need input on opening a knife store

[LIKESEMSHARP]

I was just wondering what you all think,I have a little money to invest and was thinking of doing something I really have a passion about with the money,I was thinking of opening a knife store here in Missouri as well as selling on the internet.I know there are lots of us knife nuts around but would it make enough to support a family?My idea would be to stock the best manufactuers products,and offer great service there isn't any knife stores around my area so most knives I have to order online before ever holding them it would be great to see and hold one first,so what do you guys honestly think is it worth investing the time and money in?I know I sure seem to spend a good amount of money on knives a year,just wondering if I should follow a dream. thanks

 

[Ren the devils trailboss]

Understand that retail is brutal. Long hours including weekends. Retail involves inventory. We live in a instant gratification society. If I shop in your store I need to hold the knife I am buying. I would be unwilling to wait while you ordered it from a online supplier. I can do that on the web also. I also want to see lots of other knives and hold them too. I would guess that you would need a inventory of near $20,000 to start a knife store. Then you will be in competition against many on line dealers that will sell their knives cheaper than you can afford to do because they do not have to pay rent for a storefront.

Then you need to consider employees, Taxes, inventory tax, Liability insurance, and a host of other tax and legal issues.

also understand that 3 out of four small business fail within their first two years of operation. Can you afford to lose this money. The undertaking of opening a retail knife store is a high risk investment.

As a professional salesperson of almost 19 years. I get phone calls from literally hundreds of people who are opening a new retail location. In my experience I can think of three that survived the first three years of business.


my advice ...take the money and put it in a Janus fund and continue to enjoy knives.

 

[VCM3]

LIKESEMSHARP,I think you should talk to other dealers,and purveyors,"pick thier brain". If you can get a feel for how much money to spend in the start up phase,versus what might come back at you,in the first months. This will help figuring out how much capital you will need,to fund the new venture,and keep your own expenses paid.You don't want to lay too much out,without knbowing what an estimated return mnight be.If you do it,GOOD LUCK!! And if you do,e-mail me the web address,I could be a customere,lol,Vince

 

[yam]

I have heard people say (who have started their own businesses) whatever you think you'll need up front ........ triple that amount, then you're in the right neighborhood. Then, don't plan on much of a return on your investment for several years. In reality, making a living doing something like this could take lots of money, time and patience. If it were easy, more folks would be doing it.

Along with what Ren said, take the money and invest it unless you can afford to lose it.

 

[LIKESEMSHARP]

thanks for the replies,I work a full time job and own a auto detailing side bussines,was thinking of quitting the full time job and pursing the knife store,I was thinking 50 grand should get me up and running at least for inventory was hoping there was some Missouri folks that might be interested in the store front part

 

[puukkoman]

These guys all have valid points so far, with which I agree.

I'd like to address your approach, if I may. As far as your inventory is concerned, I think you may need to reevaluate your plan. Top-of-the-line knives aren't going to be your bread and butter; you'll make a bigger profit (proportionally) by selling the cheaper stuff (at least this will be the case with a storefront operation). An online store may be different, but how many of those are there already? Think about what you'll do to distinguish yourself from your competition.

Mu recommendation is this: Start up an online venture. Use some of your capital to get someone to build you a really nice, professional website. Don't skimp on it. Just like knives and other tools, you get what you pay for. Do this on the side, in addition to whatever you're already doing. Look at NewGraham Knives: they're a pharmacy that also sells high quality cutlery. Start off that way. Become a dealer, establishing a business relationship with several knife manufacturers. The online operation is step one.

Peace.
Alex.

 

[Jay_Wyatt]

A good friend of mine let me order knives at the whosale cost. I thought this was great at first ; untill I saw the whosale prices. The internet stores are selling with very little profit. Good luck with whatever you decide to do

 

[Gossman Knives]

Any retail business is HIGHLY competetive. The profit margin on knives is low. High volume is the key to profit. I was a retail knife dealer on a small scale for about 8 years and finally gave it up because of very little profit. It a tough business. good luck with whatever you decide.
Scott

 

[LHD]

A good friend of mine let me order knives at the whosale cost. I thought this was great at first ; untill I saw the whosale prices. The internet stores are selling with very little profit. Good luck with whatever you decide to do

In many cases you can tell from the MSRP. Most manufacturers put the MSRP at double the dealer price. You can expect this from people like spyderco, benchmade and definatly kabar. Kabar is down to the pennies. If MSRP is $109.96 the dealer price is $54.98.

