Since no one has thrown any figures around, I'll give it a crack:
Assumptions:
- 250sqm shop @ $300psm
- 2 month period before sales kick-in.
Stock: $30,000
Rent/Outgoings: $15,000
Other Overheads: $5,000
Buffer: $15,000
Repayments on fit-out / business purchase: $5,000
TOTAL: $70,000
Select to expand quotebene313 said..
Since no one has thrown any figures around, I'll give it a crack:
Assumptions:
- 250sqm shop @ $300psm
- 2 month period before sales kick-in.
Stock: $30,000 Minimum $150,000.00
Rent/Outgoings: $15,000 Anywhere with decent position and traffic flow will be triple to quadruple, lets say triple @ $45,000 (inc outgoings)
Other Overheads: $5,000 Massively underestimated sorry. Phones/internet, insurances, advertising, repairs/maintenance, staff costs/super/workcover (inc self), etc, etc so at least $35,000.00
Buffer: $15,000 At least $50,000.00
Repayments on fit-out / business purchase: $5,000 God help you if you borrowed!! $100,000.00 loan will cost more than double that, interest only+fees
TOTAL: $70,000
If you only invested $70K, you will almost certainly fail within 12 months, maybe even sooner. The reality is that a well run business can achieve a NET profit of around 15-20% in the kitesurf industry (but many struggle to achieve 10-15%). So if you had a $1mill turnover, you would net $150K, you would need $250K of stock and need to turn that over a minimum of 4 times in 12 months to achieve that income and bottom line, but its not that easy, there is always dead stock, and the never ending problem of how to clear it and get at least some of your money back - yes it means selling stuff for less than you paid for it, and a good example that I can think of is race boards, can't give them away at any price so it seems.
People that say shops are ripping people off, or that they can get kitesurf gear for half the price that its available here, are just dreaming and in my opinion justifying their short sighted decision to purchase online overseas. There are always exceptions and some people live in very remote areas and have no choice than to buy online and Google will serve up any relevant site worldwide.
Shops here advertising product on Seabreeze for $0, should be banned from the practice, its deceptive and I'm sure it illegal too, someone with a legal background should take them to task on it, I'm fairly sure they will force the shop to supply the advertised product for $0! 
When I started working, doing paper rounds and selling junk food at the footy, I learned all this the hard way. Each Saturday O'briens gave you a stall, some opening stock, a cost price, rec retail prices, and at the end of the day you had to count back in your stock, money and the difference between cost and the cash result for a 10-12 hour day was your wage. The "cost" was of course not the real cost, we were cheap labour and the cost price was already marked up by O'briens Catering. I learned how a small business worked when I was 13 yo, and have put the knowledge into practice ever since, and apart from short stints as a traditional employee I've always been self employed, in small retail/small business.
Select to expand quote
in reality around $300,000.00
If you only invested $70K, you will almost certainly fail within 12 months, maybe even sooner. The reality is that a well run business can achieve a NET profit of around 15-20% in the kitesurf industry (but many struggle to achieve 10-15%). So if you had a $1mill turnover, you would net $150K,
So for an investment of $300k you can make $150k / year. 50% ROI sounds pretty atttractive! I presume that doesnt include a wage to the owner which reduces the ROI a bit. Plus more risk than you can poke a stick at of course.
Select to expand quotedjdojo said...
^^^ Get a life bud.
Glad to see im not the only one who has had a gut full of kawasakis crap
Select to expand quoteKitepower Australia said..
Shops here advertising product on Seabreeze for $0, should be banned from the practice, its deceptive and I'm sure it illegal too, someone with a legal background should take them to task on it, I'm fairly sure they will force the shop to supply the advertised product for $0!
Err pardon my snappy-ness prior.
Yes you are correct. I rang FairTrading and the QLS, and yep.. the product is technically for free!
I might just call one up tomorrow and get a free board.
If there were no kite shops almost none of us would be kiteboarders.
You dont buy a kite online and take up the sport without some help, we all surely were introduced to the sport with the help of a kite shop to some degree.
It costs a lot to run the store, thats for sure, they dont run stores to become millionaires that for sure.
Alot of people seem to love giving the local kite shops a hard time, why? They deserve a little more respect in my opinion because...
If there were no kite shops almost none of us would be kiteboarders!
Select to expand quoteeppo said..Kamikuza said..
I love how this place can go from discussing the facts to "personal attacks" for absolutely no good reason at all. 
Switch has been around what, 2 years now? Might be a bit early to call it, either way.
I'm intrigued to see how switch go when their volume of sales worldwide reach a certain threshold, without on the ground support mechanisms in place.
Product is decent though, no questioning that, but will their distribution and support model hold up.
Interesting space to watch. 3 Years I think isn't it overall, given they have the V3?
Yep def 3 years, It was early Feb 2011 when I got my first quiver of Switch kites.
Select to expand quoteDave Whettingsteel said..
in reality around $300,000.00
If you only invested $70K, you will almost certainly fail within 12 months, maybe even sooner. The reality is that a well run business can achieve a NET profit of around 15-20% in the kitesurf industry (but many struggle to achieve 10-15%). So if you had a $1mill turnover, you would net $150K,
So for an investment of $300k you can make $150k / year. 50% ROI sounds pretty atttractive! I presume that doesnt include a wage to the owner which reduces the ROI a bit. Plus more risk than you can poke a stick at of course.
