Am I crazy (or what would you like to see in a small photography store)?

Am I crazy? I'm thinking about and attempting to purchase a small photography store - Boise Photography and Darkroom Supply. The present owner wants to retire and is giving me a good price. Presently he sales film, darkroom supplies, camera accessories and rents darkroom time. The business is presently profitable but not by much. The store pretty much ignores digital, but I don't think it can stay that way. He does some custom darkroom work and sells some used cameras.

So what I'm asking, is given the constraints of Boise, ID (there is a small chain of camera stores in town that sells cameras, accessories and a few darkrrom supplies, but the store I'm probably buying is the major supplier of darkroom supplies in the area. The Boise area has about 570,000 people.) What would YOU like to see in a small photography store?

Here is my plan. I plan to take one room that he's using for an office, studio, and storeroom and turn it into a classroom. My old employer is showing an interest it leasing the classroom during the day and I could teach photography and Photoshop in the evenings (I'm an Adobe Certified Photoshop Instructor as well as a Microsoft Certified trainer). I'd like to expand the custom darkroom work. I already own a Wing-Lynch processor and could take on a lot more work. I've already talked to my youngest son about doing the processing and printing. Now, I don't think I can ignore digital so I'd put in a small lab with a PC, Mac, Epson 9000 series and 4000 series printers. I'd also add Ilford's inkjet papers. As a final item I'd probably still shoot weddings and portraits.

So anything I'm missing? Am I biting off more than I can chew? Can a small photography store survive today?

Steve

What I'd like to see in your Boise store? Easy, another great e-commerce vendor.

I'm familiar with 4 small indie photo stores in different towns here, which together probably don't have a 1/2 million popuplation base. They are surviving, but I'm not sure to what degree. Ritz is also present in each of these towns.
On the digi side, I'd like to see a shop knowledgeable about printers and photography, where I could buy such things from knowledgable people. As opposed to going to the big chains for such stuff. Sounds like you have the knowledge, whether such stuff is practical for a small shop to sell is a different question. Might be if you aren't selling the models Staples sells.
On the Analog side, I'd like to see what it seems like the shop already carries, a selection of paper, chemistry, etc. + film in various sizes.
Maybe you are crazy, but you deserve kudos for even thinking about it!

Short answer, you're totally insane. Up until recently, I was a manager in a camera store in the DC area. Camera gear, supplies, etc. are an incredibly competitive business. The teaching part could be more profitable than the materials. I would NEVER, under any circumstances get into that business, there isn't any upside to be had and an unlimited downside. All of the most popular things will put you in competition with the big box stores, and the margins are so thin that even if you did snake customers away from them you wouldn't make much money. Be prepared to have to go through distributers for things like printers, ink, paper etc. and not dealing with the company themselves. This makes it very difficult to get new models and there is usually little to no dealer "protection" when new models come out. It's true that people make fortunes going against the odds and persevering, but making this work (paying back a loan and pulling in a profit) is just about impossible. these days in the photo equipment/supplies world, quantity is everything.

We did about 30%-35% of our business in "accessories", things like bags, filters, warranties, etc. and that's where 60%-70% of our profit was. Any business that relies on 65%-70% of it's money to just bring people in the door and act as an incentive to buy the other stuff is not one that I would want my money tied up in...

Isaac

I think that you would benefit from asking what your store could provide that the larger retailers can not provide. If you can provide things like convenience or better service and you have a large enough customer base from which to draw then you might have a shot at making a success of this business...chances are highly likely that you will not be able to compete with the larger retailers on price. Unless you have a ton of cash and are willing to purchase mega quantities of merchandise...the problem then becomes, if that were true, just where are you going to sell the mega quantities of merchandise?

Putting one's hard earned money in a place where you have not carefully considered the implications of how you compete and what you have to uniquelly offer is a recipe for financial disaster.

Please understand that I am not saying that your situation is disasterous...just that this is a time for objective rational thought.

Steve
e-commerce as Jstraw indicates would be a big help.
Niche product lines with an ability to deliver consistantly.
Digital printing alongside traditional processes is a big plus.
Imogan or better scanner inhouse will generate lots of income .
Inhouse framing is a must.Concentrate on quality and predictable timelines for your work.
Let the big houses concentrate on speed and price.
Try not to compete with the pennies per pound printing service.
Isaac is giving you good advice with regards to the retail side, I would listen as he seems to have a strong history to base his comments.
Niche , Niche, offer one stop shopping from input to wall finished work. Leave the product sales to the guys with the deep pockets and will to compete on the small margin gain world.
Best Regards , hope you do well and don't disregard your dreams, just be careful.
by the way good will and client list on any company is only a small value, unless the current owners will stay on and make your transition profitable.
Bob
www.elevatordigital.ca

Elevator was a 100% analogue lab 6years ago with darkroom rentals and custom film processing and printing.
My main competitor in Toronto GTA *3.5million* was completely analogue as well.
He is now renting space and joined up with us.
If we stayed the course we would have been bankrupt.
This is the sad reality of 2007 commerce.

