Opening A Shop In A Low Provery Area

[Abet Computers]

Backstory, I live in a pretty low to lower middle class neighborhood I have been running my computer repair business out of my home for the past 2 years with really good results. ( my community has really rallied behind me ) and are urging me to open up a commercial spot which I want to do so, but overhead $$ and the nervousness about neighborhood crime and such has been holding me back, I have priced my services at a reasonable amount to keep the "higher" lower class coming to me but keeping the rift-raft away.

I have a community group behind me to open up a shop in the rough part of neighborhood (this is for a beautification project for the city and to bring it back to life)

The only competition I have around me within a 3 mile radius is a bunch of ( password cracking, selling illegal software/music/movie types ) which are great because they keep the crap clients away from me to focus on real clients.


Space Available - 677 sq.ft.
Rent Per Sq. Foot - $7.15 / sf
Rent/Month - $403.38
Taxes / Month - $33.74
CAM / Month ( Common Area Maintenance ) - $25.00
Total / Month - $462.12

• All leases are triple net (includes rent, taxes and common area maintenance charges).
• Common area maintenance (CAM): shared costs for parking lot maintenance, dumpster, landscaping, etc.

My question: Do you think this is a jump that should be taken to support my community?

 

[Boston Pro Comp Serv LLC]

I have always been leary of triple net. Rent sounds low which is good. With the amount of business you have now will this jump leave room for profit?

 

[Freedom PC Solutions]

It is nice to support your community and all but don't make that the reason you "jump". Will you make enough to pay for utilities, insurance etc?

I am home based as well and probably will not go brick and mortar anytime soon because I wanna do more than just pay bills

By the way, love your commercial...... lol

 

[Abet Computers]

yes it will leave me with a decent amount of profit and growth, I have had quite a few people shy away from approaching a home to drop off a computer for repair. And I do not blame them its would look and sound shady to me.

I only make calls out to businesses, and residential have to bring it to me I have been told to become a mobile tech as well but that's just something I will not do in this area.

 

[acesdeals]

dang thats cheap lol, i have to pay $2000 for 1250

contact a lawyer to help you look over the lease

a few hundred bucks could save you thousands in the future

 

[PCSupportGlasgow]

only you can do the sums to check if worthwhile or not.


As this an actual local government initiative have you looked into what benefits they can offer yourself for actually opening in that area?? whether that be free rent period, grant for startup in area, free tax period, etc?


Also worth noting that gratification projects can turn run down areas into middle class areas so choose wisely where about in the area you decide to open (tip: look for where councillors themselves are actually investing and get in there before the big developers start to buy up everything in sight)

 

[NYJimbo]

Don't forget if you open a shop you will likely be sitting in there all day.

Also you will likely have to get some security equipment, possibly add a steel pull down gate and get insurance for the shop. This can quickly add up to a couple of grand.

 

[brandonkick]

If you've done the homework, and there is more money to be made then I'd say go for it.

Figure out how much you have to lose, and compare it to what you have to gain. If the risk to reward ratio is good, then I don't see how you can't take the chance.

As mentioned, have someone knowledgeable in the legal realm look over the terms of the lease. Spending that little bit of money can save you a lot of headaches.

I fully recommend you invest in a security camera setup. For an indoor area like this one, you can get away with 2 or 3 analog cameras max and you won't need a big server/dvr system to run it on either. You'll probably slide in around $2000 for something like this installed. It can probably save you money on insurance and it should ward off "most" people thinking it would be an easy smash and grab.

Invest in some advertising. A few hundred dollars can go a long long ways towards getting your new name/location out there.

If you don't have people on managed "service" contracts, consider finding a few local businesses and trying to get them on board for routine work. This could really help when things get slower, as you know you have that work and that income if no one else comes through the door.

If you know for a fact there are other people in the area doing illegal things and providing illegal services, I would anonymously report it to the appropriate place. Don't think of this as being petty, think of this as you doing some potential clients a favor. Some of the people that use their services might not realize what is going on. In today's world almost everyone is trying to save a dollar and get the most for their money, some people don't know any better and some people are just plain cheap!

