Home – New Forums Starting your journey First business. So excited ! Retail Fitout costs, advice ?

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  • #978178
    omocha
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    Hi ! Just a Lil’ warning, this is quite a post. :D

    I’m a new member here, and i was looking around for information, but could hardly find anything useful. So i stumbled on this forum and boy do i love the community ! Full of like-minded people all helping each other out. It’s great ! I think I’ll stick around ;p

    Anyways, I’m 19, a young entrepreneur (or yet ?)
    Studying Small business management cert IV at TAFE. And did about a year of Business and commerce at university, which i dropped out of. lol

    I have found an excellent business opportunity, one where there is a extra large gap in the market which is also a relatively new and young market. Not just in my local area, but a very wide area, in fact the next “similar” store is the only one in the Sydney City CBD, and they only stock a certain type of the product group. I am out at the south western suburbs. Ive done my market research and pried into every store in Australia carrying similar products. Melbourne has 3 to 4 stores right in the CBD and a few others in the suburbs, all very popular. Brisbane also has a few very crowded stores and the market for my product is growing very rapidly. Sydney is still getting there, so this is my opportunity ! And they just opened a new store in Brisbane last month !

    I did trial selling on eBay, and it was pretty good success despite the online competition from international sellers. There is a local markets/stalls area the next suburb down, i held a trial stall there for 2 weekends, and it was VERY popular. My planned location is very ideal, with everything i need to ease myself into the market. It is well anchored by big things. ;) Ive sniffed around and done a lot of examining. This is the perfect place, with my target market readily available in this area and the surrounds. I’m not telling you where it is, but the location is being developed quite nicely by the local council for the past few years and still more to come. And in a few years time, i can see this place growing up even more. xD

    So there is my babbling on, and you can see how keen and excited i am.
    I am working two jobs and trying to save up all the money i can, while i study TAFE online and pray that my opportunity stays open for a little longer ! The main reason of this post however, seeing that i am ready to open business around October/November:

    1. Retail Fit outs !
    Does anybody have an idea of the costs for a basic retail fitout, for say, a 50-60sqm shop ? Ive looked everywhere, and im not ready for a real quote yet. Assume that the floors need to be carpeted, and walls painted, basic shelving and a window front as well. Give or take a couple thousand, what would be the price bracket ? I’m on a budget, so I’d like to know if there’s anything i can look at, along with the price ranges.

    2. Advice !
    Does anyone have any advice regarding me rushing into business ? Have i missed out on something disastrously important in my babble ?
    What are your ideas on a business partner. I’ve met someone great lately and they are also very interested, but I’m not sure is it’s the right thing to do… Although it does sound very tempting, seeing they are very willing to invest money as well.

    3. I have received advice from a friend to spread rumors about my store to get people hyped up. Is this a good idea ?
    I’m really worried someone might do the same thing, after all i am only 19 and still working my bum off. You never know who has cash ready and can jump on someone else’ plans.

    4. Leasing ! I’m shaky on this one. Do i really need a solicitor ? The company that works the leases for these properties is pretty big, and manages a quite a few of the commercial plots in my area. Is it possible to negotiate a lease a bit cheaper ? Does a discounted lease sound possible ? I’m still reading up about lease contracts and exits and all these things, so confusing.

    5. Is there anything else you think i should know ? I am pretty young, and this is my first business as well. I am scared for sure, but i love these products myself and i have big plans.

    Thank you in advance !
    I look forward to reading your responses (:

    #1105250
    DJ_m
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    1. Retail Fit outs !
    Does anybody have an idea of the costs for a basic retail fitout, for say, a 50-60sqm shop ? Ive looked everywhere, and im not ready for a real quote yet. Assume that the floors need to be carpeted, and walls painted, basic shelving and a window front as well. Give or take a couple thousand, what would be the price bracket ? I’m on a budget, so I’d like to know if there’s anything i can look at, along with the price ranges.

    How long is a piece of string? 50-60sqm by a professional shopfitting firm including pland and drawings $40,000-100,000. DIY, you should figure $20k+ minimum by the time you have put in comms, EPOS etc.