A little more info.

At present most all schools in the area, including the University are still teaching wet darkroom. The bulk of his present sales are tied to that (which worries me). I suspect that the majority of income would come from the teaching (either my classes or the renting of the classroom to my former employer). I wouldn't expect to really compete against the bigger stores in things like camera or printers - the margins are just too slim.

In the way of background, I worked at several camera stores many years ago when I was going to college. Presently I work as a technical trainer in the computer industry, which pays decently well, but I'm bored to tears with it and I have to travel 2-3 weeks a month to my teaching gigs across the country (sounds fun, but its a royal pain in the butt and this month I've been on the road, or am scheduled, for 4 straight weeks.)

Building an e-commerce site for the business wouldn't be any problem since I do that kinda work already. I'd also expect that it would give me more wedding and portrait gigs.

I'd love to make my living doing photography, and hope to start working on a MFA in about a year. I didn't expect this opportunity to arise. The owner wants to retire and has offer to sell it to me for 30K. Off hand I think I'll need to invest about 60-70K (including the purchase cost) to transistion it into something with more long term upside.

The think whats freaking me out is I see small photography stores closing left and right. I think with the classroom it will be viable, but am I fooling myself? Would I be better off just trying to increase my wedding and portrait business (another dog eat dog business)?

Magic,
As mentioned earlier, competion is cutthroat.
I think you may have enough local traffic to scrape by but
any more the internet is where any money is to be made.
Think in terms of Freestyle & KEH etc. They make it because they're primary market is global. Tie yourself to a single locale & you're sunk.
To be competitive you need to be able to discount supplies have a competitive shipping policy terrific communication and excellent customer service.

Dear Steve,

Yes, you're crazy. That isn't necessarily a bad thing.

Two of my friends run small camera shops in the UK. One specializes in bulbs, books and film-to-video transfers alongside the traditional camera store; the other sells seriously weird kit and a lot of collectors' stuff. Both have a significant web/e-Bay presence. (Google Bernard Hunter/Bristol Cine Supplies and Camerex).

Yes, you can do it. Is it worth the returns? Only you can say... Another friend sold his camera store (again in the UK) after the third break-in in a year; long before that, his accountant had told him he could make more money by selling all his stock, putting the money in the bank, and living on the interest.

Cheers,

R.

how many people are you planning on employing?

in the small town I live in (5000 people) the local photo store has a minilab which prints digital files to real photo paper. Contrary to popular beleif, he has found that his minilab is very very busy because people accumulate several hundred digi images on cd and bring them in to be printed which is much much cheaper and quicker than printing digitally at home.

At the risk of being nosy, you haven't said if the 30k buys real property or just business accounts.

If you're buying real property, then you might have some real equity. If you have to rent, then the first thing I would do is check the lease, see if it's affordable, transferable and extendable for a decent term to allow you to budget for some startup time. If you miss this step, then your business might be at the mercy of the landlord and landlords have no mercy ... I know ... I am one ...
Also, remember that when you have 100k invested, the return to you after the normal business expenses have been paid should not only be a real income, but also an additional (approx) 1% of your investment per month as a replacement for what your 100k would have made in another investment. Be sure to include this figure in your budgets.

cheers

photo store

Listen to Isaacc7 he seems to know what he is talking about, but if this is what your going to do then I thing service to the pro rather then the retail buyer. There are other wedding photagraphers you can process there wedding packages for. The retail end of the buisness is ruined by the digitol industry. You can buy a camera where you bought your computer you can buy the paper there to, or Staples. You don't need the photo store. They got what they deserved cheap price, no knowlage things always breaking down. The only one who makes the money is the manufacture. The retailer stands there for 30- 45 minutes while the customer decides between two or three cameras and you might make 25.00 or nothing if they walk.

