My brother and I have been kicking around the Idea of buying a hardware store, maybe a franchise like true value. The problem is, the store would have to support 2 incomes for our families. Naturally, location would have a lot to do with it. Does anyone know how much could be made from a well run small hardware store in a medium sized town in Penn.?? I have over 30yrs exp. as a renovation contractor and I am ready for a change of pace. My brother is an engineer. I think we could have a good bit of fun doing this if we could make a living at it. Any thoughts.
Hardware store owners salary??
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firefighterjake
Minister of Fire
Well I don't have any idea on the salaries . . . and what might work in one place for one person might not work in another place . . . but I do know that my local True Value has a brother and sister who co-own the store and they seem to be doing OK . . . by OK . . . I mean as a casual observer they keep busy and haven't gone under since buying the place a number of years back. Of course again I have to offer the caveat that I have no idea what they're making as a salary, the closest Big Box hardware store is 20-30 minutes away and they've also been pretty proactive in offering a wide variety of services -- i.e. recently they began selling and repairing appliances when the local appliance sales and repair store closed shop when the owner retired. In either case . . . good luck with your dreams.
thewoodlands
Minister of Fire
mikeyny said:
When Home Depot and Super Walmart moved in our town it hurt the True Value along with plenty of mom and pop stores, in this economy people have been forced to get the best price around. If you do decide and go that route opening up a store good luck.
Zap
I know the local Rocky's (ace hardware) pay their managers a salary from 40-50k in this area and assistant managers 32-40k Plus bennies and such.
I'm in "the town that beat Wal-mart" according to Smithsonian mag, which makes me wonder why they gave us a supercenter if they had been beaten the first time. So now we have a wal mart and TSC, and the real hardware store seems to be doing just fine, even prospering. That may have EVERYTHING to do with the local culture and prohibitive distance to big box building centers.
SlyFerret
Minister of Fire
I ran a neighborhood hardware store for four and a half years (I've got 6.5 years total in retail hardware). I left and went back into IT back in October of 2008.
A general manager (not owner) of a neighborhood hardware store with quite a bit of experience can make can make around $35k per year. I made $30k per year. The manager I replaced (with 20 years in retail hardware) was making $35k. Assistant managers made ~$24k /year.
You're not going to get rich as joint owners of a single hardware store. If you can grow it to a chain, you might do OK. My wife and I looked into buying the store that I managed, but when we really looked hard at the numbers, it just wasn't going to work out.
If you're starting a store from scratch, you'll probably be looking at around $400,000 (or more) in startup costs.
This is to buy an entire store full of inventory (my 8000 sqft store had about $215,000 worth of inventory at any given time). Inventory would be even more if you were selling riding mowers and other bigger ticket items like grills, water heaters, or a large selection of power tools, which I didn't really have.
The rest of the money is for the build-out, buying all of the store fixtures, computer systems, software, and other tools and equipment for the shop. Make sure you get an electric forklift (a walk behind unit would be sufficient). You'll be amazed at how critical this piece of equipment is.
My average margin was pretty good. I was usually around 45%. My store was in a good location, and I did about $750,000 per year in sale.
Keep in mind that you will need to be able to extend store credit to property management companies and other businesses. The maintenance men for the management companies love small stores where they can get in and get out quickly. You can easily do $10,000 to $20,000 worth of sales each month to "house account" customers. Most of them pay quickly, but some will drag out payments to 60 or 90 days. It's a service that you'll need to offer, but also one you'll have to stay on top of to make sure it doesn't get abused.
When you plan for staff... the bare minimum crew is going to probably be 3 people at all times. One cashier, who should NEVER leave the cash register at the front of the store (for security reasons). The cashier isn't going to be somebody who should help customers on the floor. You'll need one person on the floor to help customers, and a third back in the shop to thread pipe, repair screens, and help out the person on the sales floor. You'll need to take this into account when you calculate your over head costs for staff. Running the store with only 2 people isn't fun for the people working, and isn't a good shopping experience for the customers. On a busy Saturday, 5 or 6 staff members on hand were appropriate, even in a small store.
