Should I open a Supply Shop?

[mykayel]

I'll give my opinion to try and help you out. I live in South KC, so I've never looked to see if there is a LHBS in the North Lands, but if there isn't, then you might have a good idea. Personally, I buy almost exclusively online for two reasons, its typically cheaper and its more convienient than having to drive to the shop over in Shawnee, KS. The only reason I will buy from them is if I'm brewing and I don't have something, or to buy my base grains as I buy in bulk and its cheaper. Looking at them as an example, they have an internet site, but its a piece of crap, if you plan on doing any business online have a good website. If its not easily navigatable, you won't sell anything.

Now a lot of people do support their local shops so you may very well do good business. What you could do to help yourself out: have decent evening hours, if not every day, at least twice a week. Sell the supplies to make equipment like mash duns and keggles, sell them as "kits" with a pinted piece of paper for the instructions along with already set up pieces. Have a good crush on your grain mill, how many post have you seen on here where people complain about the crush (and efficincy) they get from their LHBS. I'd be another piece of equipment, but maybe even get a second mill with that finer crush and just advise your customers about a possible stuck sparge (the last thing you want is your standard crush to be to fine and all of your customers getting a stuck sparge). Definately do the classes/host clubs to help get new customers. Good luck. And if you have good prices on bulk grains I may even consider driving up there.

 

[Jaybird]

So the OP started this conversation well over a year ago. Since then I opened my store and have had a great time doing so. I have learned more about wine than I ever thought possible. I would very much tend to agree w/ Austin about the numbers. I am right on target in my first year w/ just about everything he posted, spot on. I started my store w/ almost NO MONEY at all and very little help from my EX business partner (now that’s a really long story and one I may tell some day). Although I put a ton of time into my business I have spent really very little money so far. You don't need to spend your life savings on this hobby/business.
I am really just responding here to find out what the OP ended up doing. Did you make a go of it?
Jay

 

[patrck17]

I am also curious after reading the first 20 or so post. Like so many others here I too have the dream of combining work with hobby and making a brewery, brewpub, or LHBS. I am short out of college and in no financial position to start a business, but the dream stays alive. With the big online sites and ease of online ordering, plus this economy I typically dismiss that there is a chance to make it work. I wish everyone else the best and hope the OP is living the dream. Grats on your current success Jaybird.

 

[Jaybird]

Grats on your current success Jaybird.

LMAO! I wouldn't call it a success just yet. I'm just getting started. We have only been open right at 7 months now. But we have a great customer base so far and just started advertising locally. My website is going to go live VERY VERY soon. I have a long ways to go my friend.
But thank you
Jay

 

[rwinzing]

Do it there are two stores close where I live the difference is iventory and knowledge. I pay more for things because I know he'll have it and I enjoy spending time in the shop poking around. Hil location isn't great but he's been doing it for 10 years.

Go luck......

 

[chiaroscuro]

I know this is an old thread....

I have worked in retail management for some time and I'm considering the possibility of opening a supply shop. As I have been reading this thread, I noticed that there are a lot of opinions about shipping cost, LHBS pricing, and online pricing. My question is:

How much mark up is too much?

If you get free shipping or flat rate shipping, the HBS is covering the spread with some of their profit. Someone has to pay the shipping cost...FedEx ain't delivering your Blichmann Top Tier for $7.99.

What gets your LHBS in the ballpark as far as pricing? What would make you buy 90% of your purchases locally?

 

[ReverseApacheMaster]

What gets your LHBS in the ballpark as far as pricing? What would make you buy 90% of your purchases locally?

You really have to decide what market(s) you want to appeal to. If you are trying to snap up the homebrewers that brew a lot you're going to have to have low margins so you can compete with the big vendors and go for volume sales. If you're going to try to get new brewers you can afford to have bigger margins but your salespeople/servicepeople need to know how to get people in the door and have the knowledge to sell the right products and you'll have to pay more in marketing to generate new customers (as your older customers will find cheaper places online and leave you). Are you going to be the slightly more expensive but well informed and well stocked convenient location? Your margins can be in between but you risk having to stock so much stuff that it might go bad on you before you can sell it.

I buy online most of the time because I place orders for several batches at once so with flat rate shipping I can get supplies cheaper than local places. However I do go to the local store when I need small amounts of supplies. I realize I am paying a little more for the convenience.

If you are charging more than the large vendors you need to think about what it is you do for your customers that justifies the mark up. Being local doesn't really cut it anymore in the big box world.

 

[chiaroscuro]

@ReverseApacheMaster

Your last line is the dagger. I'm willing to make a little bit less per sale if I can get most of my local dollars, but you as the consumer have to make a commitment to get most of you supplies locally. If you're not committed, someone will always have something for cheaper and LHBS will continue to struggle.

I'm not sure that there is much value adding that you can do in this business and I can assure you that being knowledgeable only goes so far. I'm not interested in marketing to bring in new customers that eventually end up as somebody else's customer purely on price. And I don't want to be the local last resort for that 1 pound of Crystal 40. No one can rely on this as a business plan.

