Having a Home Business (Retail) Pros v Cons ?

[Gordon Gekko]

Hello All,

6 months ago, My wife and I and 4 kids moved to a semi rural area in the eastern suburbs of Melbourne. The property is 6 acres of very fertile soil, endless amount of water from a spring feed dam.

I have been in the Retail sector for 23 years (my working life) and enjoy selling and picking the right products to sell..................

Our property lends its self to having a business on it. The business i am thinking about is a Stockfeed / Rural supplies business from home.

My idea is to build a huge shed, pallet racking inside for pallets of feed and so on, forklift, delivery ute / truck................and so on. Our property is on a very busy main road but having the added bonus of having its own dirt service road, with an entrance and exit and plenty of room forcustomer parking. I would fence off the business, so it will be seperate from the house.

I have so many pros and cons but i would love to hear from people who have some ideas,

Cheers,

GG

 

[Sunfish]

I'm sure you're on the right track.

In ten years time some things that will be considered normal and desirable are fringe ideas today. I don't know what or when but I am confident that decentralisation and localisation will be the buzz-words.

 

[Propertunity]

Its a great idea.

PROS: No commuting to work in the traffic
Time you would have spent travelling can be more productive
You don't have to rent space somewhere
Part of your property becomes tax deductible
If it all goes pear shaped, you are not stuck with a 5 year lease

CONS: If you are the workaholic type you can spend too long at work (because you are home really anyway)
People know where you live
Angry customers (if you have any) can vent at your kids
Part of the property becomes subject to capital gains tax if you sell

But if you can separate work / private life - go for it

 

[Gordon Gekko]

Its a great idea.

PROS: No commuting to work in the traffic
Time you would have spent travelling can be more productive
You don't have to rent space somewhere
Part of your property becomes tax deductible
If it all goes pear shaped, you are not stuck with a 5 year lease

CONS: If you are the workaholic type you can spend too long at work (because you are home really anyway)
People know where you live
Angry customers (if you have any) can vent at your kids
Part of the property becomes subject to capital gains tax if you sell

But if you can separate work / private life - go for it

Thanks for the reply, some very interesting cons i hadn't thought about, especially the "angry customer" one .....hmmmmm

Thanks once again,

GG

 

[kinga4610]

GG

Here is some food for thought.

In the business you are considering gross margins are between 5 – 20%. So for the capital you will invest in building your shed, pallet racking, forklift, vehicle etc you would need to sell several million dollars worth of product to pay for this and also wages.

Now I live in a rural area and a lot of townies buy produce from their local rural outlet. Unfortunately the townies buy one bale of hay, one bag of dog food, one bag of chook food. That sale may have made a gross profit of say $5. So you need to work out how many customers you would need in a day to make a profit and pay your wages.

In order for a business such as this to make any real money is to have the big customers ie customers who buy a pallet of dog food, pallet of horse food etc. You really need volume buyers.

Unfortunately most of what you can sell would be readily available from Bunnings, Big W, Mitre 10, other rural outlets etc. So what would set you apart from them? I know each of these companies will erode your margins due to their bulk buying power.

If you intend on selling farm chemical, then you will need to be Agsafe accredited as well other accreditations such as S7 licences to sell dangerous goods. Also feed and grain does tend to get insects and attract mice, so you will also need a fumigation licence if you would like to fumigate your own product.

The idea you had sounds great, but thought I would paint a realistic picture for you.

Kinga

 

[sparky23]

Gosh is it 6 months already!

Maybe you could try an on-line business instead selling some of the pet supplies, set up your own web-site and use ebay. Due to postage costs you would need to stick to more lightweight products of course such as collars, leads, toys etc but then you would need a much smaller shed and no expensive equipment, if it worked out though you could build up to selling some of the other stuff down the track.

Good Luck whatever you choose to do!

 

[our obsession]

Kudos to what Kinga said, an accurate picture of the business, plus also, customers each have their pet likes/preferences for different sorts of goods, you may find they want "a bag" of some particular sort of produce, you need to order a pallet load of the stuff, they buy their one bag, you never see them again, you are stuck with the rest and nobody else is buying it.

We have family in this business, regional city outskirts, it is as Kinga describes..(profit margins etc). Lot of work, outlay and being tied down to a business, you would want a good volume of turnover.

 

[Peter Parker]

CONS: If you are the workaholic type you can spend too long at work (because you are home really anyway)
People know where you live
Angry customers (if you have any) can vent at your kids
Part of the property becomes subject to capital gains tax if you sell

But if you can separate work / private life - go for it

Also check with the local council for any home business regulations and rules re signage visible from the road etc.

Other risks include:

* burglary of home/theft of stock

Opportunity might be higher from an isolated rural location, and more people would see your house than otherwise (though the seperation should help).

* Possibility that you'll get visitors wanting stuff outside business hours - they might be more relaxed about that as 'you live there and hopefully you're around'.

* Less peace and quiet - risk of cars slowing past your gate/even going up your driveway.

One other benefit:

If built in a versatile fashion so it could be used for non-business owners for personal purposes or vehicle storage, building a shed and prettier driveway on the property might increase its value. The cost of such improvements might only be a few years rent (of a shop) and you keep all the benefits (more if the property value increases by double your expenditure).

If all that's OK, then the low overheads are a big advantage compared to if you rented a shed in the industrial area of town. So you might sell only half as much, but if your costs are only 1/3 then percentage profit might be higher even if gross profit is lower; in other words more profit per hour work.

 

[Francine]

when you work from home you are around when workmen are needed, kids need a bit of watching, you can do personal things in quiet time here and there. It can have alot of advantages and flexibility as well as tax advantages.

children can be raised seeing good customer service.
Children can be raised helping in the business.
however if children/ partners will be stressed by too much helping or pressures at too young an age thats not a good thing. Chldren should have childrens issues not adults pressures.
the separation of work area is really important for it to stay professional and to have a peaceful home life. Otherwise your home would never feel like a home and would never be a place of respite.
FRancine.

 

[Gordon Gekko]

A BIG THANK YOU TO YOUR INFORMITIVE REPLIES !!!!!!!

Sorry, i have been away for awhile, so i couldn't reply.


We have looked more into a business at home and the cons far outweigh the pros.........thank you so much for all of the great advice

But we are still keen to have our own business

Regards,

GG

 

[coldfire]

Dear Gordon,
It really comes down to profit margins as Kingo said.
Other one is, if it becomes established and you want to sell it off. Would you be willing to sell it with your property as a turn key business and move elsewhere? Just a thought.
Good luck with it all