Should I open a Supply Shop?

[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.