Business Oportunity, Advice please

martinn123

Hi Guys/Gals

I run a small Conservatory/Sunroom business based in Co. Meath.
I rent an office and a couple of Conservatories are on display in a business park.
2010, was a great year, 2011 not so good. The site has been associated with this type of business since 1977, so little advertising, just passing traffic, and the fact that the site has this association.
Next to me is a Garden Shed business, Timber and Concrete, with 10 or so sheds on display, again the site has had sheds since 1977.

Now the Shed Co has gone into liquidation, it was based in Carlow, but the sales from this site have held up well in the current climate.

The landlord has offered me the oportunity to Rent the land on which the Shed Co traded, and suggests I contact another Shed business and obtain an agency arrangment, the concrete bases for the sheds are in place, so new product just needs to be moved onto the site.
In addition I have set up meetings this week, with a UK Conservatory Co who may be interested in placing Show Models on display.

So my questions are how/who do I talk to in the Garden Shed industry, and what type of arrangment could I put in place.

I have invested most of my available funds in my business to date, and so would also be interested in talking to potential Investors who would see the merit in taking on other agencies, Garden Furniture for example, there is lots of space available for the display of such products.

Any advice I can get here would be most welcome, I realise the Economy is in a poor state, but I am planning for the end of these hard times, I have the 3 most important aspects covered, location, location, location.

smcgiff

My first inclination is to advise you to stick to the knitting - there's a reason the landlord is trying to off load the responsibility to you - it's hard to find tenants.

What's in it for you?

1. You'd have control over the type of tenant that goes in there - you'd want a complimentary business.
2. You might make some money sub renting.

The downsides are many and include

1. You'd be in the renting business and that's going to take time and money (pay a solicitor to write up a lease agreement)
2. Potential liabilities - What happens if you lease from the land lord and your tenant goes into liquidation. Would you still be liable to your landlord?

At the very least only agree to renting from the landlord if you've a client lined up yourself.

Good luck

martinn123

smcgiff wrote: »

My first inclination is to advise you to stick to the knitting - there's a reason the landlord is trying to off load the responsibility to you - it's hard to find tenants.

What's in it for you?

1. You'd have control over the type of tenant that goes in there - you'd want a complimentary business.
2. You might make some money sub renting.

The downsides are many and include

1. You'd be in the renting business and that's going to take time and money (pay a solicitor to write up a lease agreement)
2. Potential liabilities - What happens if you lease from the land lord and your tenant goes into liquidation. Would you still be liable to your landlord?

At the very least only agree to renting from the landlord if you've a client lined up yourself.

Good luck

Thanks for the reply, but perhaps I did not explain myself clearly.
I see this as a business I can run, in paralell to my existing business.
I am on site every day, talking to potential clients, and often remarked to the guy who sold sheds that one person could easily run both operations.
I can amalgimate both into my existing office, and would see the Shed operation running as an agency, i.e sales on a commission basis, with the delivery and instalation carried out by Main Co.
Its not a Sub Let.
The landlord has been more than helpful over the past two years, the current rent reflects the downturn in the Economy, he is looking to the future where perhaps I can have a successful operation, and he benefits by way of Rent, in the short term lets just say rent is not an issue.

smcgiff

Looks like I did pick you up wrong - however are you still considering a business area that an operator trading since the 70's recently went into liquidation.

Are there other uses for the site?

Gambler

Yeah, my main concern is if someone sold sheds at a location and their business failed then why would you try to run the same type of business in the same location? Especially given you have no experience or contacts in that specific business area..

If you are determined to go ahead with it and you have any sort of a reasonable relationship with the previous owner of the shed business then I would contact them and ask them for details of what went wrong so you can try to avoid the same issues and for some contacts in the business to get you started on sourcing supplies etc.

martinn123

many thanks for the replies and observations.
To clarify the closure of the Shed Co. The actual business was based in the Sunny South East, the outlet in Co. Meath was an offshoot.

The closure was, shall we say, tactical, as the Phoenix part launched before the Fire, so it did not have to rise from the ashes, can't say any more than that.

The site I am looking at was always busy due to location, and profitable.

It has great road frontage, on a very busy road, and people from a wide area travel there to view Sheds, as they do to view Conservatories, the site has been associated with both being sold there for many years.
Its a busy Business Park, with other business's

I cannot speak to the Phoenix operation as rent O/S was an issue, and landlord will not wear it, so |I am looking for another supplier.

