What To Look For In A Shop Location

[Desert Moon]

I am looking to expand my business into an actual shop. I currently do 4 or more shows a year, have a web site, and do some wholesale production work. My plans are to start with my leatherwork then expand into teaching classes and stocking supplies as there is nowhere withing 2 hours to buy them.There is only 1 other leather worker aroung me who has a shop at his house in the country.

My question is should I try for an expensive high traffic spot, or a lower cost not so much traffic spot. One spot I am looking into is in an old mill that the city has started revitalizing, I have spoke to several tenants and they all say you will have to make your own trafic, there is a ton or auto traffic but not foot traffic. It is in a very central location, but a littlle run down. The rent is really cheap, $500 a month for 500 sq ft, 900 sq ft for $900. includes all utilities and internet service.They have room for me to grow as big as I would ever need. The city has alot of resources they offer new businesses in this area.

They second area is in a more afluent town, with about same auto trafic, but much more foot traffic. rent is also $1000 for 500 sq ft.

For a leather working business would I be better to go with the less foot traffic and spend the extra money on advertising? Is a leather shop a foot trafic place or more of a purposeful stop that is a planned visit?

Anyone with experience starting a shop I would love any info you have on what your experiences are/were. Thanks

Mike

[electrathon]

I have heard that a good number to use when opening a business is that you need to have savings to not make a cent for three years. You may be making money now, but it only counts how much more you are going too make. I would say if you are going to sell products like a $3500 saddle, they will find you. If you are going to be selling a can of sealer, you better be where they already are. Another thought, the worst place to open a business in where there are none, if it was a good idea it is likely that there already would be one. The best place is next door to a successful shop. Lure them in because you are new, keep then with your quality.

[Desert Moon]

Thanks for the input, zthere was a leather shop here for years that did quite well, he retired and now works out of his house he was around for like 30 years. He had several different locations with the last one being the shop with the cheap rent that I am looking at. I spoke with about 5 tenents there and they all said they get people asking about the leather shop, which closed like 2 years ago. I will be making small leather goods, belts wallet ect. No saddles for me.

[WScott]

Maybe have a chat with that gentleman and get the inside scoop....he may have some great suggestions for you

God Luck!

[SeattleLeather]

So I'll toss in my 2 cents ($10.00 more like!). I'm super new to leather stuff in particular, but am a long time self employed person, and have previously owned a retail store. Much of it applies across the board I think. It may be a bit rambly at points, but it’s early and I don’t have enough caffeine in me yet! I think there will be good food for thought though.

First I agree with the logic of "I would say if you are going to sell products like a $3500 saddle, they will find you." This is generally true. Think of all the random places that sell super high end specialty stuff. They can often get away with being a "destination store" no problem.

This is not what you're planning on doing though apparently. So, then the question becomes who are your customers going to be? If you're going to stock supplies will it be other people who are sincerely interested in looking for something because they NEED it? Or are you hoping to sell more belts and such to out and out "consumers" who just happen to pass by?

If you were going for more of the utilitarian supply shop idea, the cheap place might not be bad because those people need whatever they're after. Maybe they don't want to order online because they want to see things in person, maybe they're old and don't shop online at all, maybe they just want it now. But they need it. So they might travel out of the way. For the retail of actual leather goods angle, the high traffic spot would probably yield more sales for that type of product, and inevitably "high quality" leather care products. Mink oil, cleaner, etc which I would guess you would stock.

So to me you need to figure out which of those is what you're really going for as the main thing, because as with the 3500 dollar saddle, they're different types of customers.

What did the old shop specialize in? Was it more of a supply thing, or a consumer type shop? If he lasted a long time it might be an indicator of what would work. He also stopped doing it... So was it purely because he was getting older and didn't want to work as much, so he knocked off? Or was it because his business was slowly tapering off? Ask him! I talked to the guy who had previously owned a similar shop in the small town where I had my retail store, and he was happy to spill the beans because he was no longer involved in the business. As a matter of fact he still had some inventory around and I bought some of it off him, and consigned some more in my new store!

Once you’ve figured out what type of customer you’re going after, then comes the next question. As mentioned above you SHOULD have the money around to lose money, or at best break even for a couple years. My shop made money the first year, but not much! It then ticked up over the next few years.

Now you don’t HAVE to have 36 grand laying around in the bank (based off the 1000 spot). Realistically you’re going to recoup something out of that rent, but it may not be much at first. Plus you also have to factor in buying displays, inventory, signage, and other costs of opening. Depending on what kind of displays you want and how expensive the inventory items are, this can be considerable, even for a small shop.