Turnover is hell. You'll need to make sure that you pay your key employees enough money to keep them around. You have to have knowledgeable people on hand to help your customers. A store staffed by nothing by high school kids isn't going to be able to meet your customers needs. They'll be coming to your store for expertise and service. You won't be able to compete on price, no matter what the hardware suppliers will try to tell you. You will have to compete on service, and if you can do this, you can do very well.
I don't mean to scare you away from owning your own store. I still may own one myself one day. IT pays a lot better than hardware, but I really miss hardware. It was a lot of fun. I still consider going and getting a part time job in the evenings/weekends at a local store just to stay sharp. I miss the people.
-SF
A general manager (not owner) of a neighborhood hardware store with quite a bit of experience can make can make around $35k per year. I made $30k per year. The manager I replaced (with 20 years in retail hardware) was making $35k. Assistant managers made ~$24k /year.
You're not going to get rich as joint owners of a single hardware store. If you can grow it to a chain, you might do OK. My wife and I looked into buying the store that I managed, but when we really looked hard at the numbers, it just wasn't going to work out.
If you're starting a store from scratch, you'll probably be looking at around $400,000 (or more) in startup costs.
This is to buy an entire store full of inventory (my 8000 sqft store had about $215,000 worth of inventory at any given time). Inventory would be even more if you were selling riding mowers and other bigger ticket items like grills, water heaters, or a large selection of power tools, which I didn't really have.
The rest of the money is for the build-out, buying all of the store fixtures, computer systems, software, and other tools and equipment for the shop. Make sure you get an electric forklift (a walk behind unit would be sufficient). You'll be amazed at how critical this piece of equipment is.
My average margin was pretty good. I was usually around 45%. My store was in a good location, and I did about $750,000 per year in sale.
Keep in mind that you will need to be able to extend store credit to property management companies and other businesses. The maintenance men for the management companies love small stores where they can get in and get out quickly. You can easily do $10,000 to $20,000 worth of sales each month to "house account" customers. Most of them pay quickly, but some will drag out payments to 60 or 90 days. It's a service that you'll need to offer, but also one you'll have to stay on top of to make sure it doesn't get abused.
When you plan for staff... the bare minimum crew is going to probably be 3 people at all times. One cashier, who should NEVER leave the cash register at the front of the store (for security reasons). The cashier isn't going to be somebody who should help customers on the floor. You'll need one person on the floor to help customers, and a third back in the shop to thread pipe, repair screens, and help out the person on the sales floor. You'll need to take this into account when you calculate your over head costs for staff. Running the store with only 2 people isn't fun for the people working, and isn't a good shopping experience for the customers. On a busy Saturday, 5 or 6 staff members on hand were appropriate, even in a small store.
Turnover is hell. You'll need to make sure that you pay your key employees enough money to keep them around. You have to have knowledgeable people on hand to help your customers. A store staffed by nothing by high school kids isn't going to be able to meet your customers needs. They'll be coming to your store for expertise and service. You won't be able to compete on price, no matter what the hardware suppliers will try to tell you. You will have to compete on service, and if you can do this, you can do very well.
I don't mean to scare you away from owning your own store. I still may own one myself one day. IT pays a lot better than hardware, but I really miss hardware. It was a lot of fun. I still consider going and getting a part time job in the evenings/weekends at a local store just to stay sharp. I miss the people.
-SF
SlyFerret said:
I have always said that "Retail is a lot of fun. It's a shame ya can't make a living at it.".
Thanks for your 2 cents guys. There are definitely pros and cons to owning a store. Maybe we will do it, not sure yet. The economy is not the greatest for a start up biz, but you never know.
Mike
Mike
SlyFerret said:
Holy Crap.....an IT guy that likes being around people.....
If you're serious about starting your own business, I would recommend you find the local SCORE office and spend some time there to understand what's required to get going. They're free and they've got a lot of good folks that have been in your shoes and volunteer their time to help you get going. Start with a business plan and and come up with what you think you can do. A business plan is a lot of work but it makes you think through the process and allows you to come to some conclusions about profitability.
PM me if you want more info.
Full disclosure: I'm and IT guy and a SCORE volunteer......
I got a job at a Woodcraft franchise several years ago when my wife lost her job. It was fun, so I stayed on for another year after she got a new job, just to be around tools and other woodworkers all day, and to take advantage of the great employee discounts (usually 15-20% below wholesale, direct from the manufacturers). The guy who owned our store used to be an IT VP at Xerox, so he had some business acumen you'd think. Well, maybe....