Compare MSRP to what most online places sell for and see exactly how little they mark up.


BTW, most of your knife knuts are going to come to your store to finger your floor models and talk to you about them for hours at a time then go home and order from the cheapest place listed on froogle. The people that will make or break you are the casual knife buyers who in most cases dont spend more than $30 on a pocket knife.

If you choose to persue this endevor you should probably let the board know and drum up a little more business. That $800 dealer membership might make you think twice though.

 

[Dijos]

What everybody else said x 2. Write a business plan-that'll give you a few months of research, and a big eye opener. A b&m store with 50K? no way.

 

[Mikey121184]

Here's some advice speaking from experience. My father and I sell knives out of a few display cases in his business (Its a small convenience store) We started out with very cheap product from Frost Cutlery and it was hard to keep it in stock, we sold hundreds of cheap $5-6 knives. So we continued to order the cheaper product and added on some more expensive product (kershaw and case) and have only sold 5 or 10 quality knives. Unless you know that you're in an area of knife collectors then you won't sell anything but cheap product. People can't see spending more than $10 on a knife that they are going to carry because they are afraid of losing it. If you really want to give this store a try then my advice is to sell different types of product other than knives, possibly more types of sporting goods (boots, guns, aummunition, clothing). Best of luck if you are going to pursue this. -Mike

 

[Cougar Allen]

 

[Esav Benyamin]

Good advice already. Some points I think are really important:

1) It's a business. You have some business experience with your auto detailing. You can use that to learn how to organize the legal and financial responsibilities and perhaps some of the merchandise requirements.

It will help if you aren't only dependent on sales of cheap knives. if you sell a lot of $5 knives, people won't buy the $15 knives next to them. If you add in sportsman's gear, you've just added to your inventory requirements.

You may need some formal business schooling to balance all these requirements.

2) Working with autos, you might be better off opening a shop selling tools ... then multitools ... then Swiss Army Knives. Once people know you are good for these, you'll be in a better position to sell a wider range of knives.

Make sure what you sell is what your community wants to have. Developing a need for a new kind of item is a long and expensive process.

3) Especially if you have any internet skills at all, or access to help with a website, online sales are a great way to add in some business without actually having to be there, face to face with tire-kickers.

It will also allow you to carry the higher-end knives that won't support you on sale in your store. But it's a hard way to make the business support you all by itself. You see how demanding people are. Inventory can choke you -- having too much or having too little.

4) Yes, many small businesses fail. Many small businessmen go into it with no idea how to run a business. You've already gotten past some of that. Small businesses are an engine of economic growth in this country. You can do it.

 

[harm]

Here's some advice speaking from experience. My father and I sell knives out of a few display cases in his business (Its a small convenience store) We started out with very cheap product from Frost Cutlery and it was hard to keep it in stock, we sold hundreds of cheap $5-6 knives. So we continued to order the cheaper product and added on some more expensive product (kershaw and case) and have only sold 5 or 10 quality knives. Unless you know that you're in an area of knife collectors then you won't sell anything but cheap product. People can't see spending more than $10 on a knife that they are going to carry because they are afraid of losing it. If you really want to give this store a try then my advice is to sell different types of product other than knives, possibly more types of sporting goods (boots, guns, aummunition, clothing). Best of luck if you are going to pursue this. -Mike

mikey hit the nail on the head.try for an outdoor store.if u have stuff that joe average is gonna buy everyday,you're in bussiness.the knives can be a side line.

 

[TOMBSTONE]

I'm no genious,but I would say it would be a losing investment.There are alot of good established dealers on the internet to compete with in production knife sales,and profit margins are small.I have seen dealers on ebay sell knives at almost dealer cost.A storefront is another expense.

