Subscribe Now!

Events Calendar

Online Product Catalogs

Manufacturers Directory

Product Update Pages

eBabyShop newsletter

Baby Shop Flipbook

Opening a Baby Product or Maternity Store
Small Business Tips for Start-up Retailers in the Juvenile & Pregnancy Product Industry

Let me state at the very outset that unless you have extensive retail experience, it will take you 12 to 18 months of planning and execution before you will be opening your doors to the public with a sign that says "Open For Business".

Store Character

The first step in setting up a store is to define the "character" of the store. This is a tougher proposition than it seems. To help you in determining the character of your store, I suggest visiting stores similar to the one you have in mind, especially those in other cities. Study their layout, product mix, lighting, floor coverings, pricing, use of wall space, window displays, and promotions. Make a list of what appeals to you and what does not. Visit well, make your visit worthwhile. Study them with an "observe & learn" attitude. If you are thorough in defining the character of the store you envision, you will come up with a good idea about the product mix you would like to carry. Determine whether to carry juvenile and/ or youth furniture, maternity, toys, and clothing, as well as the percentage of each category you wish to include in your inventory.

Size and Location

Size and location are two very significant factors that will determine many other aspects of your store. A store of under 2000 sq. ft would be considered small (one crib and case goods display alone will take up 60/80 sq. ft. of space). Remember you will need to allocate approximately 20% to 30% of the total space for aisles, common areas, etc.; otherwise, you will end up with a very cluttered look. Most baby product stores are 2000 to 7000 sq. ft. In terms of location, your three basic choices are to be mall based, within a strip plaza or in an independent building. Each has its own advantages and disadvantages. As baby product stores are considered "destination" stores, you do not have to rely on mall traffic for your survival.

Have you ever noticed how shoe stores are located close to each other? An independent retailer I know says that the main reason for his success is that his specialty baby furniture store is located in a strip plaza about 100 yards away from a Babies 'R' Us. He has adjusted his inventory to offer specialty products, but at prices that are not significantly higher than those of his mass merchant competitor. He also relies on Babies 'R' Us marketing and promotions to get customers to his store. If you are not savvy in adjusting your product mix however, a move like this will destroy you. You also want to locate your store in an area of town where young people live. Do not open a store in an area just because it is close to where you live; open the store where your prospective clients are.

Leasing Suggestions

Unless you already own a store property that is ideal for a Baby Products store - we highly recommend that you initially RENT the space. Sign the lease for as short a period as possible, but make sure you have multiple options to renew the lease for predetermined periods and rates of rental. Besides the basic rent and utilities, find out if there are any other charges that you would be responsible for. It is not uncommon for business tenants to have to pay certain common fees or for garbage disposal. If you are considering purchasing an existing store, I suggest that you find the reason or reasons why the owner is selling the store. Verify the reasons he/she gives you by checking with neighboring store owners or others in the community. Any decision to purchase an existing store MUST be accompanied by a complete audit of accounts for the past 5 years. A competent accountant will be able to guide you to determine an adequate purchase price based upon the cost of inventory and the profitability of the store.

The success of any small business startup rises significantly when its owner has good standing and a relationship with a banker, accountant, and handyman.

Purchasing a Franchise

There are definite advantages to purchasing a franchise but...like anything else in life...there are no free lunches. The five primary benefits of becoming a part of the franchise operation are:

1. They help set up the store;
2. training is provide to help you manage the operation;
3. the guidelines about inventory takes the guessing out of such choices;
4. they assist in marketing and advertising; and
5. they provide tested computer programs for operations.

Ask the franchise company as many questions as you can. IF you are going to join their group, they better have the answers. IF they don't — move on! Inquire about the factors that dictate their decision on selling other franchises in your area and whether you, an existing franchise owner, will be given the first opportunity to purchase other franchises in your city or region. Compare to other franchises in order to understand the pros and cons.

Unless you purchase a franchise, you will be free to determine the layout, design and other aspects of the store. Select a name for your store (each letter in the name adds to the cost of signage), incorporate to limit personal liability and try to purchase used store fixtures and fittings. Used display cases, lighting and even slat walls are available in almost every city at less than half the cost of new equipment. You will be surprised by the selection and variety found at used store fixture and furnishing places.