Bill quit his job at 55 years old to pursue his "dream" business. He missed the bid on the new store in Rochester, NY where he lived, but Woodcraft's demographic studies showed that the Albany area could support a store. He got on it and made it happen. Sold his mini-estate in Rochester, got his wife to quit her teaching job, liquidated his 401K (incurring a huge penalty) and moved to the Albany area to open a new store in Latham, NY.
Business was booming with all the woodworkers in our area. He had the grand opening just before Christmas, and started out with about 6 full-time employees (including me) and maybe 8-10 part-timers. We were working 6-7 days a week, with a 12 hour day every Wednesday and Thursday when the store was open 9-9. Then, little by little, business started to drop off. After six months, there was only his operations manager and one full-timer left (me), with three part-timers - all retired guys pulling less than 16 hours/wk. There wasn't enough help to take care of the stock, sell, and man the cash register. Customers would come in and find the front empty because I was out unloading a truck and there was no one in the showroom. Theft began to occur. Then we had to cut back on our orders because we couldn't afford to restock what sold. That caused business to slide further. At a certain point, the handwriting was on the wall, and I bailed to go back to what I was doing before. A year later, I went in to buy some sandpaper and everything was 75% off... what was left of it.
He lost over $750K during that time. His dream estate in Rochester was gone and he was living in a leaky 19th century home in the Stockade area of Schenectady, NY. Bill was overqualified for just about anything in our area. His wife was unable to get a new teaching job. At the Northeast Woodworkers Expo this spring, an ex-Woodcraft employee I ran into told me that Bill had just died. He apparently had drunk himself to death.
Retail is tough, tough, tough. It's not something to jump into without an extensive amount of management experience. I have a strong background in both retail food and in hardware. Who knows, I may possibly have been able to help Bill if I was in control, but he wanted to man the helm all by himself, and he went down with the ship. There were many other contributing factors that I didn't go into that also led to his failure, most within his control, some out of it, but I feel the enterprise may have been doomed from the beginning. Good luck, though, if you go ahead with it.
Bill quit his job at 55 years old to pursue his "dream" business. He missed the bid on the new store in Rochester, NY where he lived, but Woodcraft's demographic studies showed that the Albany area could support a store. He got on it and made it happen. Sold his mini-estate in Rochester, got his wife to quit her teaching job, liquidated his 401K (incurring a huge penalty) and moved to the Albany area to open a new store in Latham, NY.
Business was booming with all the woodworkers in our area. He had the grand opening just before Christmas, and started out with about 6 full-time employees (including me) and maybe 8-10 part-timers. We were working 6-7 days a week, with a 12 hour day every Wednesday and Thursday when the store was open 9-9. Then, little by little, business started to drop off. After six months, there was only his operations manager and one full-timer left (me), with three part-timers - all retired guys pulling less than 16 hours/wk. There wasn't enough help to take care of the stock, sell, and man the cash register. Customers would come in and find the front empty because I was out unloading a truck and there was no one in the showroom. Theft began to occur. Then we had to cut back on our orders because we couldn't afford to restock what sold. That caused business to slide further. At a certain point, the handwriting was on the wall, and I bailed to go back to what I was doing before. A year later, I went in to buy some sandpaper and everything was 75% off... what was left of it.
He lost over $750K during that time. His dream estate in Rochester was gone and he was living in a leaky 19th century home in the Stockade area of Schenectady, NY. Bill was overqualified for just about anything in our area. His wife was unable to get a new teaching job. At the Northeast Woodworkers Expo this spring, an ex-Woodcraft employee I ran into told me that Bill had just died. He apparently had drunk himself to death.
Retail is tough, tough, tough. It's not something to jump into without an extensive amount of management experience. I have a strong background in both retail food and in hardware. Who knows, I may possibly have been able to help Bill if I was in control, but he wanted to man the helm all by himself, and he went down with the ship. There were many other contributing factors that I didn't go into that also led to his failure, most within his control, some out of it, but I feel the enterprise may have been doomed from the beginning. Good luck, though, if you go ahead with it.
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