So to summarise, its a great location, long associated with what I want to sell, people constantly driving in to view what was sold, and in my opinion a good oportunity for me to maximise the potential.

Thanks for comments, please keep them coming.

Gambler

There's certainly an argument if you can run the business for a lower cost then the previous business could. Would you need to take on many additional staff or could you run both with the current staffing level? Is the landlord willing to give you a better rent rate per m2 on the basis that you will now be letting two properties from him? Finally are you comfortable making the initial required investment in stock or might this leave you over extended if the shed side of the business proves to be less profitable/more risky than expected?

I suppose the other thing you will need to consider is installation - will your existing installers be able to take on shed installation without any issues or will there be a requirement to get new staff in to cover this..

wobbie10

I'm pretty sure i know the business you are talking about (close to a petrol station ?). I would take care getting into any extra overheads which you may struggle to cover. If you can cut a good deal with the landlord then it may be a runner, but only if he offers you a really really good deal.
The owner of the business that recently closed did so for a reason. He could have found different suppliers but decided not to.

Regards
Wobbie

martinn123

Gambler wrote: »

There's certainly an argument if you can run the business for a lower cost then the previous business could. Would you need to take on many additional staff or could you run both with the current staffing level?

I can run both business's on my own.

Is the landlord willing to give you a better rent rate per m2 on the basis that you will now be letting two properties from him?

Absolutely.

Finally are you comfortable making the initial required investment in stock or might this leave you over extended if the shed side of the business proves to be less profitable/more risky than expected?
I suppose the other thing you will need to consider is installation - will your existing installers be able to take on shed installation without any issues or will there be a requirement to get new staff in to cover this..

To be clear how it works, the supplier place the sheds on site, at his cost, and retains ownership,as samples of what he can supply.
I just sell them.
The supplier installs them, fits them, my only role is sales, on commission.

wobbie10 wrote:

If you can cut a good deal with the landlord then it may be a runner, but only if he offers you a really really good deal.
The owner of the business that recently closed did so for a reason.

I can cut a great deal with landlord, and the reason the owner closed was tactical. Lazarus is only in the halfpenny place.

Gambler

martinn123 wrote: »

To be clear how it works, the supplier place the sheds on site, at his cost, and retains ownership,as samples of what he can supply.
I just sell them.
The supplier installs them, fits them, my only role is sales, on commission.

At first appearances it certainly seems to be a runner then - I guess the main thing you need to do is work out how many sheds you need to be selling for the commission to cover the extra cost of rent, rates and the other misc extra costs having the extra space will incur. Best of luck!

antoinolachtnai

This is called consolidation, sounds great to me.

If I were you and were looking for a supplier, I would ring all my existing suppliers and ask them if they know anybody who wants to sell sheds. If that doesn't work, I'd start working my way through the golden pages. I would talk to the seomra people, and to other companies which have a very distinctive product.

I think you would need to do a very good deal on the first few sales, so that the company would have an opportunity to recover their investment in placing the product on your premises. This would be a lot easier than taking new investors in. Your partners would effectively be capitalizing the growth of your business.

I would also take care to agree a marketing plan with them in advance.

martinn123

Guys, many thanks for your replies and encouragement.
To give an update I researched various suppliers, and contacted one who, has various outlets but nothing along the east coast.
We met had he was very impressed with the location.
We discussed the merits of my taking on the lease, and he providing product, and eventually agreed, he would assume responsibility for the lease, invest up to 50K, in product, laying out the site, installing bases, landscaping, etc. In addition an advertising campaign to launch the new site.
I will act as manager of the business, and I have a 5 year contract. I will be paid a generous Comm on each sale, which works out better than a slightly higher Comm, and being responsible for Rent etc, in addition I can continue to run my existing business from the office he will provide, as its on the same site.

So to all out there with the bones of a good idea, chase it down, and look at all aspects and variations available, I really think 2012 will mean a real turn around in my finances.

antoinolachtnai

Well done, it is great to hear that you got a deal that you are both happy with.

TheCostumeShop.ie: Ronan

My advice, although probably overly obvious, is to take the previous owner out for lunch. Maybe offer him some money for his time / advice as a gesture.

You may find he is loyal to his previous customers and would love to have someone continue what he started and continue to look after them. The insights he may have to pitfalls, opportunities etc may be invaluable.