I swore I wasn't going to rain on someone else's parade, but I can't help but comment on the Northwest Crossing Market. They are like the poster child for what not to do. Maybe, even, if they read the following, they might start some course corrections. Like, you know, STOP SPENDING MONEY! Buying your business cards two months in advance is exactly the wrong thing to do.

I always talk about the book, GROWING A BUSINESS, and that is the first example he uses about what not to do -- buying business cards makes you feel good, but does little to help your business at first. It is an easily dispensed expense. The few hundreds of dollars you spend on accoutrements will be money you wished you had later. But most importantly, it is a dead giveaway that the new business owner is about the PROCESS and not the actual business. A very bad sign.

I wrote the following on Bendbubble2.

About that market. I think people often under plan these ventures. In this case, they may have over planned.

We know they spent 75k on equipment, which they mentioned was almost equal to 'construction'; so we know they've sunk 150k in infrastructure, right off the bat. (Plus fancy business cards, etc. and god know what else....)

They are also paying 2.35 a ft. !!! and they don't mention triple net, which in my experience would be a minimum of .25. So 2.60 times 1500 sq. ft, equals 3900.00 a month in rent alone.

Just for fun, I googled up some industry averages.

For neighborhood shopping centers, the average sales per foot are:

General Merchandise; 100.36
Food 311.72
Food Service 182.61
Gifts/Specialty 148.75

Average 185.86

So 185.86 times 1500 sq. ft equals
278,790.00 annual sales.

The bigger the shopping center, the more per foot. So Regional centers make more than local centers who make more than neighborhood centers which make more than stand alones.

Benefit of the doubt, they are in a 'neighborhood center.'

Average margin on groceries (this includes the big boys) 32.2%.

So gross profit, not counting expenses, is 89,770.38, or 7480.86 per month.

O.K. So assuming that they have an 8 time turnover in inventory, they need about 25k, more, so lets say they're investing 200k altogether.

(By the way, 6% interest would earn them 12,000.00 a year, no risk, no work.)

After we take the minimum overhead of say, 5000.00 a month, they have
2480.00 left. So assuming no other expenses, and assuming they work every hour of every day, lets say 10 hour days times 6, and 6 hours on the seventh, they earn about 8.85 cents per hour.

But they are going to sell specialty foods and services. All the research I looked at said that ADDED to the Expenses, and LOWERED the margins.

In other words, they'd be better off selling, beer, soda, smokes and snacks.


I can't help but compare this to the Bond Street Market, here in downtown Bend. He sells the basics -- its a one man operation, no need for fancy coffee machines or ice cream makers, or whatever.

Beer, cigs, aspirin, soda, pencils, snacks, etc.

Maybe 800 sq. ft., just guessing under 2.00 per foot. So, say 1600 a month in rent. 150k in sales, industry average, 32.2% margin, 4800.00 per month sales. Say overhead of 2000.00 a month, also leaves about 2800.00 per month. One man operation, banker's hours, not bad.

The biggest advantage -- I doubt he sank even 15k into fixtures and startup costs. Probably leveraged the groceries out of the suppliers, and probably some of the equipment too.

One last thing about the Northwest Crossing: they mentioned they were holding on to their cash and paying with credit. So, my 30 year mortgage for 150k at 5.875 interest works out to more than 1100.00 a month. Kinda doubtful they are getting that long of terms, or that low of interest, etc. Never mind minimum wage, they're working for free....