Got an offer today. Need some advice

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67
Need some help guys. Everyone chime in and tell me what you think.
The first part of this post was placed on another forum earlier this week.


I am currently working at a local exotic lumber/woodworking store part time 30 hrs per week. I enjoy it and I get a good discount .... However this limits my time in my shop quite a bit. I also find myself putting in very long hrs trying to keep up on things. My averaged day is opening the store at 7:30 and closing my shop around midnight.
Another local store across town has offerd for me to move my woodworking business to their location. The deal would be for me to set up shop in the back of their store for a minimal rent. The space is about 1600 Sqft. They would also give me about 28hrs per week part time in the store. When things are slow they have no problem with me being in the back in my shop. The space is fully equipped and I would only have to move a few tools over. They also want to sell the store down the road and would like me to consider buying it. We talked about this about a year ago but I was unable to do it. They mentioned they would make it relatively easy for me to buy if I wanted it. Their son started the business and had to relocate with his wife. The owners were left with a business they really did not want so they are motivated to get out of it.

Part II The update

Met with the store owners today. Was a good meeting. We discussed buying the shop in the future but the meeting concetrated on me moving my woodworking business into their shop space.
Here is the deal....
They want me to move my business down to their store. The shop is located in the heart of the shopping district .5 miles from the largest mall in town. We are directly behind a SAMS and Walmart and a block away from Lowes. The back area is about 3300 Sqft which I would have half. Not a lot of space but for a one man operation not too bad. I have 24/7 access to the shop. The shop is already equipped but I would want to move some of my stuff (my slider) in eventually. My rent would be 500.00 per month and that includes utilities. All business I bring in is mine. Any business they bring in they get a small percentage. The owners own a small local advertising paper they distribute througout the nicer neigborhoods in town. They would provide me with free advertising in their paper. They want me to work in the store Tuesday, Wed, and Thurs (their slowest days of the week) When there are no customers I work in my shop during that time. I only have to monitor the store and wait on the occasional customer. This means I am getting paid to work in my shop. Sounds like a good deal.
I know the guy that is in there now and he loves it. He gets a lot of small repair jobs ($60.00 mimimum charge) most average around $100-$150. The owners are friends with a designer that has provided him with about $5K worth of work in the past few months. Only reason he is leaving is his wife got a great job and he has to relocate out of town.
I can advertise in the store. Meet with my clients in the store and conduct business all while working in the store. They also made me an offer to teach classes in the evenings if I want to and I take 100% of any tuition I charge for the class. I am doing this now at the other store I work at but only getting paid an hourly wage.
I have known the owners of this store for a couple of years now. They are good decent people. Straight shooters and they just want to keep the place running. To them it is a win/win situation. They get an employee they really can not afford to pay and I get a shop and business location I could never afford to pay. Everything I buy (supplies, tools, etc) is at cost plus 10%. I will not be running the store just working in it. What do you think

Greg
 
It does sound great. Not only are you going to be able to increase your shop time, but you can a place to find new custumers. Plus the free advertisment. Go for it, it looks like you will both be happy with the deal.
 
It sounds like a very good offer..................what is the catch? :huh:

You know what they say, "If it sounds too good to be true, it most likely is"..........just being overly cautious.

A few questions.

What is the worst case scenario you can see happening in say six months or a year from now?

For example, lets say they decide to close up the store earlier than you thought and want to sell it NOW....... and you are not in a position to buy........................ would you just move back to your home?

It really does sound good, the way you are describing it, but I have to ask, do you REALLY want to own a retail shop?

Retail can SUCK HARD, I know, I'm in retail.

If you buy the store, would your shop time take a serious hit, and could you end up doing a job you don't want to be doing (retail sales) instead of building stuff?

Just asking.

If it all works out, you must be living right! :thumb:
 
Stu,
All good questions.
They have a lease until Sept 2008. He has already told me his sale price and said that would not go up if I wanted it.
No I do not really want to be in retail but ownership of this shop could really be good for my woodworking business also. Especially if I want to grow or expand with employees.

Worst case scenario is I move back to my shop and keep on plugging along.

