Need some advice: Make or Break it Year

[CPisHere]

Hey fastlaners, I need your advice.

As I've posted before, my wife & I own a brick and mortar retail store. We compete directly against Justice ("tween" girl clothes/gifts/accessories) but we are higher-end and classier.

We had our 3 year anniversary this summer and things have gone relatively well. Our lease is coming up for renewal next December and I've decided this coming year is make or break it.

Justice can be Justice because they manufacture most of their own goods (higher margins, allows them to constantly have 40% off sales) and cater to a lot of parents who don't have much money or care if their daughters look like ho's.

We cater to much wealthier clients and ones who are selective about what their daughters wear. In theory this is a great market. We get better margins than Justice and way more enjoyable customers, but there are so few of them in our town.

Unfortunately, it seems that our current market is just to small for us to hit the revenue numbers we need to be at - which is 50% more than we are at today (for the income etc we want). No matter how much better we get at all the small things - displaying things better, e-mailing customers, etc it's not going to fix our broken business model.

I feel like getting better at those things are just the bare minimums, but to really grow I can't help but think we have to make some serious structural changes.

Thoughts? Feedback? Commentary?

PS: If this would get much better feedback on the INSIDERS group, let me know - I'll consider joining.

*EDIT: I SHOULD PROBABLY MENTION WE WERE BURGLARIZED LAST NIGHT SO I MIGHT BE OVERLY FRUSTRATED, BUT THE BUSINESS MODEL PROBLEM HAS BEEN BREWING.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[ilrein]

What a tough choice.

So you have an opportunity now to break free. Efforts to improve the bottom line are insignificant because the business model is not scalable (in its current form).

My gut feeling is to drop the brick & mortar shop. Clients that are still particularly partial to your products can be safely redirected to an online store. If it was worth it to keep the physical location, you know that you wouldn't be here asking for advice.

Good luck! Curious to hear other replies.

 

[Get Right]

Do you have at least one line that is yours? Your design, your manufacturer...ie Control?

 

[CPisHere]

I would like to try to make the physical location work this next year. If it doesn't work, then I will drop it. But not without a fight.

We do not have any of our own products. It's just not something we've focused on. We could probably do it for a few key gift items & improve margins some but again - doesn't really fix the problem.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Get Right]

doesn't really fix the problem.

I don't think we understand the problem then. Please clarify "market is too small" and "serious structural changes".

 

[Deon]

Is the "market is too small" problem not fixed by going online?

 

[CPisHere]

I don't think we understand the problem then. Please clarify "market is too small" and "serious structural changes".

I've edited the original post to be a little more clear, but will expand here.

We've self-limited our customer base (upper middle class, highly involved parents) & product lines (clothes/gift/accessories) to both be very small, which is limiting our revenue potential.

I love our customer base - we definitely don't want to go chasing the poor people, but our current product line mix with the small focus age and gender is too limiting.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[CPisHere]

Is the "market is too small" problem not fixed by going online?

I've felt in the past that online was the solution to our problems, but it's really a separate business - it doesn't fix anything with the store. We have to make the store work on it's own accord.

 

[ilrein]

I've felt in the past that online was the solution to our problems, but it's really a separate business - it doesn't fix anything with the store. We have to make the store work on it's own accord.

If you keep doing what you've always done, you'll keep getting what you've always gotten.

 

[pickeringmt]

To me, losing the physical location might be a great opportunity to come at your market from a better angle.

Your profile says New Orleans, so I can't imagine that you don't have a large enough population.

You should consider pairing local with ecommerce - create an online boutique targeted with laser focus at your local audience. You would save significantly on shipping, returns, and overhead.

Ads will be cheaper. Trends will be more clear at a local level. You will have a much easier time engaging a local audience this way.

I think this is the future of ecommerce. People want small, people want local, people want quality, and people want the right price.

This model can deliver that.

You need a killer, dynamic website and top notch SM.

So much opportunity here. Best of luck.

Also, sorry about the break-in. That sucks. I had just 2 of my product stolen from my car back when 2 was a lot, and it was such a crappy feeling.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Deon]

I've felt in the past that online was the solution to our problems, but it's really a separate business - it doesn't fix anything with the store. We have to make the store work on it's own accord.

That's a HUGE mental block to have.

It's kinda like the businesses on Kitchen Nightmares or The Profit. The reason they don't make any progress is because they're so attached to a certain idea of how their business is supposed to be, that they refuse to look at other options to fix it, even if the old ways are not working as well as they want.

Online has the potential to save you... if you let it.

 

[CPisHere]

That's a HUGE mental block to have.

It's kinda like the businesses on Kitchen Nightmares or The Profit. The reason they don't make any progress is because they're so attached to a certain idea of how their business is supposed to be, that they refuse to look at other options to fix it, even if the old ways are not working as well as they want.

Online has the potential to save you... if you let it.

Perhaps I'm not being clear.

Online does not require me to have a store, so why would I utilize profit from online to support an unprofitable portion of my business?

