Here goes the longest post on record
I opened a shop in January...probably the worst time of year other than July. It is a part time business as I have a real job still for a few more years till I retire. I spent 6 hard months of research including calling other shops that had been open less than a year that I could find and some that had closed. The AHA data is no good for start ups as they discount any store open less than a year in their analysis. One major thing I kept learning was you need a year's worth (or equal to a lease term of the longest term item) of fixed and indirect costs in cash if you hope to survive. All the new shops told me the first year is about survival....and I agree. I am in a MSA of almost a million people.....8 more million are 80 miles away....in Mexico. The nearest homebrew supply store is hundreds of miles away. There is a Homebrew club with 40+ members and numerous beer events in the area. Stats say I should have hundreds of customers. The hard part is finding them when you do this part time. You either have to figure out how to attend every festival, tasting event, whatever that comes along or find another way to develop awareness that you exist. And advertising is another whole can of worms...what kind, what place, how much, design, cost.....etc. It's a lot harder than you think. But each week I get someone new that claims, "Wow, I didn't know a homebrew supply store existed in the valley." There are thousands of craft beer drinkers but they all don't homebrew......building the customer base needed to support the store is difficult work so you need cash until that happens. To be honest, we have not covered all our expenses (fixed and variable) each month with profits. We have had to dip into these reserves all but one month. Be prepared.
Startup costs....my rent is high compared to many other shops I talked to (and absurd compared to what you said) at 1000 sq ft for $1000...but all rents in my area are for retail space. And my space is not large so my inventory is limited which forces me to make frequent purchases which increases my freight costs, though they are some of the better rates in the country. (Basically my high rent offsets my lower freight costs.) Freight can kill your margins.
I bought used store fixtures at great prices and they are actually attractive...more than standard gondola shelving or open wire racks though I do use gondolas along the wall. But that was still $3K. POS hardware can be leased...but I bought mine...another $1K approximately. Software is incredibly expensive, so I went the online cloud based way with PHP Point of Sale. Extremely reasonable pricing with a decent enough inventory/sales management program. Lacks a couple things I would like but they may get developed (supplier database for one). And it doesn't support PIN pads yet....and those cost a few hundred dollars. And then there are the credit card fees....your software has to work with the service provider so you may be limited in choice....don't think you can run out and get the lowest rate easily. I'm limited but the service is good. And one other precaution about cloud based POS....what will you do when the internet provider is down? Better have a backup plan.......
Deposits and installation fees for internet, phone, pest control, etc....city inspections/permits always come up with something you didn't think of unless you have opened a store before....and even then, the rules change. Careful when leasing....what may have been OK for the previous tenant may no longer be OK. Example....handicapped parking signage, access. My town changed the ordinance about a year and a half ago but grandfathered all existing tenants in my building....not me. And since we all share the same parking lot, I was denied a permit until the situation was brought up to code (landlord's responsibility but you have to deal with a landlord). Without an occupancy permit, I couldn't get the electricity turned on....we stocked and fixed up the store for two weeks without power. Again, plan for the GOTCHAs!
Store decor....believe it or not, a plain ole warehouse approach will hurt you. Many of my customers bring their significant other after they have been to the store a time or two. We like that...we don't want to give the impression that it is just some beer place husbands run off to and hang out, though we like that too
. But we have had several wives stop in and pick up things for their spouse and tell us they don't mind doing that at all because our store is comfortable, clean and seems safe and friendly. A few of them now come regularly. If you look like some dump, then people won't come in....and you want every Tom, Dick and Sally to come in.....well, most of them....and stay because the longer they stay, the more they might think of or see to buy. And speaking of seeing, presentation is important. You need a planogram before you open...and you need to have the ability to revise it.
INVENTORY
We are small. We planned to start small knowing that January would be a hard start since we would be competing for people's cash with Christmas bills in many cases...and knowing unless they got cash, they may have received homebrewing gifts and would not be in to buy them from us. We still ordered over $10K worth of inventory....and that did not include any kegging supplies or equipment besides a few pots and little cost items and only 12 oz bottles. We figured our target was NEW Brewers as much as existing...let the existing come in and tell you what THEY want. We went heavy on equipment starter kits and ingredient kits and carboys and buckets...(We knew the Mexican customer base would go for glass carboys through our research...and they did...sold out in 2 weeks
) What will be your customer base? What will they want initially? You won't sell a lot of clothing in a nudity camp...............
OTHER STUFF
Plan on a bigger refrigerator than you have planned.
Plastic or paper? bags....stock or custom imprinted?
Loyalty program?
Material handling...how do you plan to move those 50/55 lb sacks of grain?
Grain mill....already mentioned, but your home version isn't adequate for going through a few hundred pounds in a day/night.
Signage
Web page
www.rgvbrew.com and it needs a lot of work, speaking of....it takes a lot of time unless it's your avocation or occupation
chimpmail, constant contact, etc.....paid or free version? Again, a time consumer
Hours of NON operation....when do you receive goods, stock shelves, label items, reprice, clean the floors, dust the place....and you ain't seen the like of dust unless you have previously been in a grainery....clean the toilet/sink, mow if required, pick up the parking lot, take out the trash...speaking of, is your lease space providing trash service? Is the dumpster big enough? You will get lots of boxes and pallets to dispose of..... Non operating hours required are almost equal to operating hours in our case but we are only open 15 hours a week so it is somewhat disproportional. Trips to the bank...there are still people with cash....general supplies shopping
That's enough....I'm only trying to make sure you think of everything...it's a fun business...we look at like, well, we would probably spend the money some other way to have fun...and we get to meet new people, see friends, share homebrews, tell stories and lies, and learn...It has completely changed our social life since we are open evenings and Saturdays. Have fun!
