| Author |
Across the Fence:  Advice about a Possible Business Venture?  |
|
|
HeathersStitches
True Blue Farmgirl
98 Posts
Heather
Lancaster
OH
USA
98 Posts |
 Posted - Feb 05 2009 : 12:49:02 PM
|
There is a lil store opening tomorrow here in Bremen, I have just gotten back from putting most os my crafts in there for consignment. They take 25 percent..is this good or high?
While there I was asked if I wanted to be a Partner, which means pay about $70.00 a month to help pay the rent, plus work one day a week and then I get 100 percent of whatever I sell plus the ability to go with them to craft shows and show my pillows, I was excited till I told my DH and then he started in with "Is this an LLC or just ladies splitting the rent"..lots of technical questions that I have no idea, "Do they have a Business plan?"..He is afraid that if I get really involved and pay my share of the rent what if they go under..Am I out of all that money.
I told them I'll go for the Consignment part now and think on the Partner one and they said to get back to them within the week because they have a few others that would like to be a partner.
Not sure but it was exciting to be asked!
SO what do you think...Would you jump at the chance?
http://heathersheartfeltstitches.blogspot.com/
http://theforgottenbookshelf.blogspot.com/ |
|
|
melody
True Blue Farmgirl
3322 Posts
Melody
The Great North Woods in the Land of Hiawatha
USA
3322 Posts |
|
|
Alee
True Blue Farmgirl
22941 Posts
Alee
Worland
Wy
USA
22941 Posts |
Posted - Feb 05 2009 : 2:44:25 PM
|
Heather- the questions that you husband asked are right on target. There are several types of business and you don't want to jump in without knowing what is what. If you just go into joint ownership and the business goes bust you could be personally liable for any debts incurred by the business unless it is among other possibilities a Limited Liability Corporation. If they are just opening joint accounts or operating on the "good old boy" standard, that can get dangerous for you as an individual, not to mention the company!
Having a solid business plan is like having a road map. It helps answer a lot of questions and really solidify the direction the business will take.
I am still learning about all this, but I am an accounting major and this is exactly the types of things that I have been learning about in my accounting and Business Law classes. So I would say if they
1
1) Don't have a business plan and won't create one
2) Do not have a "real" business structure set up (if they are flying by the seat of their pants so to speak)
3) If they don't understand the disbursement of profit in ration to investment
Then don't go into business with them.
I would say that the "Keep 100% of the sale" and just going with them to craft shows is a BAD deal. Think of it this way:
If you are giving an investment of $70 each month in cash plus working 4 eight hour days (for no pay) then you are actually giving a monthly investment of around $326 if you pay yourself $8 an hour.
So that investment should in essence be "stock" given back to you in exchange for the investment. Ideally the business should be paying it's own bills, so if you are constantly having to pay the bills out of your own pocket, that is not good. Where is the 25% from the commissions of non partners going? Into pockets? And whose pockets? If you are investing in a company, then you should see a return on your investment.
Also, you can go to craft shows on your own theoretically. Most craft shows are not exclusive invite-only so that is not a benefit.
So if instead you are investing that $326 dollars each month and they are giving you stock, then at the end of each accounting period you should see a return on your investment if the business if profiting, and the return on investment should be equally distributed per how much each person owns in stock.
I hope that helped and didn't just muddy the waters. Feel free to email me and we can chat or you can even email me your phone number and I can call you (I have free long distance).
Alee
Farmgirl Sister #8
www.awarmheart.com
Please come visit Nora and me on our blog: www.farmgirlalee.blogspot.com
Put your pin on the farmgirl map! www.farmgirlmap.blogspot.com |
 |
|
|
Alee
True Blue Farmgirl
22941 Posts
Alee
Worland
Wy
USA
22941 Posts |
Posted - Feb 05 2009 : 2:48:54 PM
|
Oh and also if they are expecting the giving up of the 25% commission to be the return on investment, that is a bad deal too- as you can't guarantee the sale of your products, but if instead the business took those commissions then you would see that money come back to you each quarter/year when the company paid it's investors (owners, partners etc) their dividends from the aforementioned stock investments. By only taking as a return on investment the full sale of your products you run the risk of seriously shortchanging yourself.
Alee
Farmgirl Sister #8
www.awarmheart.com
Please come visit Nora and me on our blog: www.farmgirlalee.blogspot.com
Put your pin on the farmgirl map! www.farmgirlmap.blogspot.com |
|
|
|
owwlady
True Blue Farmgirl
899 Posts
Jan
Tomahawk
WI
USA
899 Posts |
Posted - Feb 05 2009 : 3:46:53 PM
|
25% commission sounds high. I've only paid between 5% and 10%. I would wait for awhile and see how your product sells and how much traffic they get. Go there on different days at different times and see how many customers they get. Talk with other vendors and see how they're doing also. My sister and I used to sell at Country Sampler. We thought that with them having their own magazine and being well known we'd have no problems. We didn't until the day they said we had a week to get our stuff out because their stores were going out of business. We had just bought more inventory the weekend before and then we were stuck with trying to get rid of that. So, you're always taking a chance especially in this economy but I hope you do well with your sales while you're deciding what to do...good luck.
visit my blog at http://lifeatspiritfarm.blogspot.com |
|
|
|
babysmama
True Blue Farmgirl
931 Posts
Elizabeth
Iowa
931 Posts |
Posted - Feb 05 2009 : 4:17:02 PM
|
Our regular consignment stores (clothing, toys, etc.) take 50%. I don't know if craft places are different but 25% sounds okay to me.
I don't like the sound of having to pay $70 a month if you want the partnership deal. You have to work there one day a week AND pay them? Doesn't sound right. If there wasn't that fee it may make more sense.