I know everybody here is obsessed with online - I get it. I've been there. But it's not the answer for us for the next year. We have the store for another year. I'm committing to trying my hardest to make my physical store more profitable. If I can't make the physical store more profitable, then online becomes an obvious choice if I choose to continue on the business because I will shut the store down.

 

[DennisD]

We have to make the store work on it's own accord.

No, you don't.

You're attached to the work you've already put in. It sounds like you already know the solution and just won't let yourself accept it. You're limiting your scope and you know it.

The way to fix your B+M business is to magically make more wealthy customers appear in your town... or to lower your prices and appeal to poor trampy teens and their parents. #1 is impossible and #2 destroys your positioning.

Your most viable solution is to keep the store and spend the next year introducing online sales. Use your physical store as a base of operations,
store your inventory, use it as social proof that you're not some dropshipper, and take the whole operation online in addition to the business you're already doing in-store.

The only problem here is that you're not letting yourself see this as an option. Yes it's going to be hardwork and there's a LOT of extra shit you'll have to go through to make it a success, but it solves all your problems and will allow you to sustain your physical location at almost NO additional cost to you.

But it's not the answer for us for the next year.

YOU CAN DO BOTH. Doing online-only has it's limitations and doing physical-only has it's limitations. A mix between the two leverages each other's strengths and minimizes weaknesses.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[CPisHere]

To me, losing the physical location might be a great opportunity to come at your market from a better angle.

Your profile says New Orleans, so I can't imagine that you don't have a large enough population.

You should consider pairing local with ecommerce - create an online boutique targeted with laser focus at your local audience. You would save significantly on shipping, returns, and overhead.

Ads will be cheaper. Trends will be more clear at a local level. You will have a much easier time engaging a local audience this way.

I think this is the future of ecommerce. People want small, people want local, people want quality, and people want the right price.

This model can deliver that.

You need a killer, dynamic website and top notch SM.

So much opportunity here. Best of luck.

Also, sorry about the break-in. That sucks. I had just 2 of my product stolen from my car back when 2 was a lot, and it was such a crappy feeling.

I'm in a suburb of New Orleans, quite small population.

Again, If I can't make it work within the next year, I'm going to drop the physical location. A year from now we can talk about this online stuff if it isn't working. Today, I need to decide how to proceed with a physical location for the next year.

 

[CPisHere]

No, you don't.

You're attached to the work you've already put in. It sounds like you already know the solution and just won't let yourself accept it. You're limiting your scope and you know it.

The way to fix your B+M business is to magically make more wealthy customers appear in your town... or to lower your prices and appeal to poor trampy teens and their parents. #1 is impossible and #2 destroys your positioning.

Your most viable solution is to keep the store and spend the next year introducing online sales. Use your physical store as a base of operations,
store your inventory, use it as social proof that you're not some dropshipper, and take the whole operation online in addition to the business you're already doing in-store.

The only problem here is that you're not letting yourself see this as an option. Yes it's going to be hardwork and there's a LOT of extra shit you'll have to go through to make it a success, but it solves all your problems and will allow you to sustain your physical location at almost NO additional cost to you.

I disagree that the way to fix B+M is magically make more wealthy customers appear or lower prices. We can extend what we offer to get more wealthy customers with different age/sex kids and/or extend what we offer to get them to spend more.

 

[pickeringmt]

Ah, I think I misunderstood.

There is a lot you can do to compliment your business. What do you do for SM?

Wealthy teenage girls all have sweet phones - You could probably kill it just private labeling a line of cases BTW.

Maybe focus on some impulse items in store that appeal to the actual end user to pump up the sale. The parents come for what they know you sell, but that extra stuff that the teenagers want will increase your average order.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[CPisHere]

We sell a ton of iphone cases. Still, a ton is like... maybe a $800/month. I might be able to make an extra couple dollars per unit by making my own but what's the point? For like $100?

 

[pickeringmt]

but what's the point?

Dude, maybe a day off?

You sound like you are over it.

You either need to increase the value of your current customers, and/or increase your number of customers. Nobody here knows how that can be done better than you.

What is working for you?

 

[CPisHere]

Dude, maybe a day off?

You sound like you are over it.

LOL, I did mention I'm a bit frustrated after being burglarized. That was at 2am - dealt with the police till 3am, then got back home & didn't sleep much after that.

You either need to increase the value of your current customers, and/or increase your number of customers. Nobody here knows how that can be done better than you.

What is working for you?

I completely agree (and Jay Abraham congratulates both of us). The problem is we've been very incremental about those choices in the past - looking at what's worked and doing a little more of this, being a little better at that. I'm really trying to challenge myself to get bigger with it. That's why I'm here

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Deon]

Perhaps I'm not being clear.

Online does not require me to have a store, so why would I utilize profit from online to support an unprofitable portion of my business?

I know everybody here is obsessed with online - I get it. I've been there. But it's not the answer for us for the next year. We have the store for another year. I'm committing to trying my hardest to make my physical store more profitable. If I can't make the physical store more profitable, then online becomes an obvious choice if I choose to continue on the business because I will shut the store down.

You're talking as if Online and B&M can't exist at the same time.

