May 23, 2006

Do the {paper} numbers add up?


Are you thinking about opening a scrapbook store? I get a lot of hits on my blog from people searching for info on opening a scrapbook store. Many people don't realize how MUCH you have to sell to pay for a store. Here's some simple math:


Most likely you have found your "dream" location and inquired about the cost. Let's say the 2500 square foot space (the average size of a store) is $1200 a month. Now, let's assume that you'll need FOUR TIMES that amount to pay for everything else in your store (utilities, inventory, taxes, insurance, etc). That's $4800 a month you will need in cash flow.


Let's say you're open 7 days a week. That means you would have to sell approximately $171 each day. That might not seem like much, but, the majority of your sales will be cardstock and patterned paper. Let's assume that a 12x12 piece of cardstock is 60 cents and the average price of PP is 85 cents each. In order for you to make $171 each day, you would have to sell 285 pieces of cardstock or just over 200 pieces of patterned paper EACH AND EVERY DAY! Can you find enough customers to sell that amount of paper? That is a LOT of paper that must walk out the door in order for you to pay the bills.


And, half of that amount will be the cost of the paper.


These are not actual numbers - they are just for demonstration purposes. The point is that sometimes we aren't scared by big numbers, but the small ones can terrify us - the devil is in the details, as they say. So, if you're thinking of opening a scrapbook store, break down the costs and work backwards to determine how MUCH will you have to sell to meet your obligations rather than taking on obligations and then wondering how you will meet them.


Joining ScrapBiz is an excellent way to get your feet wet in the scrapbook industry so that when you are ready to take on those obligations - you can be SMART about them and not let your heart rule your head (click HERE and HERE to read about that). We have about half a dozen members who have their own store - but they started it with their eyes wide open and with the support of ScrapBiz!

6 comments:

Angela said...

your research is awesome and I love reading your posts. Thanks for the reality checks!
Angela

Pegomh said...

Just picked up your blog from 2Peas comment about CM and Avon and Tupperware which I thought was so smart... so interesting to read your posts - it totally makes sense. Thanks! Can't wait to read more...

Debby said...

I just found your blog and am enjoying reading it so far. One comment on this post:

Your thoughts are totally correct, however, as a store owner for almost 5 years I can tell you that your numbers seem very low to me. I won't go into details but suffice it to say that my store is 2000 sq. ft and my daily "break-even" point is closer to $475 per day than $175. Just thought I should share that in case anyone really is thinking they can run a store on sales of $175 a day... not in this market.

Anonymous said...

This is nonsense. No one pays 50 cents a foot unless they're in some backwater podunk landfill. You have to pay $2 minimum for a legitimate retail space. If you're selling 50% sales in cardstock, it's because you're not carrying adhesives. Glue arts is $14. That's 28 sheets of cardstock. It's far more likely you sell the glue arts than cardstock.
Finally, I break even and I sell $25k per month. $4k doesn't pay for wages

Kim said...

Thanks for your input. This post is nearly 4 years old AND it's merely an example of simple numbers. People don't do the math and that's why over 50% of the retail stores in our industry are gone.

Andrea the Premade Scrapbook Lady said...

Thanks so much for posting this. You may have saved a lot of people a lot of grief with dreams of having a store, only to find it just doesn't work out in the long run.

I've had a couple of businesses myself and understand the importance of "crunching the numbers" before investing time and money.

Plus, the growth of online scrapbooks could put a big dent in the traffic a traditional "brick and mortar" store gets in the future.