Guest Contributor – Ricki Peltzman: How to Open A Store (Part 3)
by ATFDC Guest Contributor Ricki Peltzman
Money. Money. Money. Everyone thinks they need a lot of it to open a store. I opened mine with $2,000. But lets go back a little bit.
When I opened my store I did it in a space that was only 240 square feet inside the Touchstone Gallery. The rent was only $1,000. I paid one month in advance and then used the other $1,000 to pay for a desk, a table to display jewelry, and a few rails that I hung on the wall to put the clothes. I used my Mac from home and bought drapery fabric to concoct a dressing room. Everything came from Ikea.
The real reason that you need so little money is that you no longer pay by check for the goods you will sell in your store. When I first started out as a buyer so many years ago that I hate to even think about it, you got your goods in, waited 30 days, and then paid by check. Today, since no one is paying their bills if they don’t have to, you pay by credit card on the day it is shipped or most designers won’t ship you. Sometimes when it is coming from overseas I ask that they charge me the day I get the goods into my store and most times, especially if they have worked with you before, they will do this favor.
Now you might think this is a bad thing but really it is a blessing in disguise. Here is what you do. You get four credit cards. A visa, a master charge and two American Express cards in my case. You find out by going online when your last billing date is. For example: the last billing date of my visa is the 8th of every month. From the 9th until the 23rd I use this card to bring in merchandise. On the 24th, I start using one of my American Express cards because the 23rd is the last billing date of that card. With me so far? Go back to the visa card. By using it on the 9th I have an entire month before I get the bill, and then I get 3 weeks until it is due. This way I get SEVEN weeks to have merchandise in my store that I can sell so that by the time the bill is due I have the money. And then I do the same thing with the other cards. So you are basically giving yourself a LOAN on every card and yet, your credit remains perfect. At some point you have enough money to pay your cards the day you get them but that may take a year or two. And this is much better than the 30 days you used to get. The last thing you want to do is put anything up for a loan from a bank, especially your house and especially in these precarious times. If you have enough credit you can secure a loan on your signature. But remember: do not get involved with partners. They are really only good for dancing.
This method of getting four cards with different billing due dates also helps you see how each line performs. Remember how we talked about every line being profitable? What should happen is that in the seven weeks you have before the bill is due, you should have sold at least enough pieces to pay the bill on that line in full and then you basically own the merchandise. Whatever pieces are left should represent your profit. And profit is queen!!
Ricki Peltzman is the owner and buyer of Upstairs on 7th. Upstairs on 7th is an upscale retailer of women’s apparel and accessories in Washington DC known for its unique designer clothing including Ray Harris, Blanque, Planet, Crea Concept, Dress to Kill, Kokomarina, Comfy, Sun Kim, Lilith, Lunn, and Spirithouse among others.