    2. Advice !
    Does anyone have any advice regarding me rushing into business ? Have i missed out on something disastrously important in my babble ?
    What are your ideas on a business partner. I’ve met someone great lately and they are also very interested, but I’m not sure is it’s the right thing to do… Although it does sound very tempting, seeing they are very willing to invest money as well.

    Generally better off with someone with some experience particularly if they have cash. 50% of something successful is better than 100% of a failure.

    3. I have received advice from a friend to spread rumors about my store to get people hyped up. Is this a good idea ?
    I’m really worried someone might do the same thing, after all i am only 19 and still working my bum off. You never know who has cash ready and can jump on someone else’ plans.

    I don’t think people will get that ‘hyped’ unless you are giving away free money? And if they do get ‘hyped up’ and you are months away then the hype is wasted… wait until you are close to opening.

    4. Leasing ! I’m shaky on this one. Do i really need a solicitor ? The company that works the leases for these properties is pretty big, and manages a quite a few of the commercial plots in my area. Is it possible to negotiate a lease a bit cheaper ? Does a discounted lease sound possible ? I’m still reading up about lease contracts and exits and all these things, so confusing.

    Yes and no. Everything will depend on how popular the area is and vacancy rates etc. I have just leased 75sqm in Melbourne CBD and the best I could negotiate was an extra month rent free and a reduced yearly rent increase. Zero negotiating from the landlord, but with a building of 60 tenants and only two vacancies then why would he? As a general rule you should get 3 months rent free (or 6 months half rent) for a three year lease and 6 months on a 5 year lease. If you are in an area that is struggling for tenants then you could do a lot better. Landlords will give preferential deals to tenants they would rather have (large multi-nationals etc.).

    For retail then passing trade is everything. EVERYTHING. If your business won’t work because of the rent then it likely won’t work.

    Do you need a solicitor? No not really but sounds like you should get one. To get a lease agreement looked at will be less than a grand. If you are a busy shopping mall then it is likely there is no flexibility in the lease so in my mind a solicitor is a waste of money if you know how to read..nontheless it would probably be wise to find a good all-round solicitor who can advise you on other issues as well as the lease.

    Good luck.

    DM

    #1105251
    MyGreatIdea
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    My only suggestion, and since you are studying I’m assuming you already have it under control, is your costings and cash flow analysis.

    How much your stock will cost (delivered) including all customs/import costs, your expected outgoings including rent, electricity, insurance, wages (the list is endless) and how many units you will need to sell per week to firstly, cover costs, and secondly to make a profit.

    Wendy :)

    #1105252
    Kennethti
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    1. Retail Fit outs !

    It will depend on where you want to set up business, what the layout of the shop will look like, and how you want it fitted out. I’ve seen all sorts of figures however at the end of the day you’ll probably have to do the homework yourself, call around a few places, and get quotes.

    Some landlords as an incentive offer some assistance with retail fit outs.

    2. Advice !

    It’s hard to speculate on what you can or can’t do – you haven’t really told us what you’re doing other than it being something in retail.

    As for business partners, should you proceed you should put together a partnership agreement or a shareholder’s agreement (depending on what kind of company structure you have). This is critically important to determine what your responsibilities are, what your partner’s responsibilities are, and more importantly, what happens if you have a disagreement and need to go your separate ways.

    3. I have received advice from a friend to spread rumors about my store to get people hyped up. Is this a good idea ?

    I’m sure that you can market your store some way without telling others the critical aspect of the store. Again, you’re vague on details. It’s hard to speculate what you can or can’t do.

    4. Leasing ! I’m shaky on this one. Do i really need a solicitor ?

    Yes. If you’re confused, you do.

    5. Is there anything else you think i should know ?

    Trade Marks, Business Names, Australian Consumer Law, Retail Leases Act. If you’re playing music in the store you need to get licenses to play the music. Development Approval for your fit out (if required). Employment or contractors (Fair Work Act). You’ll also need to consider all costs associated with the lease – parking licenses, your share of outgoings, electricity, council rates, land tax, and some large retail places also levy a “marketing” fee.

