overheads but that was after I posted.

If the postage costs mean I'm losing money selling an item it doesn't make them stupidly low, it just means that they are just as bad as overheads.

"You've absolutely got to know what it's going to cost you to buy something, with and without postage. Will you get a discount for quantity, and what will the postage and packing charges be to get it to you?

If you can't sell it for the same price or less as it's already available for online then true, you'd be likely to make a loss. But selling it in a shop isn't going to help much, because people are going to see whatever price you're charging and think "I wonder if I can get that cheaper online?"

You'd only make a profit if you sold enough, consistently, to cover the costs of the item, the charges to get it to you, AND the fixed costs of running your shop."

I know. I have a number of different items I'd sell, but I've only just started looking into it all and trying to figure out everything I'd need. Hopefully they'd be items that would sell consistently.

"Also remember that to keep a shop open consistently, you need at least two people, even if one of them is just a casual. If a new shop isn't open consistently, you will lose business. "

That's fine, I've got someone who could work with me.

"Let's take motorguy's fixed costs of £4000 per month. Let's assume you can buy for £12, and sell for £17. That's a markup of £5. Divide £4000 by £5, you need to sell 800 items every month TO BREAK EVEN. You still haven't made a profit ... "

Yes, but that was based on one item that would hopefully sell well but probably not consistently.

Based off other items that would sell consistently...roughly, buying 3000 items for £1000 and selling for £2+. Could be far higher, the items could vary quite a bit in value.

Then there would be other items too that I haven't looked into yet and the figure above for buying could be less as that figure was just from a quick search.

"Also I'm going to ask if you've ever worked in a shop? If you haven't, please try it before you open your own."

Yes, I have. I've also sold things online for a profit. In fact, with everything I buy I get it cheap and with things I sell I have quite often made a profit, but obviously that is selling as a private seller rather than business.

jm2926

It's worth going and sitting outside the current shop (if it is open for business) or a similar one in the area all day and count the number of customers.

Have a look to see now many empty shop units there are in the area, what makes yours different and successful?

One of the main issues with retail now is people look then leave to check the Internet. Even if its not cheaper, they buy online anyway because they can't be bothered going back.

I'd be wary of comparing ebay prices too, I see lots of stuff on there I can get cheaper from other websites. Check several sources.

I hope it works for you, but retail is brutal now. You have a shop in mind, so that gives you a starting point for rent costs, find out its rateable value, and get prices for pdq and business bank accounts. You need to start pricing costs and making a business plan so you can decide if this is viable.

Percy1983

I really can't see this as a good idea, ideally you need to find stock cheaper than rivals and post things cheaper (strike a deal with a courier potentially).

If you can't sell at the same price as somebody on ebay you need to look at the above.

Now think about passing trade and how many people accross the uk (or further) shop online, to cover a shops overheads you need to sell a lot or at high margins, with posting items you just need storage which if you get small quantities at first I am sure you can store them in a corner somewhere.

I did some buying at selling about 10 years ago and did turn a small profit, but I had to know the market andkeep getting the right stock at the right time, whatever I sold well would then be flooded on ebay by others seeing the sucess and another batch just wasn't worth it.

Sorry to say I see no merit in your plan unless you are thinking truly unique items which people from all over would travel to you to see.

Wywth

Flyonthewall wrote: »

Well first of all, I have nowhere I could store any stock. Second, I wouldn't really be making any money selling online, especially after fees (and costs of running my own website if I were to create one). Third, there's quite a bit of competition online whereas in my local area there is far less.

If I had a shop I'd get sales that way and it would be worth having my own site and selling a few things through ebay/Amazon, but it's not really worth just selling online.

My local carboots don't like traders, but assuming I did set up a carboot I'm not sure I'd sell enough to cover the selling charge.

Let me get this right, you don't think you'll make enough money to cover the cost of a car boot pitch, but you think you'll make enough to cover the cost, rent, rates, electricity, etc of running a shop.

Yeah, right... :cool:

DKLS

Flyonthewall wrote: »

If I had a shop I'd get sales that way and it would be worth having my own site and selling a few things through ebay/Amazon, but it's not really worth just selling online.

If its not really worth online trading your model doesnt work simple as that. Revise your business plan or move onto the next idea.

Flyonthewall

Wywth wrote: »

Let me get this right, you don't think you'll make enough money to cover the cost of a car boot pitch, but you think you'll make enough to cover the cost, rent, rates, electricity, etc of running a shop.

Yeah, right... :cool:

Due to the target market. If they knew there was a shop they'd go there. But I can't inform people I'll be doing a (possibly) one off carboot and hope that everyone interested can make it to that place in them few hours on a specific day. Plus at carboots everyone expects everything for 5p, you don't get people haggling like that in a shop and they expect higher prices.

Flyonthewall

DKLS wrote: »

If its not really worth online trading your model doesnt work simple as that. Revise your business plan or move onto the next idea.

Not everything has to work as an online business on ebay and Amazon to do well.