Do we want to perpetuate the big box world or do we want strong local communities?

 

[TromboneGuy]

What would make me buy mostly locally? Selection. Can I get whatever variety of yeast I want, or hops, on the spur of the moment? Does the store carry unusual specialty grains? These are factors. Getting a 50lb bag of 2-row is easy.

 

[chiaroscuro]

@TromboneGuy

Great answer. Selection is important, what about price? How close does someone have to be for you to say "I know its a a few bucks more, but I like having the selection of stuff locally."

 

[IffyG]

I can't speak for anyone else, but I'd buy locally more often if the LHBS hours were actually useful. I understand everyone wants to go home, but the two options I have close at 6 PM, well before I can make it to them. Something as simple as being open until 7 would get me spending more money at my LHBS... it's tough to spend money when a business isn't open.

 

[richbrew99]

So the OP started this conversation well over a year ago. Since then I opened my store and have had a great time doing so. I have learned more about wine than I ever thought possible. I would very much tend to agree w/ Austin about the numbers. I am right on target in my first year w/ just about everything he posted, spot on. I started my store w/ almost NO MONEY at all and very little help from my EX business partner (now that’s a really long story and one I may tell some day). Although I put a ton of time into my business I have spent really very little money so far. You don't need to spend your life savings on this hobby/business.
I am really just responding here to find out what the OP ended up doing. Did you make a go of it?
Jay

Good to see a store in Redding. When I lived there 20 years ago I got my first homebrew kit and cans of LME from a flea market. The guy was really awesome though, he would deliver stuff to my work for me when needed. If I was still there I'd be shopping in your store!

 

[Monstar]

I can't speak for anyone else, but I'd buy locally more often if the LHBS hours were actually useful. I understand everyone wants to go home, but the two options I have close at 6 PM, well before I can make it to them. Something as simple as being open until 7 would get me spending more money at my LHBS... it's tough to spend money when a business isn't open.

That's a great point.

I honestly don't mind paying a little extra at the LHBS. Why? Because they are awesome friggin dudes. I'm a sucker for great customer service.

Its to the point where I actually feel guilty since lately all I buy from there are my hops. I've been malting all my own grains and washing yeast... sometimes ill grab a couple pounds of two row so I don't have to use as much home malted stuff.

 

[509inc]

The average homebrewer spends between $100 and $150 per year on his/her hobby.

I must be doing something wrong because I spent that almost every time I go to the LHBS.

 

[rhamilton]

#1) Definitely have a website and electronic order/inventory management system. Your B&M store is only open 50 hours per week. Websites collect money 24/7. See #3 -- can you make money just dealing locally? If so, online sales are icing on the cake. This is the ideal situation to be in

#2) Get a partner if you can. I don't know how much business experience you have but if you are lacking, find a local entrepreneur who can invest and help run the business-side of things. That will not only offset your risk, but you'll have some more business experience to help you get off the ground. And two people running a business is usually better than one. Yes you'll have to share profits, but you also share the risk.

#3) Run the numbers backwards, forwards, inverted, etc. Model your business and know the margins. How much do you need to sell per day, per month, per year, to make money? How much margin of error is there? If a tornado rips through the town and business stops for 30 days, can you survive? If another LHBS opens down the street and business drops 30%, whatchu gonna do? Ask all the questions and model all of the numbers. Don't forget to pay yourself. Your salary is a business expense. Don't be dumb and say "I'll just take the leftovers". Pay yourself first.

#4) Courtesy, cleanliness, & cost. I'm lucky enough to have AHS locally -- they rock the customer service a majority of the time. Their store is clean, organized, & well lit. The staff is knowledgeable, they have an amazing kit selection, their prices are competitive. This all adds up to an excellent experience. I've visited some other LBHS across Texas over the past few weeks -- they don't even compete with AHS. If your kettles on the top shelf have 1/8th inch of dust all over it -- it makes me wonder what your grain house looks like....

#5) Be a closer. You must must must must be able to close deals. Your employees must be better. Depending on your storefront, you might have a high volume of lookers. Your ability to sell 'Starter Kits' will likely make or break your local business sales. Say you have 10 lookers each day. You sell two starter kits for $150 each in January. Only one of those guys takes on the hobby and spends $100/month. You turned 10 lookers into $1500 bucks for the year. Same situation but this time you sell 3x starters and convert two by offering free weekend classes w. the starter kit which makes them make better brewers and more likely to keep the hobby. Instead of $1500 per 10 lookers, you're getting $2850. +90% revenue just by offering free weekend classes with your starter kits. Just an example situation with theoretical numbers but you get the idea.....

 

[ReverseApacheMaster]

@ReverseApacheMaster

Your last line is the dagger. I'm willing to make a little bit less per sale if I can get most of my local dollars, but you as the consumer have to make a commitment to get most of you supplies locally. If you're not committed, someone will always have something for cheaper and LHBS will continue to struggle.

I agree with you, in theory at least, to an extent. Not all big businesses are inherently bad although many are. Not all local shops deserve patronage just because they are local. I like doing business with companies that treat me well as a customer and add value to my purchase, whether it is cheaper products, better customer service, etc.

