advice on opening a home based store

Im looking to try and open a small home based store then moving to a bigger commercial store if everything works out. So I am trying to figure out how I would order wholesale live items, fresh water and salt as well as selling whole sale dry goods. There is 1 LFS in our area and the next closest is 50 miles away and it really isn't great. Our LFS is also crappy but has a bigger store with ok selection. But the store is dirty, owner is always giving crappy advice. All that in mind.....

Would I have to be a LLC or an INC?
Would doing aquarium maintenance and leased tanks be a good idea along with a store?
Would I need a brick and mortar store or just a separate building on my home property?
What do I need to buy whole sale and sell whole sale in Georgia?
what are overhead costs generally when you start up a store?
where is a good place to get quality whole sale items near GA?

any one who owns a small store I would greatly appreciate the advice, thx

 

You are asking a huge question. My first step would be to make sure you are permitted to operate a business in your home. Some towns and boroughs prohibit that, so that may answer many of your subsequent questions. Are you planning an actual open to the public store in your home or a mail order business? You will definitely want to do an LLC or Inc, I prefer LLCs but to each his own. I don't have much direct experience with small business, but my father owned his own and I currently work for one, although neither was a retail store. You will also need the requisite licenses GA requires. If you want to sell whole sale, you will need to contact each individual company, many have contact forms specifically for this on their websites.

As for the maintenance and leased tanks, my work currently employs a company to maintain our tanks. That is a full time job and they are in the field all day everyday. It's only 2 guys. Unless you plan on hiring employees whom you trust and are knowledgable, I would hold off on that as you individually can't do both.

Finally, as for costs, I really don't know, but my guess would be tens of thousands, if not 6 figures, especially if you rent a store as you will need to fit it out to suit your needs. Think of the livestock and equipment you will need to purchase plus the equipment to keep everything alive. IMO, this is the kind of business you need to go big or go home as if you try to start small, you won't get the customer base. Think of the stores you have walked in and thought they really had nothing, would you go back there? You need to make an impact with the customer and make an impression where they will come back and spread the word.

 

I know a few LFS owners who started off with no store front and once they got bigger opened a retail store. Most of them did start with maintaining tanks and selling their livestock to the owners of said tanks. I think doing this would bring your cost down to a manageable level if you are able to work out of your home and not have to pay for rental property.

I agree with GMan89 on all the avenues to find out how to get licensed though.

I have actually thought about doing the same and basically working out of my house until i can establish a retail space.

 

I know people that went this route successfully. Take my advice for what it is, and with the understanding that I'm telling you what I think is the best answer, not the only answer.

Don't. Do the homework, make the plans, find the way to finance it, and do all the other stuff required to make a store happen. Prove to yourself you have the drive, insight, commitment, and innovative ideas to make it work.

Go big or go home isn't a multiple choice answer after all.

 

I don't know much about it it but I suspect the maintenance part is where the money is.

 

My wife and I established an S-Corp when we purchased our furniture store for 2 main reasons.
1. If either of us ever leave the company - under an LLC it becomes dissolved and a new LLC must be established.
2. An S-Corp provides a little more protection of personal assets if something ever happens.

You'll need a business license and Federal tax ID before anyone wholesaler will do business with you. They'll need it for their records.
Get a lawyer involved early. Although, you can create your documents online and get them to somewhat do the job a lawyer will know exactly how things need to be worded to provide you with the most protection.

Do your research. You have time, especially if your starting your own business and not buying an established one. Go slow and research, research and then research.
Are you in the right location, can the local area support your business or do you need to sell via internet. Do you have the $$$ to keep your business afloat for a year or more while your name is getting out there. For most small business brick and mortar stores, doesn't matter what type, the internet companies put a big hurt on them. How often do you visit your LFS and look at the price of something and then go home knowing you can order for less on the internet? These are just a couple of questions you need to ask yourself. Success will not come over night.

An out of home is an okay place to start if you want to do internet sales. I concur with everyone above... If you are going to do a brick and mortar, you need to make an impression or you'll never get off the ground. Don't forget advertising. You will need to look at social media, possibly billboards and online newspapers. Radio advertising would really help you grow as well.

I'm rambling with no clear one direction. I don't have any experience in operating a LFS but I can try to answer at least some of your questions from the business side if interested PM me.

 

You sir are correct this is no small question lol

You make a good point, in GA if I own the land, and there is no housing authority, I can run a small business from my home within reason.

