Starting a stove shop?

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drtnshtr

New Member
Jan 26, 2008
204
Ohio
Can you shop owners tell me what is involved in starting up your own shop? How much are start up costs generally? Any money in it?
 
drtnshtr said:
Can you shop owners tell me what is involved in starting up your own shop? How much are start up costs generally? Any money in it?

At first anything you want in your store you will have to buy up front. As you get in business and get distributors to work with you they will slowly give you credit. Other than that make a banker your friend.

Remember, "In God we trust, all others pay cash".


Eric
 
drtnshtr said:
Can you shop owners tell me what is involved in starting up your own shop? How much are start up costs generally? Any money in it?

I'm no shop owner, but do a little research in this forum before deciding which stoves to sell.

One manufacturer in particular left their dealers absolutely and completely hanging out to dry this year, with stoves promised for delivery that never showed up.
 
After this stellar year of high sales (and now the low price of oil), I would expect next year to be relatively slow, you might want to sit on this idea for a while...
 
With the economy going in the tank, I don't think it's anytime to start a retail business. People will be hoarding their cash and spending on staples only. The initial cost of a quality stove and all the accessories related to it will turn off any would be buyers for a while. But, if you could start a good reliable stove service company, I bet that would stand a better chance. Seems like a lot people have trouble getting timely service, especially the ones who purchased at the big box stores, or bought one used. Most of them have no clue how to self service and would love to find a reliable service tech. They buy them for the savings compared to the top models but when things go bad, they suddenly have a plant stand. Good luck.
 
Im not saying I am going to open a shop but the idea does interest me. In my area there are very few shops other than TSC and you would have to drive at least 1 hour to get to the closest real stove shop around. I love everything about wood and pellet stoves and feel like I know more about them than the normal TSC person. I would think with the economy in the tank folks will be getting back to the basics like burning wood and so forth. Maybe Im wrong but I see alot more people around my area burning wood and pellets these days. Wood is abundant in my area and we have a pellet mill about 15 minutes from my house. American Wood Fibers sells pellets to the local feed mills around..Im not sure what kind of deal these guys are getting on pellets but they sell them for $235/ ton right now. I wouldnt think they are making much money on them.
 
It can be a good business, but you need a long time plan...and, of course, capital.
Even in Ohio or other areas not as upscale, that means you need some cash, some credit and hopefully another way to make a living for the first year or two. Many shop owners work their way into the business from chimney sweeping or installing...because that gives you a way to still (always) make revenue when you are getting started.

How much money?

Well, off the top of my head, I would guess that 100K to 300K would be the range of cash and credit to start something small, but real. Most small businesses fail from lack of capital. You need some staying power. You also cannot sell from an empty cart (old saying).

Keep in mind that idea of turnover. Let's say a good month for a small startup store - in season - is 150-200K. Well, considering you need 20-30 models on display, some back-up stock, etc.....well, if you are going to turn money over, you need money to finance it! A line of credit from the bank will do the job. Of course, no bank is going to give you a line of credit without you having 2x or more the equity (in your home, etc.) to back it up.

The actual fuel business (pellets) is not a good one....if you want to make money! Sure, you may provide them to customers, but the money is in the product sales, installation, servicing (cleaning, etc.), and accessories.

If you have questions feel free to PM me. I was in the business for a couple decades. Also, consider going to the National Trade Show (Reno, NV in March) is you get more serious. Vendors will take you much more seriously if you meet them there!
 
drtnshtr said:
Im not saying I am going to open a shop but the idea does interest me. In my area there are very few shops other than TSC and you would have to drive at least 1 hour to get to the closest real stove shop around. I love everything about wood and pellet stoves and feel like I know more about them than the normal TSC person. I would think with the economy in the tank folks will be getting back to the basics like burning wood and so forth. Maybe Im wrong but I see alot more people around my area burning wood and pellets these days. Wood is abundant in my area and we have a pellet mill about 15 minutes from my house. American Wood Fibers sells pellets to the local feed mills around..Im not sure what kind of deal these guys are getting on pellets but they sell them for $235/ ton right now. I wouldnt think they are making much money on them.

Where are you in Ohio?

$235 is a deal right now, $280 for new customers and $250 for stove customers at my two stores. May and June pellets were $185. The mark up on pellets is fairly low for what a dealer has to have in order to sell them (i.e. warehouse, tow motor, trained people, and INSURANCE). The only benefit to retailing pellets is if your customer service and pellets are good you can count on return customers. This year 75% of my customers are return customers and the other 25% is new customers. I had very few people not return for my pellets.

Eric
 
drtnshtr said:
Can you shop owners tell me what is involved in starting up your own shop? How much are start up costs generally? Any money in it?

Best bet is to start a pellet dealership, take money from people for pellets you don't have any intention of delivering, when you have enough money, move and leave no forwarding address. But, that's just my opinion
 
when we started this business I was lucky enough to have parents start it up with us that had 30 years experience of starting and running there own business.
then 3 months into I met a great Woman that had a job and a car. LOL 3 years latter I married her and she supported us for the first 5 years because a new business never brings home Money to pay bills.