 

[Scott Hartman]

I wish you more luck than I had. I consider it an educational experience with a cost, like paying for college. So many brands,what I like, others don't, special order a knife,they won't come pay for it. On-line sales,ebay and SMKW are tough competition. Dealer pricing is based on volume. Many major cutleries will not sell to you, if you don't have a store front business. If you import knives, taxes drive up costs. Some knives stay with you for years( not because the're so collectible)
Life is much more pleasant without that headache.

 

[GigOne]

The first thing that you need to do is contact your nearest "Small Business Development Center." Here is their website for Missouri. . . . . .

http://www.missouribusiness.net/sbdc/index.asp

They are funded by the state (with assistance from the fed's) and operate through a major university. Their #1 job is economic development for the state.

And it's free !

They can assist you in every aspect of preparing to start a business, including business plans (and you'll have to write your own), financials, laws, marketing feasibility, etc., etc., etc.....

I haven't met one of their consultants that didn't have a Masters or PhD in Marketing, Management, Business Administration, etc., and had years of experience in the market place.



It's fine to dream, wish, and hope. . . .but reality is when everything is on paper !

 

[ako Knife Lady]

I did exactly what you are proposing....except I started with just $3000.

I had done a "market survey" in an indoor flea market for the summer and fall. There definately seemed to be a market. So I opened up a knife store in a mall for the Christmas season of 2000...opened it Oct. 1st when the rent was still lower than Nov. and Dec. tend to be. I had a 600 sq ft store front that had been a Candy Castle. It was the smallest store in the mall, and had a castle themed front that I drew on in ordering supplies. I begged and borrowed all of the display cases. (I moved them around so they took up the most space so as to not look so sparse.) I paid the first month's rent and security deposit. I then spent the rest of that $3000 for supplies...a mix of cheap swords, fantasy knives, and a cheaper line of main-stream production knives (mostly CRKT and imports). I was fortunate enough to qualify for a couple of 30 day net on gift items like dragons, fairies, unicorns, etc.

The Christmas season was amazing! Extreme hours (store hours of 7am to 11pm during the Christmas rush)...the need to hire a friend part-time, then full time...but also a suprising amount of cash-flowing into the store. After all the bills were paid, I netted $14K for those 3 months! The mall was very pleased with the store (I had been able to add a number of extra cases during those 3 months so it looked very nice), and asked me to stay.

The months after Christmas were obviously not as good, and I struggled a bit, but not as much as I'd feared. I was still netting a profit each month. I also added a few other employees so I could have a "normal" work schedule. (During that first Christmas season I was at the store from an hour before opening to an hour after closing seven days a week.)

I added better production knives as I was able, and the store, and the clientel upgraded rather nicely. I found this site while I was still doing viable market research which greatly added to my knowledge. I attended the Show Show in 2001 and found more suppliers. Because the store was still small, I opted to stay with distributors in most cases rather than dealing straight with manufacturers.

After talking to a number of other store owners during SHOT and the Blade Show, I decided to expand to another store using the same forumla I had used before (open early in the Christmas season). I talked to a number of malls, and had decided on one just over an hour north that was very close to where my friend/employee lived (who would then become the manager for that store). I was to sign the lease on Sept. 13th of 2001. Obviously we all know what happened 2 days before I was to sign the lease....I got a call on Sept 12th from the mall telling me that "because of the current situation, and the feelings toward weapons, they felt that a store such as mine would not be the type of message the mall wished to convey."

At this point I made a grave tactal error and went with my second choice....a mall almost 2 hours south of my established store...an area in which I knew no one, and had to find a manager that I didn't know. I dipped into my savings to buy display cases for both stores, and supply the second store since it was much bigger than my current store, or first choice for expansion. It turned out to be a bad decision in that I had not realized the economic down-turn that resulted from 9-11. I also could not get down as often as I wanted to, and had to rely on strangers to run the store. (I allowed some hiring mistakes because of it.)

The new store did just ok that Christmas. Unfortunately instead of signing a lease just though the Christmas season, I had had to sign a years lease up-front.

I managed to keep the second store open until June, but had to renegotiate my lease and take a major loss to get out. I hoped the orignial store would make up for some of that loss over the Christmas season. That Christmas season wasn't quite as good as the one before, but I survived.

