Starting Up Retail

jokerhigh

Hey there,

(First off not sure if this is the right forum, if not, please move as appropriate)

There's a member of my family who is considering starting up her own business selling a clothing line which she has managed to source wholesale. She has done the figures and with what she can import the goods in for and sell them at, it's profit all the way.

The thing is she has no idea how to go about starting up her own business. Is there any websites or places she can go to for info?

Also, she was thinking that before she took the leap and took out a lease on a premises in case everything doesn't go according to plan, would there be any way to test the waters as it were if she could convince a larger retail group to take on these items (she would act as middleman between wholesaler and store)

Just how easy/hard would it be to contact a number of stores to see if they would be interested in stocking this particular line of clothing (none have it atm) would stores buy from an individual or would they rather deal with an actual registered business?

She has thought about going down the online route, but reckons it may be hard to advertise the website and spread the word out there.

Any ideas at all guys? All input greatly appreciated on this matter!

Cheers!

murphaph

Try askin on the askaboutbusiness forum on www.askaboutmoney.com

AccessQuery

Hi,
There are a number of points I'd like to raise....

1) Premises
2) Lease
3) Stock
4) Sales
5) Current Retail Climate
6) Funding

1) Premises - On this one. A retail outlet would need to be in a v-good location to ensure a decent foot fall. Pointless being down an alleyway off a side street no matter how cheap the rent is. OTT I know but just want to stress the point.
Don't forget the premises will probably need a refit - shelving, lighting, changing rooms, storage etc.

2) Lease - Subject to location rent could be very high and could possibly involve key money even before you get in the door. FYI Rent is generally sent on a per square foot/meter basis. Also get her to factor in Rates in the budgeting.

3) Stock - Have a good read of the wholesalers terms and conditions. I have come across wholesalers who insist retailers purchase all items from a range even though various items from a range may never sell into a retailers target market. They also have a nasty habit of insisting retailers give large minimum order values before they give any discounts! That'll kill the cashflow very quickly unless you've got buckets of cash available.

4) Sales - If the item is that good why not negotiate exclusivity for Ireland and have her sell it wholesale - No premises/ no refit/ no lease needed. Use rent money saved to keep sample stock of next seasons must haves and buy a small diesel van for running around various retailers. Sample stock can be kept in a spare room at home out of harms way!

5) Current Retail Climate - Just casting an eye over publications for the retail fashion sector, things have definitely slowed down. You can do the market research yourself very easily, just stand on Grafton St or Patrick St (Cork) and count the shopping bags your target audience have or don't have on a Saturday afternoon. Pick a dry day!!

It would help if she had a lot of previous retails experience otherwise I'd advise her to think long and hard before venturing in.

What ever sales targets she's come up with get her to slash them by 75% and does it still make sense?

6) Funding - Are the finances finite or endless? The later would help! But seriously. If she believes the product range is a goer I'd suggest going down the wholesale route for the moment.

I hope my rambling is of some help.

Good luck with which ever route is taken.

antoinolachtnai

Why would the manufacturer not fund the inventory?

Does the brand really have strength or appeal in Ireland? Is it known?

If she needs to build the brand, she's talking about a lot of money and fairly specialized skills.

I think she should not take out a lease without a lot of retail knowledge. The costs and complexity are pretty overwhelming.

For wholesaling, the large clothes retailers are run by multinationals. I wouldn't think they buy a lot through local suppliers (though I could be wrong). You're into the boutique places, so it needs to be a particular type of clothes.

She really needs to talk to someone in the fashion business about this. Also, find out how this company is distributing in other countries.

AccessQuery

Morning All,
I should have mentioned previously. I've a lot of fashion and general retail exposure via previous work and various family members in the business.

Unfortunately, manufacturers never in my experience fund the cost of sample ranges / inventory. They are after all like you in it for the profit?

On the sales side she would be better off knocking on the doors of the smaller high street retailers to start with. They're invariably owner run so you'd get a very quick Yes or No on the sales front. Certainly don't expect sales to land from day one. It'll take a lot of door knocking.

On the skills front: All she would need is 1) Be well presented 2) Have a bit of neck without being cheeky 3) Not be put off by a lot of No's coming her way 4) Have good financial numbers put together regards profit margins available to the retailers if they stock her ranges. 5) Get familiar with other brands. This'll give an idea on the type of money retailers you visit are willing to spend on stock and also expect to make. 6) Be well organised to manage the order process from Customer -2- Manufacturer -2- Customer.

On her own accounting side of things don't forget to account for the VAT involved. VAT's not rocket science, but can have a major impact on cash flow.

Also make sure she's got her own numbers worked out ie Sales less All Costs eg Garment Costs, Shipping+Insurance, Petrol/Diesel, Car Insurance, Car Tax, Revenue Taxes, Phone Bills etc). I'd advise she does them in maybe Excel and then have someone review them.