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Business Opportunity I've Been Presented

Ari's Entourage

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Hey everyone, looking to get some input on this business opportunity I've been presented.

Currently I am working at an independent niche retail store and as a volunteer firefighter on the side. At the store i work at I'm always looking for the best new way to improve the business and have helped the store grow to $ 600 000 net sales annually. The owner see's this and has mentioned he would help me open my own store. How that would work is he would give me $ 100 000 worth of product and i would make a $ 20 000 down payment right away. The rest of the money would be paid off over the course of the next 3 years after my store would open. He would collect a small royalty for essentially giving me an $80 000 line of credit, giving me all the suppliers for the product, helping me map out a good location and using the same business name for sales exposure.

I was going to sit down with the financial advisor to make sure i have everything 110% before i go ahead with this. I think also i would test a new location for November and December because if the store doesn't do good in those 2 months i will have an idea the location will be bad for the rest of the year.

I'm currently 21 years old, so i could own all the product and new product by the time I'm 24-25. Also i would have tons of time to work on other business opportunities after the first couple of years because i would have multiple people working under me. Let me know what you think.
 
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Ari's Entourage

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Any input on this? Has anyone here turned a retail shop to a fastlane opportunity?
 

AbdulhakimHaliru

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$600,000 in annual sales is no small feat, however you seem to be looking at staffing (Human capital) as the bane for success, the fastlane model is to narrow your dependency on human resources and lean towards automation. I think it has great fastlane potential since you have already mentioned it is a niche market. However business scalability seems to have a tendency of higher operations cost. Could this business become an online business in the near future so you don't have to worry about location potency?
 

RHL

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Hmmm. Paying to open a franchise for someone else. If only, if only there were something in TMF about whether or not that was a good idea...
 

Ari's Entourage

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I am working on turning it into an online business as well, yes. I would go out and do it myself but not going to borrow that much money from a bank. Also not really franchising the business. I'm not paying him a sum of money to do this. I would just be paying for the products he would be selling me at wholesale price. Pretty much the same as buying $100 000 online product at wholesale but i have 3 years to pay it off and get all the product right away. Also, already know the supplier obviously so wouldn't have to worry about getting fake product or working with someone who is not loyal.
 

Ari's Entourage

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Okay then. Thanks for the input. I get the message you guys are saying but its not a franchise opportunity or buying myself a job.

Thanks though I'll consider the advice.
 

jon.a

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Okay then. Thanks for the input. I get the message you guys are saying but its not a franchise opportunity or buying myself a job.

Thanks though I'll consider the advice.
Okay then, I have to ask. Have you read the book?
 
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miked_d

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*** 4 posts were made as I was typing this. I am posting this anyway :)

As others have said, a B&M (bricks and mortar) store using someone's brand is not fastlane.

Will he give you the $ and supplier list if you take it online? Why not send the merchandise to Amazon FBA and let them handle fulfillment? Build your OWN brand on Amazon/eBay and use them to funnel buyers to your brand's website.
 

Oswalito

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For me at least, it was the whole "I give you a loan kind of... as long as your store has the same name as mine" that made it look like it being a franchise... If it's not then I guess you're all good man.

Read the fine print before you sign on any dotted line...
 

LateStarter

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I don't have any retail experience and I'm new to this fastlane thing so take my input with that as a caveat.

I get what you're saying about the structure of the deal and yes, it doesn't sound like franchise. It does however sound like a job...but hear me out. Think of the long term goal of a fastlane from the vantage you have now as this guy's employee. The objective is to remove yourself from the daily operation of the business and to have this business generate cashflow with little or preferably no intervention. How do you see that happening if you're fortunate to get to the same level as your current employer?

"Also i would have tons of time to work on other business opportunities after the first couple of years because i would have multiple people working under me"

Is that the reality of the current business that he's running? Or is this just how you'd like to see it happening? Look at this objectively and be honest about the situation. Having staff is expensive and they can be difficult to manage (ie, they're overhead intensive). It's not an easy road to head down. I see your position that this is a good offer to build a business...and it is if you can't get the financing all on your own...but is it a fastlane business? ...it would seem difficult to pull off.
 
