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Of tweets, takings, rents and rates...

Yarn Shops

It’s a bit controversial perhaps to be posting about the finances of a small business. I’ve occasionally been advised against writing about it in case it looks like a guilt trip to the customer/audience reading it, but I promise you that is not my intention here. Before I started my research into opening the shop, I had no idea what was involved really in terms of the knitty-gritty of finance, and as an outsider to other people’s businesses (in any sector) I find the basics about how finances work in other areas fascinating. It’s the sort of thing I personally am not shy about, and I think we should talk openly about finances if it is prudent and relevant – so here I am, doing so!

You may well have seen recently a story which went viral about a book shop in Harrogate who tweeted at the end of the day that they had only taken £12 in sales that day; with today’s prices that could be as little as one book. The story of Imagined Things hit home for locals and far away shoppers alike, their tweet was “shared” 4.5k times, and the next day reportedly saw them sell over 70 books, a great improvement. The concept of sharing this information resonated with me, as I’m sure it did with many small business owners. I’ve never been brave enough to outright share similar information on social media (hats off to the book shop!) but I’ve often wondered if I should, on the grounds that it may make the difference for a customer in deciding to shop local with me, or elsewhere.

Imagined Things Books Tweet

Now I’m sure this wasn’t an average day for that book shop, and I’m also sure the spike they saw in sales following it wasn’t permanent, but it is interesting to see how many people came out to support this local business. In an age of internet shopping, or convenience supermarket one-stop-shops, the only way we as customers can be sure to preserve our local business communities is by voting with our feet – going in and investing our money in their futures.

Britain’s high streets are seeing less shoppers as our technological world changes, but the one thing that doesn’t change is that there are fixed costs of running a business – in my case and that of many others, a bricks and mortar shop unit. Rent and rates increase regularly, with dubious justifications, and no significant concessions have yet been made by the government or local council to compensate for this increasing cost versus the slow death of footfall. Regardless of Brexit, the cost of stock, the type of business, or the decline in a certain location, rents and rates must still be paid. On this note, I thought you might be interested to know the ins and outs of what it costs me personally to keep my business open.

I won’t go into takings, profits, wholesale costs of stock or anything like that – perhaps it’s for another post or perhaps it is best left unsaid – but suffice to say I have had days where I have taken less than the bookshop did on the day of that tweet. I’ve also had lots of days when I’ve taken more. The facts that don’t change are my fixed costs, which must be paid day-in-day-out irrespective.

In the figures below, I have assumed out of 260 possible days I would be open according to my normal hours (5 days per week), I may take 20 days holiday, and so costs are worked out at 240 shop-is-open days per year. You’ll also notice that this little study does not include any reference to stock, website, card charges or marketing – there are too many variables in these to be able to properly average it out without serious headaches, so I have left it out of this post, to focus on the basics.

On an average day, I need to take £126.30 to break even on my fixed running costs, or overheads. It includes £71.49 comprised of the following:

Rent: £60 per day
Electric: £2.56 per day
Business Rates: £5 per day
Internet: £1.85 per day
Water rates: £0.78 per day
Waste Disposal: £0.30 per day
Windows cleaned: £1 per day

Now I consider myself fairly lucky that when the business rates changes came in last year, I actually saved around £4k a year – I’m only just into the category where I have to pay, other smaller units on my street won’t be paying these at all – but this is with the caveat that we are unlikely ever to be able to afford the steep rate increase which would come with moving to larger premises. Some people might argue that I don’t need my windows cleaned once a week, but as a shop with large windows on a busy road, I have assumed my customers would rather be able to see through them. Also, did you know that as a business, we have to pay for each bag of rubbish we get collected or take to the tip? I didn’t, before I opened!

The other portion of this total daily target is made up of “wages”. Did you know it is usual for a small business owner in the UK not to take a wage from the business for between 3-5 years after set up? No, I don’t think I had quite realised that one either. In order to be able to afford new stock, I do not take a wage from my business, which has been open at the time of writing for 2 years and 3 months. I have, however, for idealistic admin purposes incorporated into this daily target, 7 hours working at the national minimum wage (£7.83 at the time of writing) – totalling £54.81. Now, as any small business owner will tell you, it is hilarious the concept that I only work 35 hours a week – I’d say my average working week would probably often be in the region of 75-80 hours per week (another post to come on how business owners easily rack up these hours!). But to illustrate the point and stay realistic, I’ve just costed the actual open hours of the shop for my singular member of staff (me!).

Working out what this equates to in terms of my product line is a fun exercise.  It would be 126 skeins of embroidery thread, or 59 balls of my cheapest yarn, or 12 metres of our cheapest fabric. It would also be just 7 skeins of our most expensive yarn, or about 8 metres of our most expensive fabric. In terms of everyday items, it costs me 142 pints of milk to keep my shop open. I pay around 101 newspapers to be at work every day; I need to take 39 pints of beer to break even.  

This is what 59 balls of Hayfield Bonus look like...

59 Balls of Wool

I find it interesting and cathartic to see this all written down; hopefully you do too, other business owners will be able to identify, and it may yet prove to be useful information for anyone currently researching how to open a bricks and mortar shop. Seeing the numbers written down somehow makes it more tangible for me, more relateable.

Knowing that other businesses will be paying similar, and more, is a huge motivator for me personally to want to support them. I know that however much money I earn, whatever career path I take in the future, I always want to be able to shop local, because an independent business is someone’s passion project, it is a prop of the local community, and it is fundamentally a thing I want future generations to be able to experience. And the only way of making sure that this happens is by putting my money where my mouth is and helping them to pay their most basic costs. I know that when I pay £1.80 for a cup of tea, £2 for a card, or £9 for a book, a real life owner somewhere is doing a little happy dance. That’s a good enough reason for me.

#supportlocal


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