Not opening a store now

[JohnR]

The Dayton metro area seems to have a good share of established framing businesses. No good holes to wiggle into. Most seem to be doing fine, but I know of one recent casualty (not surprising considering where he put his store). High fuel and utilities prices make me feel uneasy, not to mention that we are a GM town and the big SUV plant is having major cutbacks and Delphi is closing plants. Many of their smaller local suppliers will hurt as well.

I had about all my equipment purchased. I'd never sell them as they are too darn useful when I do framing on the side. You'd have to pry my F2200 mat cutter from my cold dead hands!

I'm considering taking my “business venture capital” and paying off the house. With my luck, the great opportunity will come along right after doing this and I'll have too little money to make a move. I plan to not be in a hurry and let the opportunity come to me in the future. I know a few older framers who might consider retiring in a few years.

For now, I plan on pushing the my side business. I do acrylic fabrication. In fact, I just did three box frames for a local framer. One will be going on (gulp) public display in a nature center. I can't wait to see how he turns my plastic rectangle into a beautiful piece.

Hopefully the new owner gives me permission to post a pic. Anyhoo, at this rate it is, “Don't quit your day job!”

Well this is my third post of my “business plan”. Keeps a changin, don't it? Thanks for reading.

John

 

[Jay H]

If you were going to open a restaurant, would you pick a market that had 3 others that were struggling or a market that 47 and 45 of them were on fire?

Bob Carter! How many "booming" frameshops are within 10 miles of your shop??????

I'm sorry John but that sounds like a perfect location to toss your dog into the fight!

I think opening a shop when circumstances are absolutely ideal is about like having a baby when the circumstances are absolutely ideal. If everybody followed that guideline the maternity wards would look like….well most frameshops these days.

I will note that paying off a home is a very worthy cause though!

Good luck. Do your homework and follow your heart.

Carry on.

 

[Puppyraiser]

It's darn scary working without a net, so to speak. But you gotta listen to your own heart. Just make sure you are making a good business decision, and not just suffering from 'prenuptial jitters'. You can hang out here either way...

 

[stud d]

I do think Jay is on to something. I have seen several frame shops(ifferent locations) in an area all to themselves-good sort old town areas. Doing nothing. Then see six or seven shops in a two or three mile radius. Now which one makes more sense. Do the demographics and see where you are then. If you see many new homes and the customer base will expand, then you have a good shot. Like they say competition is good.

You have the capitol so think heavily. And go from there.

PL

 

[Elaine]

Check with a financial advisor before paying off your house with your "investment capital"

Their advice may surprise you

my 2 cents

elaine

 

[Bob Carter]

Jay-If I stand outside, and with a good wind at my back, I can throw a rock through the windows of 7 competitors

Now, to be fair, I was here first and I am certain that every single one of them factored into their decision that is someone as dumb as I could make it there, just imagine how someone as smart as they would do (Of course, they are right...)

But, I love competition and want to be in the middle of the fray. Heck, if I'm any good I'll be alright. Yet, if there had been a string of failures, I would avoid it like the plague

In a recent former life, I had a casual relationship in the restaurant biz. Two things were as certain as Anna Nicolle loves old rich men: Be next to your best competitor and never take over a location that has seen more than one failure

I might also disagree on the house payoff decision. With mortgage rates as low as they are (and that those are deductible charges), I might leave the money in the bank. Cash is King and if an opportunity arises, who knows how difficult acquiring capital might be then (or the cost)

Imagine a deal comes up and you have the cash to pull the trigger. I'll promise a Net Worth Statement to a Bank just might be a little more attractive with 5 figures of cash than 5 figures of equity

But, if you are not going to pull the trigger on a deal, you might as well pay down the house.

If I were to put on my "Donald Trump" wig and make an assessment, my read would be there are things holding you back from taking the leap. Hey, entrepreneurship ain't for everyone. But, your hesistancy sends a bunch of wrong signals (and I could be wrong

 

[FrameMakers]

So Bob Carter is now to be known as "The Bob".

 

[Jeff Rodier]

John,
I have spent the last ten years in both the real estate and mortgage industries and offer this as my opinion.

Hold onto the money if you think you might want to use it for something later. You will find that lenders are tightening regulations which could make it very difficult to pull your money out in the future. Ohio leads the nation in foreclosures right now which means that future appraisals will be lower. When the right opportunity arises you may need to get to your money in a hurry. An equity line would give you quick access but they are tied to prime and we have seen 16 consecutive increases in the discount rate which will cause prime to go up even after the increases end. It takes 18 months for each increase to have its full effect on the economy.

Your mortgage interest is deductible and you should have a very low rate at this time. Should you not find a framing opportunity in the future you can always use the money to buy real estate when the market bottoms out.

Just my opinion.

 

[JohnR]

Jeff, Nice to have someone with experience in the the real estate biz on the grumble. I bought my place 10 years ago and refinanced twice, paid down on it each time. I got a 15 year fixed rate at 4.875%. My bank has 5% CDs that washes the mortgage interest and I would still have all my money available. I'll have to see what the early withdraw penalties are.

I'm glad most grumblers remain positive about opening the doors. Dayton is a manufacturing town and GM is not the only ones hurting. The framing businesses here are typically a few miles apart and in separate communities in the 'burbs. I think I was misunderstood about the retiring framers. I'd look into their market because they were doing well, but just getting too old and wanted to retire. I wouldn't try to open the doors in an area were no one could keep the business open. Continental Molding is down the street from me and I had a chat with them about the businesses they deliver to and the communities where shops just could not get rolling. Obviously, it could be an owner without the proper knowledge of running the business.

The other reason why I'm getting cold feet to opening a frame shop now is the side business. I'm starting to have orders every day. I might push it to see how far it will go. It may turn out to be just what I had hoped for.
John

 

[Elaine]

4.875% rate is almost like having a no-interest loan!!!!

Economics 101 - Find the definition of the Opportunity Cost of money. Have your advisor explain it and see what he advises you to do. If you don't have one, lots of them will give you a 1 hour FREE consult with some advice in hopes to get your business, but you don't need to sign up.

again, my 2 cents

elaine