I don't see a reason to pay $30, $40 and even upwards of $100 for an HDMI cable when I can get the same thing for $3 online (or even less). Many people don't know their isn't any difference, because they don't know enough about the cable. The same goes to the computer repair service industry.

 

[tomahawkeer]

You can invest in some small (4-8 camera) DVR systems, and have less than 500 bucks in them, instead of going through a security company. Starting out I would be willing to put money into it, but still try to keep it lean. Inexpensive, not cheap frame of mind.

 

[Tony_Scarpelli]

Hi Brad,

I see you use a flat rate repair of $60. Your rent needs to reflect about $122 per month additional for insurance to make up the triple net. So now you are at $600 per month mimimum.

You need to add $150 for internet/phone service as well as $250 or so heat/ac/water/trash/lighting.

Now you have to decide are you going to close the store to go do your calls? Or are you going to hire someone part time afternoons so you can sechdule your outcalls in the afternoon? Usually it is difficult to do and I waited to open my store until I could afford to pay at least a bit a bove minimum wage for the open hours.

Generally a store has to have hours beyond 9-5 to allow customers to get to you before or after work. So your open hours are likely 8am-6pm as a minimum M-F and then you can have 10-5 on sat close sunday. that is about 60 hrs that has to be covered. OK you can cover part of it but you need to also go on our calls. Someone else has to be hired to watch the store while you are out.

At your rate you are now looking at about $1000 per month for the store and $1600 per month payroll for someone to wkr minimum wage at 40 hrs a week.

At $2600 per month additional expenses you now need to earn 2600/$60 about 50 more jobs a month just to break even. This does not permit you to make any additional income. This just takes you to where you are right now in earnings as these are all costs.

I would recommend aganst this until you are already doing enough to pay the out of pocket additional costs and still have plenty of money to pay your own living expenses.

Now as to the issue of it being a new development in a low area.......SCARES THE HELL OUT OF ME, and I was in Army Special Forces. That has financial disaster all over it.

I see why they want you or any breathing body to fill their store I do not see why you want them?

Over half of all my customers are women. Women seldom want to travel to that sort of location, even during the day....

If you hire a female employee can you guarantee her safety to open or close the store when you cannot?

I'd run away from this deal.

The ONLY way I would consider the risk and time, and expense of building out a store in a new center like this on the wrong side of the tracks is if they gave me 1 year free rent to take a risk free chance to see if it could work. Explain to them you need to hire employees, build out the store and pay $400 a month in utilities and it is an unlikely neighborhood. However if you think it worth your while you can likely get them to do this.

However you MUST be able to walk away at anytime after 1 year without paying any rent, penalties or anything if after 12 months you cannot make this economically feasible.

Backstory, I live in a pretty low to lower middle class neighborhood I have been running my computer repair business out of my home for the past 2 years with really good results. ( my community has really rallied behind me ) and are urging me to open up a commercial spot which I want to do so, but overhead $$ and the nervousness about neighborhood crime and such has been holding me back, I have priced my services at a reasonable amount to keep the "higher" lower class coming to me but keeping the rift-raft away.

I have a community group behind me to open up a shop in the rough part of neighborhood (this is for a beautification project for the city and to bring it back to life)

The only competition I have around me within a 3 mile radius is a bunch of ( password cracking, selling illegal software/music/movie types ) which are great because they keep the crap clients away from me to focus on real clients.


Space Available - 677 sq.ft.
Rent Per Sq. Foot - $7.15 / sf
Rent/Month - $403.38
Taxes / Month - $33.74
CAM / Month ( Common Area Maintenance ) - $25.00
Total / Month - $462.12

• All leases are triple net (includes rent, taxes and common area maintenance charges).
• Common area maintenance (CAM): shared costs for parking lot maintenance, dumpster, landscaping, etc.

My question: Do you think this is a jump that should be taken to support my community?