These are really decent folks. They have bent over backwards on pricing equipment for me. They give all the guys at the base a huge discount. Very mom and pop. They have money and the store was purchased for their son who had to leave. They are not pressed to sell but would like to.

This does sound too good to be true but I can not find any flaws. Only thing I would have to do is get insurance

Greg
 
Hmmmm...

Stu brings up some good points.

Some other questions/comments.

What kind of store, specifically, is this?

Who, besides you, will be in the store on Tue, Wed, Thur? If it's only you...I would not plan on doing anything in your "shop" that would require a lot of concentration. Trying to do finish work, precision cuts, glueing, allignment and get interupted by customers, who have priority on those days, could cost you dearly.

What if you are in the middle of a serious discussion with one of "your" customers..when a "store" customer comes in. The store customer has priority, right? If I were "your" customer...I might wonder about your commitment to me and my project if you have to keep running off to attend to "store business".

I would be hesitant to get into a situation where mixing your business, and your other job could cause you to not do well at either...and loose one or the other.

I just see a situation where you become a solution to the owners problem, or plan, but not necessarily a "win-win" situation if you think you are going to be able to really build up your own business at the same time, at least those 3 days.

I don't mean to be negative, but as Stu pointed out..."too good..

Another Greg
 
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They have a lease until Sept 2008. He has already told me his sale price and said that would not go up if I wanted it. Greg

Are you saying they are leasing the store...they don't own it? If they are leasing...what do you do in Sept 2008? Commit to lease the store location, do your own thing...? Lease the spot and buy the current business and merge yours? What if you can't lease the spot? Rent goes up more than you can afford at the time?
 
Greg,
All good points. Thank you for bringing them up. This is why I love this forum. Yes they are leasing the store. Worst case scenario is I move to another location or back home. Hopefully I will have built up enough business and reputation to follow me.

The store is a woodworking store similar to Woodcraft. Store customers are the priority. That will require me to schedule my work. If I need to do finishing work on a project I can come in early and do it prior to opening up or stay late. My customers get treated the same way the store customers get treated. First come first served. The guy that is in there now says he usually does not see a store customer until around 10AM or later. Then they just come in throughout the day. Mid week tue/wed/thu is very slow. He averages about 6 hrs in the shop. Owner is fine with that.

Right now I see the cons you bring up are a matter of concern but not sure they outweigh the pros yet. Look at it this way. Any work I can do while monitoring the store is bonus. Right now as I sit here and type I am not getting paid a cent. In the store I will be making money. Same goes to making Jigs, shop cabinets etc. If I am not working for a client I am not getting paid. In the store I can do all this while paying my shop rent.

Keep em comming....

Greg
 
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Greg,

What is the situation with the "store down the road"? Is it still open? How is business there? Is it still for sale? (the business, as I assume the space is leased too.(?)) Do you have any interest in it?

What is your goal? Where do you want to be, business wise, in Sept. 08'

If the shop is "fully equipped" now (except for your slider), would you want/have to move your shop there? Why not just use their shop for what you can do there on Tue ~ Wed and everything else at your shop...saving moving, damage, hassle.

Would you be paying rent for doing your business in their store? Is that allowed in their lease (they can sublease space to you)?

What about your liability if you cause a fire, excess noise, smell (stain, varnish, cleaner etc.) Not just physical damage, but also loss of business...if you also damage the neighboring businesses?

Are you covered if they have a fire/burglery, etc. in the main store if it damages your shop?

How will you set up your accounting, reports so they are comfortable you are giving them their 10% on business they bring to you? How is it determined if business is generated by you or them... In other words, who decides if a customer is yours or theirs?

Again, not to be negative...just devil's advocate, maybe. :dunno:
 
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Sounds good. But I would nail down the details in a contract. The part that bothers me is when would you be working for them and when would you be working for yourself? What if they need you in front so much you can't get to the shop? What if you have to meet a deadline with a shop project and they need you in front? That's a potential conflict, even between nice folks. Bizzness is bizzness. Get it on paper.
 
Sounds like a decent arrangement if you think through all the various scenarios that may occur. I'm not clear on your primary goal here as you mention more shop time as well as working the store and possibly teaching classes.