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MJ DeMarco

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#1) Read the book: It discusses a Driver/Hitchhiker relationship as it pertains to business. This sounds like you will be the hitchhiker, the driver is your employer.

#2) Read the book: Control is so important in business. If you're at the whims of the owner, his products, his rules, his this, his that, you're no better than an employee or a manager.

#3) Not withstanding the above, this could be a great opportunity to grab some experiencing. Any business experience, even if it isn't "fastlane blah blah" is better than no experience. Many Fastlanes are created and exposed by just GETTING OUT THERE and doing something. If you move ahead, tread carefully and make sure you have all your options lined out, including your "out" if things go awry.

Good luck.
 

ilrein

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MJ said it nicely.

I think for 21, to have this level of support and trust from an established business owner is superb. Great job!

In my eyes, it's an opportunity that only came around because of the relationship you've built--it's not available to anyone else. Sure, it's not the perfect solution (no one will serve you up a fastlane recipe on a platter), but it's not bad either. It's not like you have to run this store for the rest of your life either, especially if you run it well and it's profitable, you can definitely sell it to those hungry for cash-flow positive businesses.

I would do it for the experience alone...and plan to sell in 3 years.

Of course, I also have no retail experience, and have minimal context/knowledge about the situation--so take my advice with a grain of salt.
 

TheNextTrump

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If my boss came to me tomorrow and said (hey, your killing it here at XXXXX. I'd like to give you a shot to expand our brand and get you set up in your own shop, I'll start you with 100k in inventory, for 20k down, help you along the way, and give you access to all my resources) I'd be tickled pink.

Props for grinding it out at your (job) to make this even possible. Surely take the time to read the fine print and get to the bottom of the (contract/details). But I would imagine this guy sees potential in you, and isn't out there to (rip you off) or con you into some (blood sucking) contract.

I think some of these (big timers) on the forum have a tough time seeing things from (our point of view)

It sounds like buying yourself a job.

Is this a bad thing?

His boss at his current job, offered him an opportunity to get started with his own store front. Backing him with 100k of inventory and all of his connections.

At the age of 21....

Hmmm. Paying to open a franchise for someone else. If only, if only there were something in TMF about whether or not that was a good idea...

As if the OP came on here and said, (Hey guys, I came across a rocking franchise deal that I can buy into for 20k and get blah blah blahh)

He was offered a rocking opportunity from his BOSS, by becoming a valuable asset to his boss's company. This isn't just some random guy/offer he came across.


I'm 23 with no major value behind my name at this time so feel free to tell me how wrong I am, but that doesn't mean I wont voice my opinion. I just feel like some of you guys are so (by the book) and all about the (negative) in everything.


Either way, congrats on the offer! Grind it out to figure out what needs to be done from here, and go make your self some coin. Even if this isn't (FASTLANE) it can surely help your journey to the big leagues. Best success OP!
 
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Bila

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Great advice @MJ .... It's a great opportunity for such a young age to learn and make mistakes ( while making sure to minimize the damage )
I would add one thing about going online instead ....one trend i see is that even big players in ecommerce are going retail as well ( Nasty Gal anyone ? ) so i think your learning curve would be somehow smoother going from retail to online after.
 

Ari's Entourage

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Thanks for all the feedback guys and girls. Some good suggestions and good response's helping me get my point across. Everyone's going to have a different opinion doesn't matter what the topic is and that's fine, i appreciate every response. This is something that wouldn't be a career choice, more so a business decision i think would benefit me at my age. My next steps would be mapping out a good location, looking for average salaries, average age and population are some things i'll have to take into consideration when looking.
 

Ari's Entourage

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If my boss came to me tomorrow and said (hey, your killing it here at XXXXX. I'd like to give you a shot to expand our brand and get you set up in your own shop, I'll start you with 100k in inventory, for 20k down, help you along the way, and give you access to all my resources) I'd be tickled pink.

Props for grinding it out at your (job) to make this even possible. Surely take the time to read the fine print and get to the bottom of the (contract/details). But I would imagine this guy sees potential in you, and isn't out there to (rip you off) or con you into some (blood sucking) contract.

I think some of these (big timers) on the forum have a tough time seeing things from (our point of view)



Is this a bad thing?