Financial Aspects

This topic is so large that ALL the factors can not be covered in an article like this. Only general guideline and tips can be offered in a piece like this. In broad stroke terms, suffice it to say that the MONEY aspect should be divided into two categories:

1. Capital expenditures for setting up the store and purchasing inventory.
2. Operating expenses that would cover the cost of rent, salaries, utilities, advertising and marketing, etc.

Here are a few general thoughts that a new store owner should consider:

• Spend more on purchasing inventory than on decorating the store, but make sure your space is visually appealing as this helps sell.

• Have at least six months operating expenses available in ready funds when opening a new store.

• Be prepared to work 60 to 80 hours a week.

• Hire additional help as sales increase.

• What ever monthly expenses you project, the real outlay will be 25 to 50% more...it's like when building a house, unforeseen expenses will pop up!

• The most overlooked expense is health insurance cost for yourself and your family.

• One of the best investments is to buy a quality accounting and inventory control software.

• Negotiate with banks to get the best rates for processing credit card payments. Remember, they are vying for YOUR business. Do not be intimidated. Let them know you're shopping for the best deal.

• Identify slow moving inventory and try to sell it at cost or even slightly below cost. The capital tied into such items is not earning you anything. As a matter of fact, If you have borrowed to purchase some inventory...this is costing you!

• Consider advertising an investment, not an overhead. Allocate a certain percentage of your total sales for advertising and marketing. Do not let a smooth talking sales person exceed your preset limits. Deal with reputable vendors. If they dont' return your call for potential business, they certainly won't return your call when there's a problem.

• Take advantage of prepayment discounts or other special offers — any such savings go directly towards your bottom line.

• Incentivize your sales staff with commissions and bonuses. When they put out extra effort in servicing the customers it will create good will, customer loyalty and positive word of mouth advertising.

• Sell excess and slow moving inventory on the internet through eBay and other such sites.

• One tip that a friend of mine gave me in running my business was to maintain two bank accounts. ALL sales deposits to go into one account. All payments to go out of the second account after transferring funds into the "payables" account. His wisdom was to get the banks to assist you in keeping broad stroke tabs on the income and expenses.

Important Addendum

There is this dynamic Interior Designer from Denver who is a business colleague of mine. She also recently started a high-end baby business (design, manufacturing and print). I sent her this article for review and input. Besides editing it, she brought to my attention the benefits of creating a business plan after doing the initial investigation. She explained, "taking the time to work through the business plan helped me focus in order to stay on the right path. Even though it's not much fun and I fought it every step of the way, it truly helped me focus on what I wanted and didn't want my business and passion to become. The research alone will help you sell your vision to a banker or investor if necessary. It will also help you establish your story and know everything about the business inside out. She added, "....... encourage your readers to locate a reliable free source who can help review the plan and offer valuable input, specifically a professional individual who isn't partial (i.e. family or friends). Besides the SBA being an option, the Small Business Development Center in Denver was easier to reach and meet with. I found the latter source able to provide sound advice without the sugar-coating that one would receive from a friend or family member, and at the same time give it to me straight without intimidation that other sources offer too freely. Yes, we all need to know the perils, but those of us who are serious, need a source that is on our side - one who is willing to back you when the commitment is there to make it happen no matter the day or situation. "

I can not over stress the need to have as detailed a business plan as possible. In each city there are business resource centers at the Chambers of Commerce, Colleges/ Universities or Small Business Associations that can help you in refining your plan. Many of these services are available to you at no cost. Utilize such resources and you won't be disappointed.

Naresh Dewan, Publisher of Baby Shop magazine.
www.BabyShopmagazine.com

Is there something you would like to add or comment on?

[ FEEDBACK ]

Would you like to start looking for products?

[ FIND BABY AND PREGNANCY PRODUCT MANUFACTURERS ]

If you do decide to open your own retail business and wish to carry baby furniture, baby accessories, infant clothing, toys, maternity clothing or pregnancy products, Baby Shop Magazine will be a tremendous resource to you BEFORE you even open your doors! Baby Shop Magazine is a semi-annual printed trade publication of Spindle Publishing Company, Inc. This website reflects the articles and advertisers that appear in the current printed edition, and is available to anyone in the juvenile or pregnancy product industry — whether you are thinking about opening your baby store or you have operated your retail business for years! If you are a retailer, you may receive a FREE SUBSCRIPTION to this trade magazine by registering with us today!