Nice to work with honest, decent, straight shooters, but I prefer to assume that at some point, that relationship won't mean squat, for any number of reasons: owners have a change of heart, health/financial problems, you're sick or injured, etc., etc.

I'm assuming you're doing this as your current shop is too small for the increased work you anticipate doing. You said, "I also find myself putting in very long hrs trying to keep up on things. My averaged day is opening the store at 7:30 and closing my shop around midnight." I don't exactly see how you're going to add that much shop time to your work when you mentioned you'd be in the store about the same # of hours as you're working now. I'd plan on your "store" days not being as productive as other days due to interruptions. As for your customers, you can always try to schedule meetings with them Fri - Mon. And then teaching classes? That'll certainly take time away from your shop time.

Is access to your shop and equipment restricted for when you're not there? And, as you mentioned, insurance is a biggie. What if it's your fault that the whole place burns and they loose all their inventory? . . or a fire in their store destroys all your equipment and some partially completed projects? Need to CYA for those kinds of things.

Just keep bouncing ideas off people here and elsewhere and you should be prepared to make a go of it - with one or more fall back options.

Mike
 
greg, you own your tools......you have skill-n-knowledge.....you have a place to work now... these "good folks" are offering you floor space in exchange for labor?.........you have floor space!
the way i see the offer you`d be getting exposure to other woodworkers....not necessarly potential clients.....( how many of us pay to have stuff made?)
i`d offer to teach classes on their equipment for a salary.....if you need money right now then go work as their employee......don`t work to rent space you don`t need........there`s my .02 tod
 
All,
Good points and once again thanks.
Greg
Customers are customers. The shop gets a small percentage of work that I do that comes through the store. Therefore first come first serve. This is a small mom and pop shop. Not Lowes....No mad rush of dozens of customers. I have been shopping there for 2 years Never saw more that 4 at a time. Ususally old timers just browsing. People come in to chat, drink coffee, eat the donuts and talk woodworking. This is managable.

Not sure what store down the road you are talking about. Could you be more specific.

RE: Subleasing. I do not know the specifics yet. However they have been there for 5 years and part of the space has been subleased to a guy that builds the side tables for Jet table saws. He has been there the whole time with zero issues from the owners. Like I said good decent folks. They have helped the guy who has to leave quite a bit.

The shop is fully equipped. I live out in the sticks. It takes me over an hour round trip to make a run to the store to get supplies. Now I have any supplies within reach and I can get to other supplies within mins. I can also get my lumber delivered to the store. They do not deliver where I live.
Did I mention I pay 10% over cost on everything.

Insurance: I will get insurance to cover me and my equipment and liability. I would need this if I was leasing a space in an industrial park. If the place next store burns down and my place catches on fires also????? I will work the details with the insurance guy to make sure I am covered. They have insurance to cover their shop and I will work those details out too.

As far as figuring out where did the business come from and who gets what... No issues from the guy that is moving out. They know me and know that I am an honest broker. The only other employee is a retired Navy Captain and I am retired Navy Commander. I think we will be able to figure this out. If they trust me enough to just keep a tally of the supplies I use I think I can trust them too. I keep good books and we should not have a problem with it.

Mike,
Shop time is the goal. But so is growing my business. This is an opportunity to grow my business, get my name out and get more work and cashflow. I will be an employee getting paid to work in my shop.... I know this sounds way too good but that is the deal. I know most of the cabinetmakers/woodworkers in town. The guy who has to leave does not want too. Prior to moving into the store he was unknown. Now he is getting called in to do work in million dollar homes.

I get paid to run my business If I was to work a part time job making the same hourly wage I would get ZERO shop time while at work. Lets just say I have a busy day at the store and I can only work one or two hours in the shop. I just got 2 more hours that I would have gotten at the other job. When I close the shop I do not have to commute to my shop to get to work. I just go in the back and start working. I see a huge advantage to this. Now best case scenario is I get to the shop and have no customers until lunch time. Say I get busy and have to spend 2 hrs waiting on customers. Then I get back in the shop for another 3 hrs until the end of the day customers start coming in. I just put in 5 to 6 hrs in my shop working on a project (which I am getting paid for by my customer) while getting my hourly wage at the store. Whats not to like here. Maybe I am not thinking clearly. But this seems to be a good deal.

