Couple of questions for the board

[Pap_sak]

I have 3 shops.

1)One doing nicely with good growth.
2)One - because of earlier staff problems - I only open 1 1/2 days a week and shows a small profit
3) Was my first shop. Slowly going down hill ever since I stopped working there fill time.

1 we are leaving as is. 3 costs by far the most to run in staff and rent and is now making a loss. I opened 2 because I drove past here weekly and thought why not,I had staff but after stealing took it over myself and now just operate it a 2 afternoons and one morning - but makes a little profit - I still have a year lease and taking into account probably spent around 30K on shop fitting. Walking away will be hard, but shop three is just going down the tubes.

Options are:

1) Close shop 2 - work in shop 3 full time. I save on quite a few expenses, but I am sure I could get some of the business from shop 2 - but all that effort/cost of setting up will go to waste
2) Same but sell shop 2: Getting some ready cash but lose out on some sales.
3) Hire a staff member for shop 2 again....maybe on limited hours it could work, but staff stealing is just rife - and it will only make a small profit, is it worth it? Then if it dosn't work it's going to be quite hard to "move" as I'll be working full time.
4) I could convince myself that it's a bad part of a bad year and stick my head in the ground and leave things as is.
5) Writing this down has made it easier! It's all about what to do with shop 2. Sell it, close it or staff it.

[Blurock]

5) Writing this down has made it easier! It's all about what to do with shop 2. Sell it, close it or staff it.

By writing down everything, you have used the first technique in problem solving. I think you may already have the answer and only need confirmation from the members.

Without the relevant information it would be hard to give advice, but allow me to share a few ideas.
Selling is obviously better than just closing the shop, as you would recover some of the set up cost. If the shop has potential, it could work with the right staff, controls and incentives.The location of a shop is important and one should consider the whole spectrum of cost and business potential. Your first shop worked well while you were still there. Your replacement did not do well so was obviously the wrong person for the job.

One question - why would you employ someone you don't know to run a shop without direct supervision? Do you have the right controls in place and how often do you make surprise visits and checks?

I am sure you will make the right decision in the end.

[wynn]

Consider inviting a director into shop 2
Someone who will buy in for a nominal fee to recompense you for your initial outlay but will only share in any profits.

The incentive is for someone to get into business and to show a decent profit to share with you, you can dangle a carrot of letting him buy the business later if he wishes to.

[Dave A]

At first glance I would have said close shop 3! Normally you shut down what is not profitable and focus on what is profitable.

But reading between the lines I'm guessing you're considering closing shop 2 because you believe you'll be able to really turn a decent profit out of shop 3 with your full attention. Would that be right?

[Pap_sak]

Cheers for the replies.

It does seem a bit strange closing a shop that is turning a small profit - but my "business model" is probably not the best. Small shops in small towns that offer branded sports gear at city prices..sounds like an ad, but it's not. The problem is the profit is very small..I won't get into figures, but a staff member can steal this profit very quickly. My idea was smallish (3 - 10 K)profits from 3 shops plus a bit on internet sales.

But driving to work today I realized I am now tired of the "staff" lottery - and have decided that going ahead with the minimal amount of staff is the way forward. Remember is retail you are surrounded by expensive items -adidas, Nike ect and for every one stolen you need to sell 2 just to get your cash back.

I am 100% convinced that shop 3 with just me running it can make a decent living - I'm just going to miss all the time working from home. I will probably put shop 2's fittings for sale on Gumtree - if I don't sell them I will just pack them up. I haven't work out the ROI on shop 2 I don't really think it would be appealing to a buyer.....around 250K investment for a return of 2-6K p/m? and that would be owner operated....

On the bright side I should be making some sort of salary in the next couple of months after paying redundancies. And I have a huge amount of stock that's been paid for but needs to be shifted

But cheers for the replies I am feeling a lot more positive - I should have never opened shop 2 (as said, I knew I was never going to make much out of it, but had figured I drive past there anyway and could give a couple of people jobs - bad,bad mistake) I've lost some money, but gained some experience.

