So what would be a good educated guess for a B&M tobacco shop start up costs rent not being factored in. I am just figuring inventory and such.
Startup costs
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I don't want to be a kill joy, but..... There are some older strings where this very topic has been discussed.
Needless to say; the start up costs are very substantial, as they are for any start up business. For a small decent inventory of pipes alone you are probably looking at between 30 and 50 thousand dollars. If you think about it a small selection of only 100 pipes sale prices averaged at $100 each... that's $10,000. A decent selection would be closer to 500 pipes, and if like The Briary you have around a thousand.... well... the average sale price will climb to $150+ each, owing to economy of scale; multiplied by 0.7, will render approx. actual cost.
$150,000 x 0.7 = $105.000.00 just for pipes and this is just a 30% margin (which is very low).
Some things to bear in mind are; the lower the cost for merchandise to be stocked in limited quantity, the higher the margin, conversely the higher the cost for merchandise to be stocked in limited quantities, the lower the margin. This is where many retailers make mistakes, and push the lower quality merchandise to increase turns on the higher margin product, thus the perception is that the store is oriented toward "the cheap stuff", and your long term viability is compromised. However; if you want quality the costs for product and operations are higher and a more difficult balancing act to maintain, but long term viability is increased through quality of product,reputation, and dedication to service (good will equity), thus a higher short term risk. (You must survive long enough to build good will equity.) The Briary has been in business for over 30 years, and has Grade A good will equity and a solid core customer base. That's just for pipes. Your higher margin items would include the product lines listed below.
Then you have accessories, and humidor, and tobacco, inventory insurance, display cases and other furniture, salaries and, healthcare costs, utilities, initial advertising, and subscription type advertising, web site setup costs, and a few other incidentals; e.g. permits. Also, you must choose the correct location. And, as a start up you will not get the best pricing on your merchandise.
It's a tough business... and I didn't mention "rent", and hopefully customers.
Needless to say; the start up costs are very substantial, as they are for any start up business. For a small decent inventory of pipes alone you are probably looking at between 30 and 50 thousand dollars. If you think about it a small selection of only 100 pipes sale prices averaged at $100 each... that's $10,000. A decent selection would be closer to 500 pipes, and if like The Briary you have around a thousand.... well... the average sale price will climb to $150+ each, owing to economy of scale; multiplied by 0.7, will render approx. actual cost.
$150,000 x 0.7 = $105.000.00 just for pipes and this is just a 30% margin (which is very low).
Some things to bear in mind are; the lower the cost for merchandise to be stocked in limited quantity, the higher the margin, conversely the higher the cost for merchandise to be stocked in limited quantities, the lower the margin. This is where many retailers make mistakes, and push the lower quality merchandise to increase turns on the higher margin product, thus the perception is that the store is oriented toward "the cheap stuff", and your long term viability is compromised. However; if you want quality the costs for product and operations are higher and a more difficult balancing act to maintain, but long term viability is increased through quality of product,reputation, and dedication to service (good will equity), thus a higher short term risk. (You must survive long enough to build good will equity.) The Briary has been in business for over 30 years, and has Grade A good will equity and a solid core customer base. That's just for pipes. Your higher margin items would include the product lines listed below.
Then you have accessories, and humidor, and tobacco, inventory insurance, display cases and other furniture, salaries and, healthcare costs, utilities, initial advertising, and subscription type advertising, web site setup costs, and a few other incidentals; e.g. permits. Also, you must choose the correct location. And, as a start up you will not get the best pricing on your merchandise.
It's a tough business... and I didn't mention "rent", and hopefully customers.
things for any shop owner to consider:
1. how much of my products must i sell to turn a desireable profit
2. how big is the market in my area
3. what is my competition, and how much of the market do they tend to
since pipes and pipe supplies are a relatively low volume item, you may have to expand to other tobacco products (cigars, cigaretttes, hookahs) in order to support selling the pipes you will enjoy selling. also, since you xan expand your reach by selling online aswell, especially helpful with such a specialty item. finally note that your local competition will usually have the default upper hand due to customer loyalty, and if you have to share the tobacco market, it may be best to select an untapped area without an existing tobacco shop.
good luck
1. how much of my products must i sell to turn a desireable profit
2. how big is the market in my area
3. what is my competition, and how much of the market do they tend to
since pipes and pipe supplies are a relatively low volume item, you may have to expand to other tobacco products (cigars, cigaretttes, hookahs) in order to support selling the pipes you will enjoy selling. also, since you xan expand your reach by selling online aswell, especially helpful with such a specialty item. finally note that your local competition will usually have the default upper hand due to customer loyalty, and if you have to share the tobacco market, it may be best to select an untapped area without an existing tobacco shop.
good luck
I was figuring about a 100k so at least I wasn't far off. I would get into the cigar market also. The location would keep me out of the hookah market to keep the type of customers decent. Location would be solid and with very minor if any competition in the area. IF I decided to do this it would be when I finished my quest for a higher education. So i would be looking around 5 to 7 years min. Hell by then god only knows if tobacco would be legal.
I would like to get my MBA first. The thing is since I am a Vet that saw some time in the Gulf there are many Small Buisness grants available to me and from what I was reading they would cover most if not all of startup costs. The location would be smack dab in the middle of a Private College area, so I figured offer a place to smoke, drink coffee, and study. Also I would keep around 100-150 pipes in stock, half being low budget then filling the other half with mid/high range pipes. With a good varity of bulk and tinned tobacco. I would also have to budget in the all expense trip for Kevin for the grand opening...LOL..
In Canada,here, the government has set it up that a business owner in this industry is designed to fail !! ( now ain't that just wonderful ??)...oooooo that makes the hair at the back of my neck scream !!!
Sounds like a plan to me Duncan.
Good luck, and study well.
And thank you for your service to our country, my family, and me.
Good luck, and study well.
And thank you for your service to our country, my family, and me.
The key to any successful business venture is to ensure your business plan is watertight. I guess as an MBA student that should be second nature to you.
At this stage I'd be asking questions to successful B&M's and find out what it is they are doing right and what pitfalls they found. Even if this means going to see them in person. Also I'd be going to see the B&M's that are failing too. Although I guess I'd be careful what questions I asked.
Make sure you write down all ideas and questions in a pocket book that you carry with you at all times, if your out-and-about. And when you get home, make sure you write it up properly (including back-up copies).
I know you said there was a possible grant out there available to you as a Vet, but have a look for others as well.
Keep it realistic and always remember the 7 P's... Prior Planning and Preparation Prevents a Pi** Poor Performance.
I wish you so much luck buddy, more so as you are an ex-serviceman.
At this stage I'd be asking questions to successful B&M's and find out what it is they are doing right and what pitfalls they found. Even if this means going to see them in person. Also I'd be going to see the B&M's that are failing too. Although I guess I'd be careful what questions I asked.
Make sure you write down all ideas and questions in a pocket book that you carry with you at all times, if your out-and-about. And when you get home, make sure you write it up properly (including back-up copies).
I know you said there was a possible grant out there available to you as a Vet, but have a look for others as well.
Keep it realistic and always remember the 7 P's... Prior Planning and Preparation Prevents a Pi** Poor Performance.
I wish you so much luck buddy, more so as you are an ex-serviceman.
I still have awhile for that to all happen. I am all about the prior proper planning, that is why I am starting now kinda. When ever I get the chance and I can get to a B&M I always take a mental note of setup and product. I have a decent plan or so I believe but I want to hone it and learn all the loopholes before even diving into this pool.
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