-Elizabeth |
|
|
|
melanie47601
True Blue Farmgirl
1949 Posts
Melanie
Boonville
IN
USA
1949 Posts |
Posted - Feb 05 2009 : 6:05:21 PM
|
I was thinking 25% didn't sound so bad, but compared to what some of the other gals have said they pay, it does sound steep. I checked into consignment selling where I live once. The shop owner wanted 50%. At the time I was just making wreaths and flower arrangements. If she charged $30 for the arramngement, she got $15. My leftover $15 would maybe just barely cover my costs of materials and didn't pay me at all for my time.
Your husband and Alee make some really good points. Going into business can be risky and should looked into thoroughly before making any decisions.
Melanie
Shop~ http://www.squidoo.com/buyinghomemade
Blog~ http://wheelsarealwaysturning.blogspot.com/ |
|
|
|
Nance in France
True Blue Farmgirl
1438 Posts
Nancy
St. Laurent de la Salanque
France
1438 Posts |
Posted - Feb 06 2009 : 04:58:09 AM
|
| Bonjour gal pals! Heather, I agree with Melanie, that 25% does not sound off base: But then again, I do not have experience with this. Years ago when I dabbled in oil and acrylic paintings, the shop owner I approached wanted 40%; my sister is a fine arts painter, incredibly talented, and shop owners want 40% minimum, which she painfully swallows BUT they are an outlet to the public. I say, try it like that, no partnership involved, and you can see after a few months if your things are popular items or not, and if not, take them back and move them elsewhere. Sometimes it takes a few misses to get a hit, and you gain experience along the way! Good luck and I wish you loads of success! Hugs, Nance |
|
|
|
owwlady
True Blue Farmgirl
899 Posts
Jan
Tomahawk
WI
USA
899 Posts |
Posted - Feb 06 2009 : 06:44:48 AM
|
When I said I never paid over 10% commission, I should have added that I paid an additional booth rent plus the 10%. Do you pay rent in this store? If not, then the 25% isn't too high. But, I would still wait and check things out.
visit my blog at http://lifeatspiritfarm.blogspot.com |
|
|
|
queenofdreamsz4u
True Blue Farmgirl
3845 Posts
Stephanie Suzanne
Smoky Mountains Tennessee
USA
3845 Posts |
Posted - Feb 06 2009 : 2:39:38 PM
|
Heather, All you need to do is ask them for a copy of their consignment agreement and a copy of the partner *option* agreement so you can see how organized they really are. Don't ever do anything in business without it in writing and signed by all parties involved. And ask for it to be notarized..this always gets their attention and lets you know how serious they are about their partners being treated right.
Your word or theirs is not enough. Consignment fees vary widely around the different regions of the US and also are dictated by the level of pricing that is found in the shops overall inventory.
I've seen consignment fees as low as 10% and as high as 60%...I have seen the option to work one day a month to reduce the consignment fee, I've seen space rented by sq ft as a monthly fee and many other options.
Look over the *consignment* option agreement to see what type of limitations they may put on you concerning selling an item online that may be in their shop. You need to make sure if you come in and pull an item from inventory that they will not charge you the consignment fee even though the sale wasn't generated through their shop. No question is wrong when it comes to a business agreement. You do not want to wind up loosing $$$ over these tiny things not being disclosed up front.
And of course, just beware that when someone goes out of business and owes you money that many times you don't recover your inventory nor money unless you take it to small claims court (upto $2500). Sadly, most occasions result in alot of time, money and energy exhausted because if someone has no money it doesn't matter what the court has told the person to pay you. So this is a clause in the agreement that should be addressed..how your inventory and cash owed is handled should they close the business.
Once you look over their *partner* agreement you can ask is they are an LLC, if the amount you pay each month covers your expense to the shows they go to each year (vendor booth, application fees, etc.) I'm sure it wouldn't cover your lodging or food. For tax purposes it sounds like this business is "in the business of leasing space"..that's what most shops like this do for tax purposes because they may or may not have any inventory of their own. So for yourself, this creates the opportunity for your own small business so that you can write off your annual expenses for producing your goods. Getting your business license and resale number would be a benefit if you are serious about marketing your goods.
Good luck,
Stephanie
Queen of Dreamsz ~ keeper of dream kingdom
www.queenofdreamsz.blogspot.com ~~~~~~The Portal to A Vintage Collection & My Creative Journey |
Edited by - queenofdreamsz4u on Feb 06 2009 2:45:44 PM |
|
|
|
K-Falls Farmgirl
Chapter Leader
2096 Posts
Cheryl
Klamath Falls
Oregon
USA
2096 Posts |
Posted - Feb 06 2009 : 3:25:48 PM
|
All good advice.. They should have a business plan..Heather. Don't leap through the hopop until you know how far you are leaping and what you are going to land in..Good luck. I'd think If you went withthe 25% consignemnt fee that would be within reason, at least here on the westcoast it is 30-35% but if you have to then pay them for rent.. I'd opt out. You could just do consignment and offer to work a couple days for fun & exposure actually there to sell your product ,a nswer questions & take orders. . forget the rent partnership. You can go to the craft shows without them..Usually they are open to anyone with a tax number.
Cheryl
Farmgirl #309
Almost daily posts at:
http://www.k-fallsfarmgirl.blogspot.com/
Come visit the barn at http://barndoorcreations.blogspot.com/
Every time I hear the dirty word 'exercise',
I wash my mouth out with chocolate.
|
|
|
| |
Across the Fence: Advice about a Possible Business Venture? |
|
Advice about a Possible Business Venture?