[Blurock]

Staying focused is better than spreading yourself too wide. Experience has shown that owner involvement results in better service and more loyal customers. They will pay more, knowing they are dealing with the owner who understand their needs better and are interested in retaining them as customers.

Being directly involved also allows one to keep your ear on the ground so that you can better react to market conditions and trends.

[murdock]

i have also been down the staff road...some say that its an indication of a persons lack of management skills...however i tend to disagree...and why i say this...because i have managed to pull off projects worth millions of rands with more than 50 people working under my supervision...and not only did we finish the projects well within the cut off period...we also started one of the project 3 months late...we were the only company who which didnt have to pay penalties.

anyway i am not here to talk about myself...i agree with wyns comments...and also believe you should look into a person who has a stack in the profits and losses...by doing this you might still loose some profit due to theft but at least the person will be accountable...you loose they loose.

is it possible for you to delegate and move between the shops or are they far apart from each other.

cameras are not as expensive to install as they use to be in the past...if i had shop this would be the first requirement...a good cctv setup...which is not monitored in the shop or should i say not visible to the staff...they must know they are being watched just not how...when and where.

i have seen a lot of my customers close shop after a period of time...once they have left other people to manage things.

recently i found a person who i thought was going to take over the one part of my company...he resigned and left on friday...for more money.

so i am pretty much the same position as you at the moment...decissions decissions...what do you do...where to from here.

[Blurock]

Beware of the agency factor.

Once you leave your business in the hands of other people, the agency factor kicks in. This means that the staff member does not have the same interest or commitment to the business as the owner. An owner has his back to the wall. He/she has to make it work. The consequences for the employee is far less. They can walk away from a disaster - the owner not.

[Pap_sak]

Well my staff get standard retail wages then if they hit target they would get an extra weeks pay - after that they get R150 each per R5000 in sales over target. I do not set unrealistic targets, in my one shop they hit target 11 out of 12 months last year - this year it looks like 12/12. I have always believed that your staff should have a stake in the profit. But what works in some places does not work in others. BTW shop 2 had a terrible staff member I have not had that with shop 3 and I do not really blame the staff there. Sure after a few years some "slackness" has appeared and as the owner I will make more sales - but times are tough and I do not blame the staff for that.

It's just a pity that I have to close shop 2. I've been running it for 4 months for 2 afternoons and one morning and now it's at the stage where it could pay a staff member a monthly salary (at retail wages!). So opening all the time (minus the sales I make as the owner) I reckon about 10-15% up as this is the quite period. But ja, just not worth the hassle that extra staff could give you - after 4 months I am still not close to recouping the cash the last ones grabbed.

[Pap_sak]

Slightly interesting development.

Had a call asking for employment in shop 2 (I get tons, there are just no jobs in this town) after saying no, closing the shop - I phoned back and asked her to meet at the shop later. Now am considering hiring this person on a part-time basis. My lease has been shortened because I am handing over most of the shop fittings but still have 4 months left. If I hired this person she would only work around 20 hours a week but she would be getting 10% of the profit after rent, alarm and insurance has been paid - but after a certain amount would bump that up to around 15%. She has then said that she would probably open the shop for longer hours. Is this legal? Can a person work for longer hours than they get paid for?

[Dave A]

If the employment package is structured as a basic (with a minimum hours stipulation) plus profit share, why not?

[Justloadit]

Note that your agreement says 20 hours, the fact that she may work 30 or 40 hours, in no way requires you to remunerate her as far as the number of hours worked. Ensure that it is stipulated in the agreement what over time, or extra hours are as per your requirements, not hers. So at a later stage, when she may create a dispute, you will then bring out the agreement.

You must state in the agreement that it requires a written request by you for her to work more than the stipulated hours, if she is to get remunerated, then ensure you stick to it! else you create a precedence if it is done verbally, then it may become he said she said scenario.

[Pap_sak]

Thanks for that - did not think that was legal at all. Have decided to close it - and just take the extra rent payment on the chin. Have built up a few regular customers and just have to hope that they will come and visit me. Basically if I can get rid of the stock even at cost I will have no debt - so will be having a huge sale when I "relaunch" the first shop. But eish, finances are tight!