It has nothing to do with being obsessed with online. It has to do with getting a new stream of customers, which you said is the main problem.

You can still continue selling through you store too, I don't see what the problem is.

 

[GravyBoat]

Online has the potential to save you... if you let it.

Sir, why would you NOT sell online? Get a site built, get on Amazon, get on Ebay, Etsy, whatever. You're leaving MANY dollars on the table by not doing this. Don't touch your margins, simply reach EXPONENTIALLY more of your target market by selling online!

 

[Vigilante]

CP.

Not sure if this will help you, but let me tell you what helped ME in our physical brick and mortar business (before I sold them because they were too big of a time suck...)

I did what seems counter intuitive. I expanded my brick and mortar presence into multiple (but lower cost) distribution venues. For you, here's what that might look like :

1. I'd do a deal with these people.
http://empiregymnastics.net/Home_Page.php
Put your top sweatshirts and a few other items there. Give them a consignment sales commission of 10%. And, cross promote by having their program brochures and posters in your store.

2. I'd do a deal with these people.
http://www.oakwoodcenter.com/directory
Seasonal kiosk. Staffed by high school kids.

3. I would look for organizations like this to partner with, expand distribution, and cross promote
http://www.lacheerforce.com

4. I would get on this conservative talk radio station, and talk about the difference between your store and others.
http://www.wrno.com/main.html

5. I would invite this gal out to do a story on teen fashion, live from your store
http://www.fox8live.com/story/22923313/shelley-brown

6. I'd do something with these guys
http://www.jrpneworleans.com/Main/workshops-ages-9.html

You can't fight traditionally. You have to use unconventional warfare. And, you have to add some unique, higher margin proprietary offerings to your lineup.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Vigilante]

And... quadruple your online efforts, using your store as your warehouse/shipping center/customer service center. You need both, and you'll be surprised at what you can sell online that doesn't sell at the store. You already have the expenses from operating the store. Multiply the efforts by using your store not only as a store, but as your .com headquarters and your distribution center for other physical presence. I had one employee whose job it was to handle online, and shuffle merchandise to my offsite locations.

 

[Deon]

Sir, why would you NOT sell online? Get a site built, get on Amazon, get on Ebay, Etsy, whatever. You're leaving MANY dollars on the table by not doing this. Don't touch your margins, simply reach EXPONENTIALLY more of your target market by selling online!

I think you quoted the wrong person

 

[GravyBoat]

I think you quoted the wrong person

Yes, meant to say I agree with you 1000000%

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Determined2012]

My gut feeling is to drop the brick & mortar shop

This was my 1st thought too. I see so many people doing so much business straight off of instagram, and instead of them sprucing up their online stores/marketing/traffic I see them put the money into a brick and mortar space... I'm like HUH?! Why?! Aren't they hustling backwards?

Could you scale it out and reach more of your target customer if you had top online branding and online marketing toward the wealthy shoppers?

 

[biophase]

I see a few things that I would do differently. In fact, I've walked into several B&M stores in Phoenix and thought, I could buy this biz and expand them online. To me, if the B&M is making money and all systems are in place. You've already got the ordering, receiving and employees. You just need to add the shipping division and an online store. The last 2 parts are the easiest actually.

As a retail store, you may eventually need to sell your own line of products. Every large B&M has there own product line. Look at Walmart, Costco, Target. This increases your margins.

You need to go online. Don't know why you see it as a separate business. You say that your customer base is limited, so you need to expand your store's reach.

Think of what the Profit would do if he walked into your store... what would he say was wrong.

 

[Ninjakid]

I'm in a suburb of New Orleans, quite small population.

Again, If I can't make it work within the next year, I'm going to drop the physical location. A year from now we can talk about this online stuff if it isn't working. Today, I need to decide how to proceed with a physical location for the next year.

Or you could do it now, because you know that your current game plan isn't working and you came to us for advice.
I'm strongly for the idea of going online. Even if you keep the physical store. The amount of people you can reach online will be exponential. I'm able to have this conversation with you because we're online now. Yes I'm very biased towards the internet; but use it to your advantage.

P.S. Sorry to hear about the burglary. You got security cameras? Have security.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[AllenCrawley]

@Cparsons - Some real solid input here especially from someone that has owned B&M stores. Be sure not to discount some of advice by Vig, bio and others because it doesn't fit into your preconceived ideas.

 

[CPisHere]

This is tough. I don't want to sound like I am ignoring all you guys' advice because I really truly respect it, but I don't think it addresses my real issue & so I must not be explaining it well.

@Vigilante you are awesome.

BUT, I have limited time and resources. I believe I can make the physical store work without online sales, and I feel that once it is working well I will be in a better position to invest into online, since I'm not currently equipped for it. If I can't make the physical store work without online, I see no point in running an online business to support it - I would just shut down the store and focus on going online (even if I have to keep the store open for a few months to make it happen).

Therefore, my goal over the next year is to make my physical store substantially more profitable. The only way I see to do that is to expand my customer base via expanding my inventory to cover a wider range.

Thoughts? Am I taking crazy pills?