I managed to scrape by (by dipping into my life-savings) all that Spring and Summer, educating my established customer base, and switching to better (and more expensive) major band knives. Unfortunately that was not especially condusive to attracting new customers, but I had turned into a major knife snob. I refused to buy imported knives from manufacturers known to knock-off major-brand knives. During this time the internet glut of knives marked up bare percentages started in full-force. Shipping was still quite cheap. I had plenty of "customers" that would love to come in and see all the newest knives, then go home to their computers to order from someone cheaper.

After that Christmas (which had again been somewhat down from that first year), the mall decided I must become a permanent store which would almost triple my rent! After a lot of soul searching and number crunching, I decided that I just couldn't afford to stay in the mall. (I tried to make a go of it in a small storefront about 6 miles away that just didn't work out....losing too much of my life-savings, in a desperate attempt to make it work.) I am now working for someone else, slowly climbing the ladder toward middle management, and trying to make up for that lost retirement savings.

Sorry that was so long, but it is an honest attempt to let you know both the good and bad that can happen. I learned a lot, had my plans changed by situations out of my control, made many mistakes, some of which turned out to be major mistakes, and had a blast and for a while made some decent money and lived out a wonderful dream.

The best advice I can give you is to do serious market analysises (the indoor flea market worked well for me), constantly think though your goals and objectives, to be able to roll with the punches that life deals you. A business plan updated yearly is a great idea. Perhaps just open a seasonal store for Christmas in a mall for a couple of years. Retail in general starves from January to late Oct of every year. (If you decide on a seaonal store, opening in Oct is a good idea to give potential customers ideas before the rush.)

If you have any questions, email me and I'll be glad to help as much as possible.

Pam

 

[BladeHQ]

I may have something to chip in here, since I’ve spent the last two years doing exactly what you’re thinking about. My comments are not intended to be negative, just realistic.

was thinking of doing something I really have a passion about with the money

Let me just mention that what you have a passion for may soon become “just” work. Passions are often best left as passions. I mostly enjoy my work, but there are days when the last thing I want to do is look at a knife and I wish I had just kept my collecting as a hobby.

I know there are lots of us knife nuts around but would it make enough to support a family

Now this is an interesting question. I don’t think anyone has addressed your standard of living yet. The answer will depend on how big your family is and what they will require. You may need to make $35,000 a year for yourself, you may need to make $100,000 a year. Your first goal, therefore, is to figure our exactly what your take home pay will have to be. From there you have to calculate your other costs (store, utilities, advertising, expansion) and determine what amount you need your revenue to be (or your gross) based on your profit margin to cover all your costs. You may be surprised.

My idea would be to stock the best manufactuers products,and offer great service

This is a great idea. Sadly, it’s already been put widely into practice on the Internet. You’d have some very stiff competition. You have mentioned that a physical store in your area (where there are none) might be the way to go. But consider what others have said. People will come in, look at your stuff, waste your time and then go home and buy the knife from a cheaper location. “It would be great to see and hold one first” and they will agree, but not necessarily buy it from you.

is it worth investing the time and money

The answer to this is really the next question. But here's my personal experience: For the last two years I’ve put in about 80-100 hours a week working on my business. I started with an Internet store since the overhead (costs) would be lower. I had $2,000 to start and so I was forced (much like Knife Lady) to sell the lower ends knives. But this was a means to an end since my “dream” was to carry the best and the coolest. As other have said you’re required to have a storefront to carry most major brand knives (you can lie, and it can work, but you’ll feel bad). We got a trashy warehouse and roped off a section as “storefront” and gave it a go. I guess you could say that we made it work through sheer force of will. Mind you, this “business” did not support my family. It was a side venture. Fast forward two years. Since then We’ve invested over $500,000 into our business, gotten a real storefront and it provides a “nice” living as of 5 months ago. One thing to remember- our physical store is really just a tool- maybe 4% of our sales come from there but it represents about 16% of our total costs

just wondering if I should follow a dream

And that’s what it all comes down to. Following that dream or not. Personally I think one should always follow their dreams. Turing a dream into a reality- even a failed one- is often better than always wondering “what if?” And if you believe in your dream hard enough and long enough you may just make it come true.

 

[bigbcustom]

VidKnight, what is the name of your store?