On the inventory note if I may make a suggestion from personal experience, and from experience as a customer too. If you’ve got the money, BE WELL STOCKED at all times. I would suggest carrying as wide an array of different items as you can, and whatever you do decide to stock, make sure you ALWAYS have some there. There’s nothing a customer hates more than going somewhere for a particular item they’ve got there before, and it’s out of stock. They won’t bother the next time in many cases. The more different types of random off the wall stuff you have, the more likely someone is to find something to buy.

So, to go back to the having a ton of cash laying around bit. The real question there is can you afford to lose a good chunk of that rent every month at first out of other income you already have? And if so, can you afford it for the expensive spot? If you can afford to straight up lose 500 bucks a month, but not 1000, then that may dictate the cheaper spot is the way to go simply because you know it won’t kill you.

Then there’s always how much more will I actually make from the higher traffic spot? Try to be realistic here. If you’re open Monday through Friday you have 20ish days a month. Let’s call that $25 bucks a day profit for break even on the pricier spot. I don’t know what price point of belts you’re selling, but if we want to assume reasonably priced ones, you might need to sell 2 more belts a day. Or, because of the lower margins, a dozen or two 5-10 dollar “accessory” items like cleaners etc. A ton of cheap little hardware items. Does some combination of that sound “reasonable” to sell in the town you’re thinking of setting up in?

“Well what if the 1000 spot makes me exactly 500 more a month?” Personally I’d be ok with that. Higher overhead, higher gross, and the same net at the end of the day is something I’m ok with. Some people would rather have less work, less stress and the same bottom line.

Another thing to contemplate, is what else “fits in” properly with your general idea that you can do to expand the market? As a for instance if you’re good at sewing, would you do leather repair? This is something where there’s practically no hard cost, so it’s almost 100% profit. If you don’t feel comfortable doing complicated stuff, would it be something you would want to learn? It’s certainly something that would increase the bottom line if you wanted to do it.

How about selling used leather items like jackets? There’s an awesome new/used leather store I go to that makes it off just that and repairs.

If you’re going for the more retail oriented spot, expand the number of “stock” types of items you make. If you’re personally all about western style belts on a personal level, maybe expand to make more Rock & Roll looking stuff to expand the potential market. Maybe not your cup of tea, but they’ll sell. You don’t even have to throw this stuff on your website if you want to maintain proper “branding” for that, just make some for the retail store.

There are plenty of other ideas you could come up with I’m sure.

Finally, if you have success in the cheap spot, you can always move to a better spot, which will inevitably drive up your “consumer” sales with little/no loss of “destination” customers. However if you go from the nice spot to the cheap spot you WILL lose retail sales, but it’d be hard to know exactly how much unless you have really good books stating what types of products were sold… And are a little psychic!

In the end, starting any business venture is all about what kind of capital you have around to get the deed done, how much you can afford to lose, and what you’re comfortable with above all else. Some people can brush stressful situations off, others can’t. I’d say if you figure out what type of customer you’re really wanting to go after, and how much cash you can afford to lose IF you have to, that should just about make the decision for you!

I hope my early morning rambling helped!!!

[Desert Moon]

Thanks Seattle, much insight gained. To answer some of the questions you posed,

I am looking more into the supply side of things. Where I am in Maine is the most populated part of the state, about 800K in area. There is not a leather supply shop in area have to travel 70 miles of so to get to one, I personally like to see stuff I buy and like to go to the shop because I alway see something I forgot I needed.

Im leaning towards the lower price spot as I do not want to be cranking out so much handmade items that I would get burned out. The more expensive spot would yeild much more in the way of handmade sales as it is a tourist spot that gets cruise ships in frequently, but I think for the supply side it would be a bad spot hard to find parking and alot of traffic.

The Idea I have is more of a small supply shop with a few tables that customers can hang out and work leather at. I want to do classes for basic leather working as the craft is disappearing here in Maine. I figure to do free classes for the scouts and 4H to 1. give back to the community 2. make future customers for myself. I also will have paid classes for adults.

I am a 100% disabled veteran so I have money to live on without taking from the business and could afford to lose around $500 a month for a year or so.

The other guy who had a shop is still doing business out of his garage out in the sticks. He is not open to sharing anything about his past experiences, about the only thing I got out of him is that I should not teach anyone how to work leather becuase they may steal sales from me. Before he knew I was a leather worker also he did say that he closed the business down to retire and take it slower.

I do a little repair now mostly resewing tack, i have a good machine so this is something I am going to advertise. I also would like to get into sewing patches on biker jackets also, seem like it would be all gravy.

thanks for your reply,

Mike