30K buys the business and inventory (no real estate). The rent is less that $1000 a month (but I think we will be outgrowing the space very soon). I've seen his books and his breakeven point is about $175 a day. He averages about $300 a day in sales. That's why I don't think its even an option to leave the status quo. The leasing of the classroom to my old employer during the day will be a money maker from the start. They also want me to teach a class or two each month. The bill rate for an MCT is about $500-600 a day.

I like a lot of Bob Carney's ideas. I hadn't thought of putting in a drum scanner based on how expensive they are, but Bob thinks its a big revenue producer so I'm looking into that. I think the niche I could offer (other than the classroom) is to be able to take the photo from "camera to wall."

As to employees, my plan is to hire my daughter in law at first since I'll have to have another person in the shop if I'm teaching. If I expand the custom B&W offerings and photo restorations I'd also hire my youngest son to do that (he's also even better at Photoshop than I am). So potentually maybe two employees besides myself. The hard part is I already make 70K, so I'll probably have to take a cut in pay for awhile (depends on how much teaching I'll be doing), but I won't have to travel 2-4 weeks a month like I'm presently doing.

Its still a big decision.

magic823 said:

At present most all schools in the area, including the University are still teaching wet darkroom. The bulk of his present sales are tied to that (which worries me). I suspect that the majority of income would come from the teaching (either my classes or the renting of the classroom to my former employer). I wouldn't expect to really compete against the bigger stores in things like camera or printers - the margins are just too slim.

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You've already received some very valuable answers.
I'm not a businessman, and don't know much about photo-related business in the USA, so take my words with a grain of salt.

However, I noticed you're worried about sales to schools. I don't know for sure, but it seems like there's a minor "revival" of traditional B&W (wet) photography everywhere. From what I read here on apug and elsewhere, the school darkrooms which were closed in the past few years are being put into function again

Besides, the idea of photo classes is a very good one. You could also offer traditional B&W classes for beginners - that way you'll be shaping you own customer base.... and creating your own market. Your students will be more likely to purchase their materials from you than from other competitors.

Work on popularization of traditional B&W process and you could create your own "niche market"....

Still, I think you've got a lot of courage to go into such business, when traditional photo labs are closing down left and right... But, like I said, if you corner a "niche market" and take care to widen your (prospective) customer base, you might stand a chance.

Denis

Customer service and staff knowledge are the most important things a small player can do to compete with the box stores IMHO. Yes, any of them can sell you a a widget at a good price, but if you need expert advice on actually using it, mostly you get blank stares from the commodity stores.

sounds like your shop will have to provide at least two maybe three peoples incomes. Given the size of your catchment area I would have thought its possible. If you are going to be stocking traditional materials I would also consider setting up an online shop as well. It's so cheap to do, although time consuming, and it will pay for itself very quickly and boost your income further.

But also consider that if what you really want to do is custom printing and teaching and wedding photography, then having a retail outlet just to support those things, which actually stop you from being available in the retail outlet and force you to employ another person, may not be the way to go about it. i.e. An online store covers the whole country. A darkroom at home allows you to offer custom developing and printing and wedding photography is out on location. So why do you need the retail outlet unless its purely for selling to a dwindling market which an online store can do just as well and more cheaply. Hiring a room for teaching should be easy and a lot cheaper than $1000 a month. So where is the value in the retail outlet?

bdial said:

Customer service and staff knowledge are the most important things a small player can do to compete with the box stores IMHO. Yes, any of them can sell you a a widget at a good price, but if you need expert advice on actually using it, mostly you get blank stares from the commodity stores.

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Very true. But how many will pay for that advice in higher markup? I contend that most - not all but most - will take your advice and then shop for the lowest price at the big box stores. Maybe justify their actions by buying a $10-30 item such as a memory card.

I've thought a bit about this in the context of my own plan to retire early in a year or two. In my case, it would be in an area with a heavy influx of vacationers in the summer. Big box stores present (Target, Walmart, and Best Buy). Add Walgreens for photo processing. My take wasn't very positive:

Forget selling cameras, can't compete on price
Supplies could work since the big box stores aren't all that cheap for them, but volume is suspect
Processing could work IF I can be responsive on time (so only one trip is necessary)

In magic823's case, he has a bigger population. But I'd hate to be dependent on what the schools do with their wet darkroom.

Maybe I misunderstood, but if breakeven is $175 per day and sales are $300 per day, that must be without considering the value of the owners time. Assuming 50% margin, that's about $60 per day ($300-175 * .5) pretax. Assuming the store is open 10 hours per day (10am-8pm) that's $6.00 per hour. And, while we are at it, what's included in the breakeven point? My guess is only direct overhead.