His boss at his current job, offered him an opportunity to get started with his own store front. Backing him with 100k of inventory and all of his connections.

At the age of 21....



As if the OP came on here and said, (Hey guys, I came across a rocking franchise deal that I can buy into for 20k and get blah blah blahh)

He was offered a rocking opportunity from his BOSS, by becoming a valuable asset to his boss's company. This isn't just some random guy/offer he came across.


I'm 23 with no major value behind my name at this time so feel free to tell me how wrong I am, but that doesn't mean I wont voice my opinion. I just feel like some of you guys are so (by the book) and all about the (negative) in everything.


Either way, congrats on the offer! Grind it out to figure out what needs to be done from here, and go make your self some coin. Even if this isn't (FASTLANE) it can surely help your journey to the big leagues. Best success OP!

Really appreciate the input. Thanks!
 
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Ninjakid

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It may seem tempting because from your point of view, you're getting everything you need to start your own business.

If I look at it from your boss's perspective, I'm basically selling you $100K, collecting royalty off your sales, and further expanding my own business because you're selling under my name, all while you think you're running your own gig when actually I have all the control.

So just think about if this is what you want to work at for 3-4 years or longer. We young people have a habit of getting bored of something very quickly.
 

SEBASTlAN

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Brick & mortar is not fast lane as someone already mentioned...I say only do it if you have a clause to get out of it if there are signs you won't get your 20K back and then some
 

mayana

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Brick & mortar is not fast lane as someone already mentioned...I say only do it if you have a clause to get out of it if there are signs you won't get your 20K back and then some

Even if he doesn't end up making a bunch of profits (none of us can reliably speculate as to whether he will or won't), it will still be a relatively cheap hands-on education in setting up and running a business. The lessons learned, no matter, will be priceless, and he the OP is so young that I have a hard time seeing how this is a bad move.

Thanks for all the feedback guys and girls. Some good suggestions and good response's helping me get my point across. Everyone's going to have a different opinion doesn't matter what the topic is and that's fine, i appreciate every response. This is something that wouldn't be a career choice, more so a business decision i think would benefit me at my age. My next steps would be mapping out a good location, looking for average salaries, average age and population are some things i'll have to take into consideration when looking.

Location!! It's SO important. Don't get a place right around the corner from a great spot, or across the street from a great spot, or right next to a great spot... it has to be the best spot! It's *usually* worth the extra rent. Think about visibility from the main roads, accessibility, etc. I made a mistake on this a long time ago, and lost my initial investment just for this exact reason.
 
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Pete799p

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I see a lot of people saying owning a franchise is not fastlane but I know a lot of very successful franchisees who are killing it. This runs the gambit from small timers with 1 location to the big timers with lots of locations. Examples of this can be seen all over, in fact a Wendy's franchisee recently went public to give you an idea of scale, there are plenty of PE groups that own 100's of locations, and many more smaller operators that own 10's of locations.

There is no doubt that you loose some control and there are many stories about franchises going wrong but the right opportunity can allow somebody to scale faster. A good franchise will have all the systems in place all you have to do is execute on them. This can definitely cut down on the learning curve etc. Another little know benefits can be potential advantages in lease negotiations etc. many landlords are more willing to lease to a franchise vs. a mom and pop, especially if the franchise entity will guarantee the lease. This works both ways so if you own the real estate a corporately guaranteed lease can help boost your property value even if you end up selling the operating business etc.

I also second the importance of an A+ location.

As with anything always do your due diligence. At the end of the day I don't know exactly what your opportunity is but I wouldn't rule it out just because its a franchise and not "Fastlane"
 

J. van Driessen

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I think you can turn this opportunity in a positive experience if:
- You get as much freedom as possible, even when the store has the name of the current owner. From what I read I assume you have a good feeling of what it takes to be successful, and you want to make sure you can take the steps you want to for your store, even if your current employer has a different view.
- The current store cannot form any competition for your new store. That of course will depend on the niche and location.

I wish you all the best! Maybe it's not 100% fastlane, but you can basically take a working business concept without really paying for the learning process your employer had to go through (which you would be paying for in a real franchise concept).
 

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