setting up a bead shop to sell Beads

So you want to open a bead shop - but don't know where to start?

Before you start you need to work out whether it will be worthwhile. This can be subjective as the amount of profit you want to make depends on how much reward for you time effort and risk you want. One of the worst thing about people going into business is being too optimistic or too pessimistic. Some people just ignore the planning stage and hope it will all sort itself out magically. So rather than start something that you might later regret, do a bit of planning...www.australiabead.com

Get the numbers right.

Sales income needs to cover the cost of the products/goods you have sold, all of the operating costs and have enough left over to provide you with whatever income you need.

How much do you sell your beads for?
Many other retail businesses work on 100% mark up, this means that items that they purchase wholesale for say $1 would be sold for $2. It should also be noted that often retailers talk in terms of gross profit margin. In the example of cost $1 sell for $2, the gross profit margin is 50% (of the selling price).

Why such a price increase - well to answer this accurately, you to work backwards; adding all your costs and desired profit together. But for now consider that each dollar of profit you are making must cover all the operating costs, your income, any capital requirements (eg loan repayments) and make allowance for any inefficiencies in your stock. These inefficiencies come form various factors such as shoplifting, use of stock for displays, deterioration of stock, giving away free samples, holding stock that does not sell. For these reasons, some bead shops selling seed beads by the scoop would put 300 or 400% mark up on to make up for these inefficiencies.

Yin and Yang of business
In planning a business there is generally at least two options. Before making a decision about something that seems a really great idea, first consider that there is usually a negative side to every positive. For example, if you have the opportunity advertise in a local directory that you have heard is really well accepted. Before you decide to advertise, consider that many things could possible go wrong, such as the address may be incorrect in the advert, or you end up in a bad position, or as often happens, just not enough people actually buy after reading the ad to make it worthwhile. Running a business is a continual process of risk management and weighing up various options that are available to you. Often there will be more options than good and bad and you may want to colour group them or give them percentage values based on your perception of them.

Are beads enough? - Generally no
As we saw in the numbers section, you would have to sell an awful lot of beads to survive on just selling them. If you operated s shop where the rent was $500 per week, wanted $800 per week for your self and had about $500 per week of other overheads, you would need sales of at least $3,600 per week just to stay open (based on 50% profit margin).

To overcome this, you have two main choices, 1. to do other beady type things, or 2. to diversify into other products.

1.Other beady things can be quite a long list. It is usually based on the skills of the owner, for example, if you are good at making beaded Jewelery items; you might make then and sell them in your shop to customers who prefer premade items. The down side to this is that some of your customers may see this as inspiration and want to copy it.
So the main options to consider are; selling pre-made jewellery, doing repairs to customers projects, running classes, selling through other channels at the same time,
2.If you have a good understanding of the local clientele, you could consider what other products they buy. A common choice is candles, fragrant oils and various "new age" products. This allows you to offer products to customers who do not buy beads every week, the reason to come to the shop more regularly, the downside is that you lose the image of being bead specialist. Another option fo diversifying is to become a landlord and sub-lease part of your shop to a compatible business. Examples of this are glass blowing, craft supplies, artist supplies, etc, they are indirect competitors in one sense but another customer source on the other hand.

Other distribution channels
The good thing with beads is that there are quite a few ways you can sell them. ETSY, Ebay, local markets, to other shops, through a shopping cart website of your own.

Seting up a shop can be expensive. Two things to consider;
1.General for commercial premises, you will have to pay for every thing and the landlord will pay for nothing. Unless it is specifically in your lease, you as the tenant will have to provide the air conditioning system, shop fitting, floor covering etc, so in addition to counters, tables and shelving, you may have a substantial cost.
2.The time it takes to set a shop up. Unless you have negotiated a rent free period with the landlord, you will have money going out long before it comes in. Plan the schedule for the shop fit out as carefully as you can with any items that can be pre-fabricated off site and guaranteed deadlines for trades people. The other issue with setting up the shop is that you will be spending a lot of your time organising it and may not have any income.

Buying an existing business.
In my experience, it is very rare for some one to be 100% happy after buying some one elses business. In the large part, this is because no two people are identical in the way they would run a business, so if you pay some one for their hard work in building up the business and then choose to change things, you have reduced the value you get. One of the most common reasons that people give for selling a business is ill health. I may be cynical but I often feel that it is either the business s that created the ill health or that it is not profitable enough to pay staff wages for the owner to take some sick leave or both! Occasionally there are bargains where the previous owner has a very specific reason for getting out and if you can feel that you would be able to run the business profitably in the way that it is curently run, it then gives you the flexibility to slowly make changes and inject your own personality.

This article will give you some tips and pointers for starting a business. The most important ingredient in starting a business is research, therefore this article will provide you with tools not solutions. Most countries have free or low cost business advisers who can help signpost you to other resources. In the future you are likely to need an accountant and a lawyer, spend some time researching the best ones for you and your business and they will be a great source of assistance also. Meeting other business people can also be very helpful. The thing to remember here is that good business relationships may take some time o develop - just like friendships.

If you have any ideas or suggestions for improvements to this article, please let me know.

Graham Bell
Links

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