Keep em coming. Make sure I am covering my bases.

Greg
 
Tod,
I was waiting for you. You are absolutly correct on all accounts. In fact everyone that has responded is correct. Most of the customers are woodworkers. However the store advertises custom woodworking and they get calls everyday for work. Some small stuff and the ocasional big stuff.

LET ME CLARIFY.... THIS IS AN OFFER ONLY.....

They want me I have not signed on for anything. That is why I posted. I want to hear the opinions of others and see what I am not looking at. There space has only one advantage to mine. Location......

Working at the store will only provide me more cash on hand, free advertising, and a bit more exposure.

Greg
 
Another local store across town has offerd for me to move my woodworking business to their location. ... They also want to sell the store down the road and would like me to consider buying it. We talked about this about a year ago but I was unable to do it. They mentioned they would make it relatively easy for me to buy if I wanted it. Their son started the business and had to relocate with his wife. The owners were left with a business they really did not want so they are motivated to get out of it....

Greg

Greg,

This is the other store I was asking about... You mentioned it in your first post here.

Thanks.
 
Quote: This is a small mom and pop shop. Not Lowes....No mad rush of dozens of customers. I have been shopping there for 2 years Never saw more that 4 at a time. Ususally old timers just browsing. People come in to chat, drink coffee, eat the donuts and talk woodworking. This is managable.


That is what I would be afraid of more than anything. I love to talk with other ww'ers about the craft and I would be likely to waste a lot of time talking shop rather than making sawdust. The more you entertain those old browsers the more often and longer they will stay.

I work in my shop part time, mostly weekends and when I have a good friend come over I usually waste at least an hour with each one. I was building doors last Saturday and one of my buddies came over to pick up something I was giving him and he stayed at least an hour. I enjoyed the visit and value his friendship greatly but I wound up wasting some precious shop time. It was my own fault because he would have been just as happy for me to continue working. In that situation you are talking about I would be leary about just how much shop time you could expect.
 
Ditto what Jim said... I think we have all had that situation, but we have the liberty to "have to make a phone call", tell the wife to "come get me in 15 minutes"...or some excuse. You can't do that with customers. They will also probably want to talk more "shop" because you are the new guy there every Tue, Wed and Thur.

If I understand correctly, you have to drive more than an hour to the shop to pickup supplies. If you do this, you will have to do this twice a day, three days a week...minimum, plus drive over an hour any other day you work with your tools if they are moved there. So the travel time alone will be several hours, minimum, each week. There is a cost involved in that.

You mentioned you can get lumber delivered to the store, but not to your home. Is this lumber purchased through the store, so you get it at cost +10%, or purchased at regular price and just delivered there. Would they unload the lumber at the store, or would you have to go and help load your truck when it arrives (customers in the store or not). There may be a savings there, or not.

What amount of purchases do you anticipate over the next year and a half, and what amount of savings do you anticipate that would be. Is there any reasonable limit on the amount you can purchase at Cost +10%? Is 10% enough to cover the cost of handling the transaction, paperwork including sales, inventory and tax recording? Believe me, these are not cheap in a very low volume store. If it looks like you are getting more benefit, spending time buying for yourself, than selling for the business owners, they may begin to have doubts about the policy...

You have your travel costs (including gas/maint.repair), rent, insurance...less your salary, savings on materials, actual cost of advertising... What does the bottom line add up to?

Whats not to like here. Maybe I am not thinking clearly. But this seems to be a good deal.
I hope you don't think I'm trying to rain on your parade... I have just done a similar thing like this before.
 
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Greg,
No I do not think you are trying to rain on my parade. In fact I know you are trying to help. I would do the same thing. You, Tod and Jim have given me quite a bit of food for thought.

I have thought about the Pros of this arrangement and you have provided me some of the Cons to think about.

One big Con is Tuesday through Thursday I am still tied down. I can not go on calls or visit clients. This could cost me a lot of work.

Another is what happens when the other employee gets sick. Will I be expected to hold down the Fort. Probably. What happens when I am in the shop working on my days off and they need help with something?
What happens if there is an emergency am I going to get called in to help in the store?????????

More food for my thought

Greg
 
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