where to find inventory for new furniture store

[BrayB]

Hey, its been a few months. Business is going well so far, I have a very steady stream of inventory coming out of NC. Im looking to make the jump from warehouse to retail any day soon. I know it varies market to market but what price range for a lease would you suggest I stay in? Im hoping for anywhere from 8-15k square feet. I don't want to start too small and I want to make a good investment into a building to actually build our brand and start eating up some market share, but I also don't want to go signing a lease for 20 grand a month for a humongous building. It seems like a lot of the decent buildings around here float around 10-15k a month (triple net of course, but it is what it is). Im comfortable around 10, but I'm smart enough to know that after hiring a couple floor salesman, my overhead is going to jump to 20k a month, maybe more. Do those numbers sound right? I know there are so many variables and so many differences depending on the market, I'm just doing my best to get everything modeled out before making the jump, cause its a pretty massive jump.

[drcollie]

Good for you.

I learned the furniture business from one of the greats, the founder of Hancock & Moore, Jack Glasheen (since retired). Jack would always tell me "The key as a retailer is to control your debt service. Stay small enough so you can keep your arms around the business. Own the property, don't lease it. Pay cash for everything and pay your bills on time. Eliminate unnecessary expenses. Take Care of your Customers." Jack followed that advice himself to a "t", The main Hancock and Moore Plant 1 was a converted chicken farm. The entire time Jack owned that business (with Jimmy Moore) there was never a sign on the building that said "Hancock & Moore". Truth. I asked jack about that and he said "Signs cost money, Duane".

So I have never leased a property other than my small storage warehouse. I have owned the building I am in since 1987 (5,000 s.f) and that has saved me millions of dollars in 37 years vs leasing. And now, at the end of my run and retiring, I have sold that building and that money from the sale funds my retirement nicely. When you own your commercial property, you are not subject to the whims of a Landlord in raising your rent, or worse yet - not renewing your lease and you have to move. It also lets you have an asset that you can sell at some future time. If you own your building, then when tough times arrive (and they will) you can survive them. The 2007/2008 Recession wiped out at least 50% of all retail furniture stores, they could not service their debt obligations and went bankrupt.

A mistake I see new dealers make is they get their buildings (lease or buy) based on projected trends and anticipated income. They plan based on trends and the sinks most all of them because trends don't last, but fixed expenses do. When 09/11 happened in 2001, my business was sailing along until those planes flew into the towers. Then it absolutely died off for almost 1 year. You can't plan on that happening, it just does. Had I had a high debt load then, I would have gone under.

I am very conservative. When I need a new delivery truck for the business I pay cash for it (school of Jack Glasheen) or do without it. I have never had many employees, they are costly. I unload the frieght trucks and clean the bathrooms in the store. Not saying that is the only way to go, but for me, it worked. You won't grow as big and fast with no debt and paying cash, but you will be strong when you do. Good luck on whatever you decide.