You want to check with some HEAVY hitter Manufactures. Like Travis, Enviro, Harmon, Lennox ect to see if your area is open to dealership for them big name brands.
because if not you will only be able to sell stoves that anyone can buy in the INTERNET or a local farm store.
You also want to find a good Distributor that can supply you with most of your install materials. For years I had to buy from several Wholesalers and it was a pain in the ass.
We are Lucky to have AES www.aes4home.com that can supply us will all our install materials and they sell us ENVIRO, RSF and some other brands as well.


Would be good to check on getting a contractors license in Heating and Air so you are covered in all aspects of installation. Thats what I did.
A lot of dealers just get a limit specialty license for stoves. the problem is they could not do gas line plumbing or electrical work.

You want to find a OFF season product to sell because unless you find a lot of contractors that want to buy from you for new construction you will be sitting around on your thumbs and still paying overhead with no money coming in from Feb to Oct.
A lot of dealers sell Pools and or Spas.
I do high end Evaporative cooling. www.aireze.com
there is not alot of money in pellets. $20 to 30 per ton profit. but in the summer I get my customers to buy and the little extra cash helps pay the light bill.

Show room
You need a large showroom Some distributors will help you build one. AES helped me for 4 days. but it will cost you about $40k plus the cost of product to have a decent showroom.
Office space
Warehouse space
THIS IS MONEY


Best to buy into a business. Because it is hard to find Contractors that will leave a dealer they had a relationship with.
Be ready to work 60 hours plus a week and the only vacation you will get will be the yearly trade show that to me is no vacation.
 
drtnshtr said:
I would think with the economy in the tank folks will be getting back to the basics like burning wood and so forth.

I think you are correct in that assumption. I have already seen it around here. We may be "on our own" a lot more in the near future, as things like hurricanes and fires have proven our support infrastructure is crumbling.

Some side lines you might consider are alternative energy products - generators, solar panels, etc.

By no means am I a "survivalist", but I have been actively looking at and implementing plans to sustain my family in the event the infrastructure fails. So far, my plans won't get us through more than a couple of weeks, but I am working on extending that.

Although I work in IT, I believe that the failure of technology could quickly lead to chaos. It's always good to have a "Plan B", a "Plan C" and have ideas for a "Plan D".
 
Bushbuck said:
The best way to make a small fortune in retail right now is to start with a large one.

Very, Very Large. Can you say bail out?
 
hossthehermit said:
drtnshtr said:
Can you shop owners tell me what is involved in starting up your own shop? How much are start up costs generally? Any money in it?

Best bet is to start a pellet dealership, take money from people for pellets you don't have any intention of delivering, when you have enough money, move and leave no forwarding address. But, that's just my opinion
Ain't it the truth!
 
hossthehermit said:
Best bet is to start a pellet dealership, take money from people for pellets you don't have any intention of delivering, when you have enough money, move and leave no forwarding address. But, that's just my opinion
Actually if you incorporate and then declare bankruptcy you won't even have to move and you can start a new one to do it again :)

BTW, repeat after me "I intend to make it right, we are just having supply difficulties, we'll make every delivery or go out of business trying, we were just victims of growing too fast"...that way it's not fraud, just bad business skills.
 
DiggerJim said:
hossthehermit said:
Best bet is to start a pellet dealership, take money from people for pellets you don't have any intention of delivering, when you have enough money, move and leave no forwarding address. But, that's just my opinion
Actually if you incorporate and then declare bankruptcy you won't even have to move and you can start a new one to do it again :)

BTW, repeat after me "I intend to make it right, we are just having supply difficulties, we'll make every delivery or go out of business trying, we were just victims of growing too fast"...that way it's not fraud, just bad business skills.

So I have been doing it all ass-backwards. Never to late to learn.

Eric
 
Thanks for all the replies guys...It sounds like something I should wait a while to do in order to build up enough $$$$ to start a shop. I am 37 yrs old and been A Postal Employee for the past 13 yrs...If I still have the desire maybe thats what I will do when I retire. If I still live where I do now I would already have the building I could turn into a shop and its in a perfect location I think. Right now I have small kids (3 & 9) so other than the extra $$ money I put into 401K and college fund money is tight. I have always been one that cannot set still wiht just 1 job though. Prior to our 3 yr old I owned a Lawn care service which I started and ran for 4 years. I should have kept it but I sold it when a buddy made me a good offer for it. Now I have more time with our kids less a couple G's/month...Not bad for a side business I guess. I didnt figure there could be much $$ in pellets since they arent really that expensive around here anyway. I would probably focus more on wood stoves since they seem to be more popular in this area as wood is way more abundant than pellets. Installation would almost be a must it seems as this would be a main source of profit.
 
Bet you could probably make a killing right now chimney sweeping
and servicing stoves for homeowners.
 
As we have been witnessing for the last few months....a sign of the times
or history repeating it self

"Steal a little and they throw you in jail, Steal a lot and they make you king." - Bob Dylan
 
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