Home business to start with but main objective long term is to have a brick and mortar store that also sells online. And yes LLC is where I want to be

You again make a good point, maybe after the main store works out this would be a branch out point?

Short term this would make the most sense for me, I work as a police officer so money is less that ideal for a high overhead business initially. but I would buy before I tried to rent because long term it would make more sense.

In a restaurant, doctor/dentist office with a huge, nice tank yes I totally agree. Now small home tanks I would also try and do "in home" set up and assessments to help better them in the hobby and use the store/ home business to acquire the supplies thus making money off of them and supplying a good foundation for the type of tank they would want. Sell what they want not what makes my wallet fatter.

Only when money is no object, but in my case it is lol

What is an S-corp?

Yes to the Federal Tax Lic, and yes to the research. My 1 and only LFS here is the only one within a good 60 mile distance. That may be for a reason but the owner is not helpful at all when I ask business questions and gets hostel if I try to pry to much. The store is old, run down, very disorganized but has a devoted customer base because he's been open for forever. He really dosent have the greatest stock, corals, DT, or really anything else but has been open forever. I really would love to go to tally, Orlando, and pick the owners brain about some stuff but that requires connections that I do not have. I am confident that I could ultimately run a better far nicer business to get the customer base from his store but I would have to do freshwater and saltwater to keep the current business in my area.

Be careful what you wish for lol

 

There are a lot of good reads out there on LLC vs S-Corp vs C-Corp.

Most homeowners do not have flood insurance (Florida might be different) and if something happens and the tank floods the house it's highly likely they'll be coming after you. This is where you'll want to be an LLC, C-Corp or an S-Corp.

LLC - gives little protection to you. It is relatively easy to get to your personal property if they were to sue the company. LLC is by far the easiest way to go but offers the littlest protection.
C-Corp - makes it difficult for someone to get to your personal property if they were to sue the company. The biggest downside of a C-Corp is the possibility of double taxation.
S-Corp - makes it difficult for someone to get to your personal property if they were to sue the company. In addition no double taxation.

With an S or C corp you have to elect officers, assign shares and maintain minutes but I think this is minimal when you consider the protection of your personal property.
C-Corp is a little outdated and the IRS loves you. When you incorporate you are automatically a C-Corp unless you file as an S-Corp.

IMHO - Everyone does freshwater, PetCo, Pet Smart, K-Mart and I'm sure there's a bunch more. You'd be competing with the big boys and their pricing. If you're talking about an in-home all inclusive maintenance program then that's a different story and I'm all for it.
Otherwise, I'd think I'd focus on the saltwater hobby niche, great livestock, great equipment and exceptional service.

I can understand your LFS's stand, nobody wants a new kid on the block taking from their milk money so why should I tell you my trade secrets. My LFS always has the same inventory and I like WYSIWYG so at times I drive up to 2 hours when I want to see a better inventory than what my LFS has to offer. I'm sure if I do this then there must be others that do the same and it hurts his business. I've told my LFS guy about this in hopes that he'd do a little upgrading and I wouldn't have to drive so far but with me so new to the hobby it'll be some time before he welcomes my opinions.

More rambling, hope you can make some since of it all.
Scott

 

I did and after you posted this I did some looking into about the differences between the LLC's

You also make a good point about the freshwater game here, we have a petsmart but no petco which is good and bad depending on who you ask.

Next question, how would I figure out if the market will sustain a Saltwater only store here? There's got to be a way to figure out rough numbers.

 

I worked for the previous owners for 6 years before I bought the store from them. Research didn't really factor in for me.
I might try to reach out to the local reef clubs and ask them about the service they receive in the local area and where they go to shop. Also ask them what they'd like to see in a local LFS.

One thing I deal with quite often and the same goes with my LFS are the folks that come in to get all their questions answered about equipment, livestock, feeding or whatever and after an hour or two they leave and you never hear from them again until they have another question about something. It only takes a couple of times before you figure out that they are shopping on line and using you for time. With that said, ask the clubs what it would take to earn their loyalty.

Hopefully someone will chime in on what they'd like from their LFS.

On a side note, to file away for when you're ready to start your business. Give some thought to putting a DT or two out in the public somewhere. ie. hospital, car dealer, lawyers office. Teach them how to feed the inhabitants and they you stop by and do the maintenance and whatever else. Put a sign up saying provided by and maintained by YOU.