So I'm a bit unclear about what is actually being bought. "Goodwill" doesn't seem to have a lot of economic value if the above numbers are correct (and maybe they're not). A lot the the ideas floated (classes, photo restoration) are good ideas, but not part of the existing business. So unless the vast majority of the $30k is inventory - and with a very conservative valuation - magic823 may be paying a high price for the existing business.

And what worries me most is what does this mean for majic823. I can understand the hassles of traveling (as I write this, I'm waiting for my delayed flight to Newark so I can spend the week in northern New Jersey - aren't I lucky). But he'll be a slave to the store, which is only OK if you really love it. I don't see how the economics support paying a good wage to employees - not a recipe for success when the employees are family.

As one who remembers fondly the small, family owned photography stores I knew growing up, I don't like being so negative but that's the way I see it. I tend to agree with percepts on the "value" point. I don't see any value in online sales - explain how to compete with the big retailers - unless you find a small niche that you can exploit.

magic823 said:

The think whats freaking me out is I see small photography stores closing left and right. I think with the classroom it will be viable, but am I fooling myself?

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Take note of that fact that small stores are folding. Work out of your home to build a wedding and or portrait business. Save your 30K.

At this point, I think my decision will be based on the deal I get from my old employer for leasing the classroom and contract teaching for them. If it viable from that aspect alone I'll go for it. If I have rely on any sales to make the bills and salary I won't do it. Ultimately, my goal is to work on a MFA, if I have to work 12 x 7 it won't allow me to do that (thus the need to hire a couple of family members). This offer (to buy the store) was unexpected.

Crazy

First You Need to define your market and what your capable of doing , the foto store to me would be great since I have wholesale and retail experince
in my back ground but thats me ,, what type of experinces do you bring to your table that will help you run this foto store, or are you just looking to get out on your own with out fore thought of what your really getting into ! today for a foto store to make it ,it must know its competition and find its niche since you can not run the volume those big guys can and thats how they make their money base on volume and low cost's and over head, So you need to get into processing and digital and frame-ing etc , New and used equipment can you make a deal with customer that keeps him happy and then keep your profit line in check where when you take something on a trade you have made money on the sale and will make money the sale of the used equipment : Food for thought Becareful of how you leap make sure you got something to land on!! forget 12 hr days your realy looking 18 hr days trust me on that; But: Good luck and a bright future||||||||Lauren

magic823 said:

At this point, I think my decision will be based on the deal I get from my old employer for leasing the classroom and contract teaching for them. If it viable from that aspect alone I'll go for it. If I have rely on any sales to make the bills and salary I won't do it. Ultimately, my goal is to work on a MFA, if I have to work 12 x 7 it won't allow me to do that (thus the need to hire a couple of family members). This offer (to buy the store) was unexpected.

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I think that's the best way to approach it. It would be nice to manage a full service photo store, but it's even better to make your time investment worthwhile. I would watch out on the scanner thing, unless you get a KILLER deal on a drum scanner, I wouldn't do it. There really isn't much call (over all) for super high quality scanning, at least not at the price that super high quality scans need to make them worthwhile. As far as I can tell, the best money available from scanning is in the decent, but cheap variety so that people can look at their slides again after all these years. Even then it's tough because there are places that charge very little for that (though the images have to be sent away... that was usually the only way I could make a scanning sale, the fear of something happening to the images if they were sent out) and it would be difficult to pay someone competent, let alone pay for the equipment at those rates (15-20 cents a slide).

I'll also echo what someone else mentioned, there are so many people that are willing to steal your knowledge and then buy their equipment and supplies over the internet. I don't know how many times I helped someone figure out that they need developer/paper/obscure camera part xyz only to have them say that they will just order it from B&H or Freestyle than let me order it for them. The worst ones are the ones that take an hour and a half of you going through the options to narrow it down to the right product for them only to have them ask, "Why should I buy this from you?" Oh I dunno, maybe that last hour and a half of my $%#% life? Even if it took 10 minutes, the fact that you have the expertise to get them the right product is meaningless to many (most?) people. The worst thing is that you still have to treat them nice even when they come in asking questions about the camera that they bought over the internet that you sold them. The really twisted thing is that this is the ideal situation, someone else had to spend the big bucks to buy the camera inventory, warehouse it, deal with warranty stuff etc, and the customer comes back to the store to buy the high profit stuff... It's still aggravating as hell and is one of the main reasons I wanted to get the hell out of that business... Anyway, rant over. good luck, if you have any questions PM me...

