#BounceExlcusive: 3 Factors To Consider Before Renting A Shop
If you are planning to start a business, owning a shop is an essential requirement.
It is the equivalent of an office for a white-collar desk job..
It is where people who needs your goods or service will find you for patronage.
The decision to own a shop should not be guided by a desire to satisfy your social status craving or filing your emotional vacuum.
Renting a shop does not mean "you have arrived".
A shop might not be that essential to the survival of your business idea especially in this digital age.
Below are 3 factors critical to finding a good business place. The success or failure of any choice business depends on them.
Ms Eucharia is a business woman in Lagos. She now owns an average sized supermarket in Isolo area of Lagos. But before then, she had had her fingers burnt before starting out successfully on her second attempt.
She told Bounce News how a wrong choice of location ruined her first attempt.
According to her, she had taken out a shop in her previous neighbourhood and started her groceries business.
The first few weeks worked out quite well. Sales were good but on the second month, sales began to drop until it eventually became a trickle.
“I would go to my shop and come back with less than 2,000 naira a day,” she recalls.
“This continued for 6 months. And then before the end of the 6th month, I decided I was shutting it down.
“I went to the landlord to have the shop rented out and had my remaining rent balanced to me,” she explained.
The choice of goods was good - groceries – items that people typically need daily.
Two things worked against her choice of location, as she came to understand later.
First, the street was sort of closed. This meant that the shop was only patronized by people who live on that street.
No one who lives outside the street comes that far in.
The street was sparsely populated – not good for a business that its profits relied on large volume turn-over.
Second, there was a branch of a giant retail store located just less than 5 minutes’ drive from her shop. So, because her business operated on a small scale, she could not compete in prices.
No matter how low she tried to bring her prices, her items were more expensive than what the retail chain offered.
So, she did the right thing, shut the place down and shopped for a better location.
2. What You Sell
The next crucial factor in taking out a shop is what to sell. What goods or services are you planning to offer your customers?
This is determined by several factors, including capital, location and marketing skills.
Let's consider David's reality.
David rented a fashion boutique along the ever busy Ijesha road in Surulere. His business was operating as smoothly as oil.
Patronage was good. His items included mainly men’s wears - T-shirts, trousers, singlets and boxers.
Sales were growing month on month until his brother-in-law who lived in Turkey decided that it was time to move up the ladder.
He came up with the idea of selling Turkey garments, especially men’s suits and dinner gowns for women.
Fantastic idea, they had thought. Residing in Turkey, it would not be difficult to source for the inventories and ship them to Nigeria, where David would resell and make a kill in his shop.
This required a change of focus for the business. David had to almost empty the shop to be able to clear the goods when they arrived.
And when they did arrive, the items were the top grade. A pair of the men’s suit cost bewteen 35,000 and 40,000 naira.
On the average, they were cheap given the quality of the materials. The ladies’ dinner gowns cost between 6,000 and 10,000 naira each. These were also cheap depending on who you are.
That was the beginning of David’s trouble. His customers were not interested in the Turkey materials. They considered them simply too expensive.
Sales began to dwindle and by the 4th month after restocking with the Turkish inventory, he had lost his patience and a lot of money.
David told Bounce News he resorted to going from office to office looking for workers to buy. Most of them bought on credit and 2 years later, he’s still trying to recover some of the debts.
David, got it right with ‘what to sell’ in the beginning, then got it wrong later. The location determines what you sell, despite the amount of capital at your disposal.
Had he also relocated the shop to highbrow neighbourhoods in Ikoyi, Victoria Island or Lekki, his strategy may have worked perfectly.
3. Trade Unions:
A woman said her husband punishes her by not coming to her bed. But she punishes herself when she refuses to take herself to the bath, says an Igbo adage.
You see, typically businessmen including traders complain about multiple taxation from state governments and local councils. But then, they thrust even heavier burden upon themselves.
Before you rent a shop especially inside any market in Nigeria, you should enquire about the number of trade unions you are supposed to join.
That was the mistake, Ms Happiness made when she rented a shop at Ikotun market. In her shop, she sold food items – Semolina, tomato paste, maggi, spices, noodles, spaghetti, etc.
Barely a month after she opened, she was served several letters of notification from trade unions.
So, it happened that there were unions for semolina and noodles sellers, union for tomato and maggi sellers and even union for nylon and packaging materials sellers. So, she was expected join each of the unions that had anything to do with whatever items she sold.
Read More: Ajimobi Goes Tougher On Street Trading
But it does not end with just joining. Registration fees cost as much as 15,000 naira per union plus attendant monthly fees.
As if that was not enough, a lady showed up in her shop one day armed with Ankara material. A member of the Line was getting married and it was mandatory every trader in the line must buy at least 3 yards to show support.
And so, after calculating how much it would cost to maintain the union and run the business, she concluded that the business would never be profitable.
She shut down the business after only 3 months. She is still shopping for a new location.
Besides all these factors, there are other factors such as government’s environmental regulations, market trends, etc. But if you must not waste resources and dispense energy in your business pursuit, you must take these factors into account before siging the tenancy and agreement form.
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