    #1105253
    JacquiPryor
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    Just to add to Kenneth’s list of things to consider – Insurance. If you are going to operate a shop with customers walking in and out, you need to cover yourself in the event someone is injured (i.e. slips in your shop) – and, may also require product liability insurance. Also once your structure is decided on – either a solicitor or account could help – consider whether you need to be registering for GST and ensure tax side of the business is properly organised and in hand.

    If you are considering speaking to a solicitor about the lease side of things – have a chat with them also about the best business structure for your circumstances, especially if umming and ahhing about a possible partner. It may be that a company set up, where that person can be a share holder may work better for you than a partnership with them.

    All the best :)

    #1105254
    dncpn
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    Hi there,

    Selling online is much more easier to manage. Your market is unlimited. Not to mention that your expenses is literally way below. You do not have to lease a plce, no employees on your payroll, no electricity bill, and you do not need to be there physically. You can be anywhere and still do business.

    Most of our clients prefer to come up with an e-Commerce website. Transact business and promote your website online. Though the competition is tough online, once you get into your groove, sure profit is in you.

    Regards,
    Dion

    #1105255
    Anonymous
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    Hi Dion,

    Welcome to the forum, and thanks for your advice to omocha.

    So that we all know who we’re chatting with, please start by posting in the introductions thread and also let us know a little about yourself by filling in your profile in ‘Control panel‘, including details of which state or suburb of Australia you’re based in. Having a completed forum profile is very important to other community members and shows them that you do indeed reside in Australia and that you’re here to participate openly and genuinely.

    As a newbie to the community, we’d also be grateful if you could take a few minutes to read through the forum guidelines.

    Thanks for joining us, we’re looking forward to getting to know you.

    Jayne

    #1105256
    inxpress111
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    I have to agree with the above posts – why not sell online and once you have made a name for yourself then look for a bricks and mortar store front. Your start up costs would be tiny compared to a lease and you would have so many more potential customers than those just walking by. Utilising the markets in your area would also get your product out there.

    A number of my customer are on-line stores who work from home and in their own hours but looking at their stores on the web you wouldn’t know.

    I’ve been in a shop front situation – years and years ago in retail and there is nothing worst than having a quiet day and knowing that you have to pay the rent at the end of the month.

    Maybe I misunderstood your post but you said that some of the stores in Australia only sell some of the product group – are we talking about a brand name here – and if so that is something totally different – they will determine how much you spend on outfitting the store.

    Whatever way you go well done on your initiative and drive and hope you have a wonderful success. Keep us posted on it all.

    #1105257
    Cats
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    Is this something that you could really do online? It really is the way of the future and will bring your costs way down. Imagine if you spent what it would cost you to set up on a dream website and SEO. And it seems as though there are many good website developers right here @ FS so that is a great start.

    It is a fantastic way for you to keep costs down while seriously testing the water. If it goes absolutely well, then question whether or not a physical shop is needed, or maybe you may just need a warehouse and continue online selling.

    All the best with whatever you decide :)

    Catherine

    #1105258
    omocha
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    Thanks for all your replies. Very informative and really got me thinking about a few things.

    I think i will have to talk to an accountant.
    Also originally it was me and a possible partner. Now another close friend wants in on this. lol

    So much to think about…

    I have already tried selling online. Ebay was the best for me, but the listing prices are gradually increasing and it just makes me have second thoughts, because i also sell a lot of small low priced items as well, the fees just take out a chunk of the profits i could be making. Even though they sold very well, it was only a trial sell for me. I also set up my own website for a while and spent a bit of money on advertising. It didn’t go so well, mostly cause i worked on it myself without help.. and i’m not too experienced in that aspect.
    There was also fierce competition from international and national online sellers… I couldn’t compete.

    It has always been my dream to have a bricks and mortar store as well, and having things there on display for people to come in and admire and pick n choose. To me it just sounds way better than online retailing. With that in mind, i will still build an online store again to compliment my physical store.

    And working with my partner, we can split the time to look after the shop, as i plan to keep my current full time job to help pay the rent until the store is stable enough to support itself. Which will be a while…

    I WILL START THIS BUSINESS.
    and i will keep posting updates as i get closer to success.