Isaac

Steve
Being self employed is a blessing and a curse.
Make sure you have a good lawyer, accountant, Insurance agent,
Bringing in Family is a blessing and a curse.
You will open up yourself to 24hour a day 365day a year nagging about the companys direction, profit / loss
Old employer is exactly that. Past, make sure you have a deal on paper, see second line - good lawyer
If you think you need 30K to invest - triple that amount
Be prepared not to take a paycheck for years

I made the decision in 1991 to be self employed . At the time I was making 90k per year.
I have not regretted the decision, but It really does take over 10years to build YOUR GOOD WILL with your clients.
Be prepared for every thing and anything to happen to you.

Your partner in life , whoever it is should be totally on board with this and supportive.If not you will experience many personal pains.
I just took the first 3weeks off in 10 years to go to the Silver Conference, so do not be mistaken. This venture will take up all your time and I really mean it .

I think many here are giving you good ideas,
but my experience is to go to the second line of my post and take to heart the message.
Good Lawyer, Good Accountant, Good Insurance.

I get great pleasure from Elevator, but it has morphed from Cold Silver Finishing 1991-1992 Silver Shack 1992-2001 Bob Carnie Prints 2001-2002 and then all the above rolled into Elevator.

One other point that I think is of value.

I have been blessed with and amazing Buisness Partner who has very different skill sets than mine. Together we have managed to keep our heads and moved forward. If you can find a non family member who you totally trust I would say a partnership is a good way to go with the type of business you are proposing to invest in.
Since APUG is an analogue site you should post over on Hybrid where discussions on your Adobe PS certification is relevent and of value. Here is not the place to go into that side of the equation.

Just to end, I have never matched the 90k per year since 1991, I do have hundreds of thousands of dollars worth of equipment. Enough to sink a ship and to the Banks eyes worth f.....all.
To that point you should know that in Canada at least being self employed ranks you lowest on the totem pole with the Banks and they really don't give a rats ass about you or your business. *but that is another story*

Being self imployed is a blessing and a curse, and it will totally take over your life. If not something is wrong.

magic823 said:

At this point, I think my decision will be based on the deal I get from my old employer for leasing the classroom and contract teaching for them. If it viable from that aspect alone I'll go for it. If I have rely on any sales to make the bills and salary I won't do it. Ultimately, my goal is to work on a MFA, if I have to work 12 x 7 it won't allow me to do that (thus the need to hire a couple of family members). This offer (to buy the store) was unexpected.

Click to expand...

Thank everyone. You've given me lots to think about.

Steve

Folks have mostly hit all the key points already and I cannot say I'd do it if I were you.

But here are a few observations:

1) I recently read that the Boise population is over 500,000 and, like many western U.S. cities, it is growing rapidly. Amongst other things - it is becoming an attractive location for active, early-retirees. These folks have cash and leisure time - so marketwise - you seem well-situated.

2) I agree on the need for a web-based presence - ideally with some kind of niche. I'm thinking for example of Hunt's Photo - a New England based retailer that has built a significant business in selling off fresh, but close-dated film, via eBay. I live in NYC during the weekdays but find it easier to order film from them then to go to B&H or Adorama here. I'm not suggesting film should be your niche - you have to figure that one out yourself!

3) I think the suggestion to be very careful about hiring family members is a good one. It's one thing if these members have made an equity contribution to the enterprise - but if they are strictly "employees" it may really strain family relationships. Do you think you can fire your daughter-in-law if she keeps coming into work late?

Anyway, good luck if decide to go forward. And whatever you decide - don't look back!

Am I crazy- small photo store...

About 30 years ago I moved into the Berkshires of western Massachusetts, and quickly got a job with a local processing lab. It was owned by two brothers, and they worked non-stop to get this lab running, doing regular film developing and printing, and also custom color and B&W prints, and slide processing.

They had been going straight for 6 months of 20 hour days, and I showed them that when they hired me (I had 15 years of darkroom experience at that time), they would be better off, because my 8 hours a day just MIGHT bring down their hours working there to only 12-14 hours per day.

After a few weeks, they agreed that 12 hour days at the lab were better for them, and they actually got to see more of their families at home, since their wives were also working at the lab, for practically no pay, but sharing all the stress and exhaustion of their husbands daily jobs.

I guess what I am really saying (and I know that Bob Carnie will agree!) is that once you own your own business (especially a brick and mortar store) you can work any 16-20 hours of the day that you want to work. Think about it!

Evan