 

[Tony_Scarpelli]

Almost everyone I know who has a store has had at least 1 smash and grab. A smash and grab is where they back the car into the window, grab what is out front and are gone in 2 minutes before any response. I have been hit about 4 or 5 times until I had steel bars put up. My store with the smash and grab was in a very nice mall in front of a supercenter in front of a bestbuy on the right side of town, not the ghetto.

Even with security cameras you will get broke into. Plan on rolling steel security door to bring down when closed like you see in the malls. They cost about $4-5k used $8k new or you can get custom welded bars.

We had a very attractive pained glass looking bars welded and painted white so it did not look ghetto and it cost us a few thousand....less than buying the rolling gate.

Security cameras have no effect on smash and grabs.

You can invest in some small (4-8 camera) DVR systems, and have less than 500 bucks in them, instead of going through a security company. Starting out I would be willing to put money into it, but still try to keep it lean. Inexpensive, not cheap frame of mind.

 

[Abet Computers]

Thank you for the comments everyone, very insightful, I need to take a step back and plan this out a little more, I was trying to dip my foot in the water but looks like I have to re-evaluate my stance.

 

[PCX]

As many have already stated, make sure you consider all of your expenses as well as what volume you will have to do in order to pay for those expenses. You may have to raise your prices in order for this to work, but you will also need to realize that you will lose some business as a result, meaning you may lose some of those supporting neighbors of yours.

One thing you must always ask yourself when making any type of long term decision is "is this sustainable?" In other words, is your local neighborhood and community really going to generate enough business to justify opening a new shop? Not likely, so do not count on it.

Finally, I personally would avoid opening any shop in a poor or poverty stricken area. I know that many do not have a choice, but If I were you, I would look at possibly opening a shop in a surrounding area that has a better economy and better clientele.

 

[Abet Computers]

I have had some time today to sit down and write things out and talk to some people. For what I need to accomplish getting my business out of my home and into a retail market and also figured out how supportive my neighborhood backing really was worth, I came to the conclusion that Tony_Scarpelli was right on the mark by saying "I see why they want you or any breathing body to fill their store I do not see why you want them?"

I do not want them - I want to get out of this area, and they really do not care how much I support the people in this neighborhood they just want my money to support their cause which is understandable, but I am not here to work for them I am here to work for myself and family.

I have been looking in my surrounding area and found a nice market its tied for 3rd most popular area that I have coming to me, and its the closest to me.

The reason they are not higher on the list is because of the neighborhood and they are nervous about bringing a computer to home residence and not a retail spot. I have done marketing in the area and they require such a service like I offer and this area has a large amount of ma & pa shops and have NO major anchors like bestbuy, office max, and such.

The closest shops to them are 5 miles away (10 minutes ) but that being said prices are double almost triple for the same sq feet.

 

[Tony_Scarpelli]

Do you use google adsense? or how do you get customers to call you now?

If you want, its cheaper than a store, see if you can put up a small bill board for 2-3 months. They try to get a 6 month contract but I am leary of making too big of committments until you know it works.

Another Idea, I visited Ohio and their economy sucks totally just like Wichita....not a great time to sign a $24k per year lease. But I wonder if the code zone guys would tolerate a 24' box trailer?

Think about a trailer, setup like a small shop that has 100% graphics all around its for sides and you bring it to a busy intersection park on an empty lot or in the parking lot of a car wash or something. Get with the owner for permission as you will want to set it there every day for a few months to build up clientele. As they see you are there every day, you establish a place of business where they can drop in on you.. Use an air card for internet or local wireless with a local store (another agreement you'd have to make). Your cell phone to accept calls.

You would be out of pocket $5k to buy/setup the trailer to look really nice...think something like a mobile Tmobile store or something along those lines. If you are not paying rent at least if the location doesn't work out you can move it to another spot. Sort of like the lunch trucks...you learn to depend on them being in a particular place.

With bad economy there should be plenty of empty lots/locations that people will allow you to set a trailer on. Who knows if it takes off, you might be getting an SBA loan a year from now to buy the lot and build a building on it.