    Thanks again guys !
    Joining this forum was a excellent choice. Now i have another source of motivation :D

    #1105259
    omocha
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    Kennethti, post: 116797 wrote:
    If you’re playing music in the store you need to get licenses to play the music.

    Does anyone have more information on this topic ?

    I plan to play music and movie trailers, and also commercials in my store which are related to some of my products.

    EDIT: sorry kenneth, i forgo to cut that out, ty

    #1105260
    Kennethti
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    omocha, post: 117269 wrote:
    Does anyone have more information on this topic ?

    I plan to play music and movie trailers, and also commercials in my store which are related to some of my products.

    You will need permission to play music that doesn’t belong to you in a shop. If you know the artist (for example, your friend’s band) this isn’t an issue, just ask your friend if that’s fine and bob’s your uncle. Same if it’s your own music. If it’s your own commercials as long as all of the intellectual property in the commercial belongs to you, then it’s not an issue. If it’s not your own commercials, you would need the appropriate permissions from the owner of those commercials. Same with movie trailers – they don’t belong to you, after all.

    For commercial music, the stuff you hear on radios, there are two associations that can assist you with getting the appropriate licenses. These are APRA (http://www.apra-amcos.com.au/) and PPCA (http://www.ppca.com.au/). If you are a business that plays music in the premises you will likely need to get licenses from both bodies.

    Long story short – if you’re playing commercial music in the store, as in stuff you would normally hear from the radio, then you have to have the appropriate licenses.

    #1105261
    AgentMail
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    I am sure if you do enough googling you will find information on starting in retail on a shoestring budget.

    DO NOT be afraid to negotiate on the lease. Just because they are a big corporation, don’t be scared of this. If your shop has already been vacant for 3 months, they will be starting to get antsy. If a shop at $30,000 pa sits empty for 3 months, that is essentially $7,500 they have lost from the years potential revenue. They will not want to lose more. As others have mentioned, they also will not want to look at devaluing by reducing the lease, so it might pay to negotiate for other things, such as fitouts and free months.

    Most of the larger groups have a fitout budget that they are allowed to use to get new tenants in, so this is one area you should definitely try to exploit. The lease term is another one. Retail might be a bit harder, but you don’t really want to commit to longer than 12 months if you can help it.

    Whilst I know a lot of people on here are in favour of an online store, and it is certainly the safer route, there is still absolutely a place for bricks and motar businesses. But without knowing what you are selling, I can’t say for sure which category yours falls in to :)

    #1105262
    JolyV
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    dncpn, post: 116817 wrote:
    Hi there,

    Selling online is much more easier to manage. Your market is unlimited. Not to mention that your expenses is literally way below. You do not have to lease a plce, no employees on your payroll, no electricity bill, and you do not need to be there physically. You can be anywhere and still do business.

    Most of our clients prefer to come up with an e-Commerce website. Transact business and promote your website online. Though the competition is tough online, once you get into your groove, sure profit is in you.

    Regards,
    Dion

    TOTALLY I agree with you

    #1105263
    Avatar Consulting
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    Starting a retail business

    Hi

    It sounds like you have boundless energy and really want to run your own business. I also train students in the Cert IV Small Business Management and I am suprised that your questions havent been answered already as this course specifically covers these areas.

    Retail leases and fitout information is in the back of the training manual and partnerships is in the first section.

    All the advice posted here earlier is on the money and this is a big decision you are making as lease contracts last years and will eat most of your sales revenue.

    1. Fitout costs depend on style & size. Expect $35-50K as min
    2. Cost of running store will include outgoings, insurances, legal & staffing
    3. You can get business advice; from business consultants, financial, insurance & legal advisors all performing for their clients at a cost ($150-$350 per hr is average)
    4. Before signing any lease, get a legal retail expert to review it

    Remember each partner you add will lower profit returns and add a layer of complexity. In my experience, clients have more problems with their partners than employees or customers. Each partner is 100% responsible for all costs or damages incurred regardless of how many partners there are. This means if your partners were chosen poorly, you may be left holding all the expenses and no profits because they cleaned out the bank and did a runner.

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