Some of the larger HBS have very good customer service, all the products I need, cheaper prices and because I know they do a lot of business, fresher ingredients. When I go to the local shop I have no idea how old the grains or hops are.

I get the desire to protect small businesses but I don't believe it is an automatic right. I think it's a bad business model to assume that customers should have to pay more to a local shop simply because your sales volumes are lower and/or you pay more to your wholesalers. You can disagree with the principal but hardly deny that customers today are mostly looking for the cheapest prices.

I'm not sure that there is much value adding that you can do in this business and I can assure you that being knowledgeable only goes so far. I'm not interested in marketing to bring in new customers that eventually end up as somebody else's customer purely on price. And I don't want to be the local last resort for that 1 pound of Crystal 40. No one can rely on this as a business plan.

If you can't think of the value adds to your customers that would make them want to come to you then you probably shouldn't open a customer-oriented business. Especially if you think that you should be able to sit back, offer goods and just hope that people come in and want to pay more just because it's local. You'll have to give people a reason to leave their computers and drive down to your shop and buy stuff. If you need ideas, visit the local homebrew organizations and ask what would bring them to your shop. That will get you started.

 

[rhamilton]

It's been proven again and again and again that price isn't the only key to a successful business. Value is > Price. Value is an abstract idea to most of your consumers.

There was this show on TV where this guy comes into businesses and helps turn them their businesses around. The episode I watched had a 'Big Gym' vs Planet Fitness. Planet Fitness is $10/month. The owner dropped their prices to match Planet Fitness. Big Gym could have had 10,000 new members and still not turn a profit. By the end of the show, they were selling memberships at full price again just by recognizing the value they had over Planet Fitness.

 

[crazybluerider]

I can't speak for anyone else, but I'd buy locally more often if the LHBS hours were actually useful. I understand everyone wants to go home, but the two options I have close at 6 PM, well before I can make it to them. Something as simple as being open until 7 would get me spending more money at my LHBS... it's tough to spend money when a business isn't open.

This is one of the big reasons I use one of my LHBS more than the others. In Portland I am very lucky to have a number of very good LHBS within 10-20 minutes of my house but I work until 6 and often can't find time to go at lunch.

I found one shop that is attached to a brewpub and while they close at 6 often they will open for you if you know what you need or if one of the shop employees is still around (they can often be found in the basement brewing after hours). They did this for me the first time I went down there and made me a repeat customer for life. There is also another place 20 minutes away that set me up with my starter kit. They took the time to walk my girlfriend and I through the first batch and let us sample a few beers to choose a first recipe. I return to that shop and spend my money as well.

Good customer service goes a very long way. The shop that is closest to my house is pretty snobby and seems to cater more to the wine people. I only go in there if I need something in an emergency. And even then I try to find time to go somewhere else. They will be getting no big purchases from me.

 

[Jaybird]

Good to see a store in Redding. When I lived there 20 years ago I got my first homebrew kit and cans of LME from a flea market. The guy was really awesome though, he would deliver stuff to my work for me when needed. If I was still there I'd be shopping in your store!

Rich
I started a thread a long time ago about Ray Ault the owner of that store at the flea market. He was a real great guy that is for sure! I now have the pleasure of watching his legacy live on with my store

https://www.homebrewtalk.com/f14/great-loss-my-lhs-owner-28199/

I have a tribute to him in my store in the form of an article he wrote in BYO many years ago, it is framed with a picture of him and his wife Betty. I still loan out his mash tun the same way he did for me so many years ago.

Cheers
Jay

 

[montecristo]

I must be doing something wrong because I spent that almost every time I go to the LHBS.

+5 isn't that the truth.

 

[Teromous]

As a consumer, I can tell you that there are certain things that will sway me one way or another.

First of all, don't sell starter kits unless you can support the homebrewer with additional equipment that is needed. When I bought my starter kit, my LHBS didn't sell pots. It's a PITA to go find a pot when you're just starting out, and all you want to do is brew. I ended up going to Walmart. Be their one-stop-shop.

Secondly, offer discounts: AHA, BA, Military, police, EMT, firefighter, AARP, farmer COOP member...etc.

Thirdly, if you offer a service over the internet, take responsibility for your product. If there is a problem, fix it. It should never be on the consumer's time or dime to fix a problem with your company.

 

[TexasAggie]

I would advise against using your own money to start a small business. There are plenty of opportunities for small business startup financing through credit. You need to protect and insulate your personal finances from the volatile small-business climate. The tax structure of incorporation is less friendly to a one man shop but it protects your personal assets from the risk of creditors in case of default. The early years of the shop are going to offer little stability so make sure that you have that life-savings to allow you to weather the storm if needed. A profitable business will be able to pay its bills including salary. You will have a little bit of safety from month to month even of you have to set that salary below your current level of income. good luck.

Cheers

 

[cowgo]

Interesting thread, but it's 4 years old and the OP hasn't been on HBT for the last 2 years. I can't find anything on the net about a LHBS in Excelsior Springs, so I guess the dream didn't pan out.