Good time to start a business?

[Bellenden Belle]

Okay guys help me out here...

I know there are lots of knowledgeable people out there....

I have a dear friend (no it's not me) who is thinking a starting up a business - selling homewares - we're talking Mrs Robinson territory - in the next six months.

Hugely experienced, I think he would be fab at it, and recognise this is a long-term dream of his.... but is this the right time to be setting up as a small independent shop?

We're not necessarily talking East Dulwich here...so please don't get too upset about the proliferation of those kind of shops along Lordship Lane.

[SeanMacGabhann]

BB - I expect karter and macroban might be able to advise from an insiders perpective

But from mine - Has this person got friends already in the trade? As in...is he able to have a conversation with the likes of Mrs Robinson herself (for a fictitious example) to see what kind of margins are to be expected?

I would say it depends on a number of factors. The recession will bite deeper than most people are willing to accept but maybe not quite as deep as some doom-mongers. The location of the premises would be key (you can see people spending money on this sort of thing in Clapham but maybe not Catford in bad times) as would the terms of the lease (imagine paying a landlord through several years of depression only for them to chuck you out as soon as the economy picks up. On the other side it might be a good time to get a cheaper lease)

And how much backup fund does this person have - to weather the storm I would suggest they need plenty.

Is that too negative? I would be extremely nervous if I was in their position, but if they have the spare capacity to weather throught it, it may even be the best time

Good luck to them anyway

[macroban]

A contrarian view is that the middle of a recession is a good time to start a new retail business, but we're not there yet.

If I were thinking of starting a new business, I'd wait six months and then review the position.

[Bellenden Belle]

I really appreciate both your responses... Macroban, this is going to seem a really basic question - but in your experience what are the particular indicators to be looking for and questions to be asking... I'm sure it's not just gut instinct?

And anyone out there - what's a sensible backup fund? Enough to keep you going for a year? Three years?

And Sean - thanks for your response - yes, he's got lots of trade connections - he's worked at senior management level for a number of high street names.

[????]

Given that his biggest fixed cost is likely to be his lease/rent, then I'd wait a while as I think he'll get a better deal in a few months time when the boards start going up...

[SteveT]

Your friend might do better having a stall in a market.

Getting good quality stuff, cheaper than shop price is a good money spinner, but don't expect high profits.

S/He will be able to test the market with his wares and avoid a fat 5,7,10 year expensive lease commitment.

98% of all businesses collapse within 4 years of start up, just something to bear in mind if it all goes wrong.

Can your friend operate on his/her own?

are they driven?

can s/he cope with long periods of solitary?

If the person needs camaraderie which one gets from a job........you don't get that from self employment.

When I started my first business it was in a partnership, which is like a marriage commitment but without sex.

It was far less stressful than the time when I split after 12 years, and did my own thing.

It is more demanding, worrying, and lucretive than any job, but it is always on your mind.

Someone once said 'you have your own business?'

I replied with all honesty 'no, it has me' because one is locked in together, almost like a commitment to a living being.

Lastly open 2 accounts, put half of the profits in each, live on one and prepare yourself, to give the other half to the government who is an uninvited member of your team. Best of luck with your new venture.

[Bellenden Belle]

> Someone once said 'you have your own business?'

> I replied with all honesty 'no, it has me' because

> one is locked in together, almost like a

> commitment to a living being.

Fantastic post SteveT - I really appreciate your honesty. Are you still in business?

Also - does anyone know how the outlets in the East Dulwich Warehouse are getting on - with my outsider's eye I am thinking that looks like a tough nut to crack.... do the North Cross road stalls do well?

[SteveT]

Yes I am for the moment but next year is another matter.

[Sue]

The North Cross Road stalls seem (mostly) to keep coming back, so one presumes it must be worth their while or they wouldn't be doing it?

Or am I naive??

[SteveT]

The way I started was doing it part time, and kept the meal-ticket full time job. When I found the full time job a pain to continue I quit and did my business full time.

By this time I knew that survival was proven.

[eccentric]

I'm currently looking for retail sites for an established business. Your friend will find it difficult to negotiate a good lease deal as a start up but the empty unit market at the moment is certainly a retailer?s one. I've been offered up to 18 months rent free and cap ex contributions and I'm not talking about Starbucks or Cafe Nero but a small established 2 store business.

In short the offer has to be different enough to hook the landlord, not another me too / Roullier White/ Mrs. Robinson.

If your friend is trying to sell premium products I think you?ll find NCR market hard work, punters need the ?credibility? of a shop to part with real money.

Good luck with the venture. I can second SteveT?s post, on the money.

[macroban]

eccentric, have you seen any reverse premiums yet?

MacRoban

[eccentric]

Not yet apart from the big boys anchoring key sites like Westfield in west London. Have heard some landlords are keen to discus turnover rents to incentivize (spl?)

[karter]

BellendenBelle, I think southside lighting up at the plough may be looking to re-assign their lease but i could be wrong.

[Ultraconsultancy]

BB I'd say with the crunch on the way [real or imaginary] it's a bad time to start a top end homewares business. There is a priority scale of businesses that show recessionary cracks first and it goes something like homewares, menswear, ladiesware, food.

however as fourquid rightly says the biggest cost is the lease, and the big issue in commercial leases at the moment is the withdrawal of empty shop rebates by local councils.essentislly, landlords who decide to keep shops empty [because their capital value grows faster while empty] now have to pay full price rates. so on a shop with a rates payable of 10k, the landlord will find his bill has just gone up from 2k to the full whack. he might therefore be happy to negotiate a lower rent in order to cut his losses.

[SteveT]

When brent cross opened every shop was leasehold, when Marks & sparks showed no interest as it was company policy to trade only from freehold sites, the owners quickly offered them a freehold plot of their choice.

That was many years ago, when Marks had a flourishing business, I am not sure whether they have as much pulling power in the retail market today.