Dave I'm not sure where you are getting the 50% ROI??
I've stated in my post that a very well run store might net 15-20% from a 1 mill turnover, but also that most struggle to achieve 10-15% (or worse I suspect! The shops that fail are achieving negative returns on investment)
For an investment of $300K, you could expect to get a return on your investment of somewhere between $30 and $60K Tops (And if you are a sole operator expect to then pay Income Tax on that amount too!) This is another reason smaller shops close, because for $30 -$60K people can get an unskilled or semi skilled job, with all the benefits, 10% super, workcover, and 38 hr working week, compared to at least 50-60hrs a week working in a kiteshop as the owner.
Select to expand quoteLoftywinds said...Kitepower Australia said..
Shops here advertising product on Seabreeze for $0, should be banned from the practice, its deceptive and I'm sure it illegal too, someone with a legal background should take them to task on it, I'm fairly sure they will force the shop to supply the advertised product for $0!
Err pardon my snappy-ness prior.
Yes you are correct. I rang FairTrading and the QLS, and yep.. the product is technically for free!
I might just call one up tomorrow and get a free board.
Send them a PM. I just did for the 17m dyno... shipping is also free but i offered to pay for that. Only fair right?
Also pm'd about the naish skater (sorry lofty, if that was the board you were purchasing 
). At its advertised price, its a bargain and even comes with a free board cover worth $100. Bargain 
If colesworth advertised milk at $0 they'd get nailed hard instore.
naish skater is a heavy pig!
i wouldn't even take it for free 
love your work though ahaha
No replies from either shop yet..
I bet they'd reply quick fkn smart when told it can be illegal to 1) sell a product advertised at $0 for $2000 (they can however withdraw it from sale) or 2)continual bait advertising.
ITL n co, its not fair on users and other advertisers. Time to stop taking the piss
Select to expand quoteMDSXR6T said..
No replies from either shop yet..
I bet they'd reply quick fkn smart when told it can be illegal to 1) sell a product advertised at $0 for $2000 (they can however withdraw it from sale) or 2)continual bait advertising.
ITL n co, its not fair on users and other advertisers. Time to stop taking the piss
Nah mate. Seriously call them all up and demand they stick to their word. Otherwise take evidence and emails to FairTrading and copies to shop and see what they do next - out goes the $0 bull****!
Hi guys,
Interesting read, and amazing that so few people know what it's like to really run a business and the returns it delivers (or doesn't).
Start up costs or a shop with a half a chance of making it out of the blocks?
You'd need a minimum of $150,000-$200,000 and that's conservative estimate for a small shop.
Rent? Rent in Perth will set you back around $50,000 + outgoings of around $9,000, so budget $60K.
Wages? We pay around $250K in wages each year for shop and school.
Advertising, legals, insurance, vehicles, office and infrastructure, add another $100,000
I think Steve's Profit percentages are what we'd like to earn. We have put a lot of time and money into POS and accounting software, and other upgrades this year including name change etc and will be lucky to break even this year.
General Dude asked about a shop closer to the North of Perth. We are moving from Scarborough to Balcatta. The old building is being sold to developers and is being torn down so we had to get out. We knew it was coming and have been out of our lease for 18 months, so we have decided to move this winter whilst it is quiet. New premises have been secured and we are currently fitting out. We are going to be VERY close to the Freeway making it much quicker for customers to come and see us if you are from the North or South and will be only 10 minutes from Scarborough.
I am also putting the business on the market for sale, so if anyone is interested, you'll see an ad appear with a broker next week. Time to put your money where your mouth is, here's a chance to buy a well established business. Fresh lease, loads of current stock.
Things you need to know about kiteshops, you don't buy them because you want to work less, you don't buy them to earn big money, you don't buy them to kite more often. I can count the number of times I have been on the water with a kite on both hands this season. 
You don't buy them to have more free time. There are benefits though, all your kite gear comes at cost! It is a fun lifestyle, but it isn't easy by any stretch of the imagination.
If you are seriously interested in buying the shop, PM me. No tyre kickers please! The business was recently valued at $455K including stock and plant, but am looking at best reasonable offer. PS, doesn't include the school permit as it's non transferrable.
There have been many kite shops come and go in WA, it is a hotly contested market and I suspect if several of the ones I know could sell for any reasonable price they would sell too. It may be for you though .....?
DM
I've always taken $0 advertised for second hand gear to be an invitation to barter. What if instead of $0 they put "price neg", that'd have to be cool wouldn't it?
Select to expand quoteKitepower Australia said..Dave Whettingsteel said..
in reality around $300,000.00
If you only invested $70K, you will almost certainly fail within 12 months, maybe even sooner. The reality is that a well run business can achieve a NET profit of around 15-20% in the kitesurf industry (but many struggle to achieve 10-15%). So if you had a $1mill turnover, you would net $150K,
So for an investment of $300k you can make $150k / year. 50% ROI sounds pretty atttractive! I presume that doesnt include a wage to the owner which reduces the ROI a bit. Plus more risk than you can poke a stick at of course.
Dave I'm not sure where you are getting the 50% ROI??
I've stated in my post that a very well run store might net 15-20% from a 1 mill turnover, but also that most struggle to achieve 10-15% (or worse I suspect! The shops that fail are achieving negative returns on investment)
For an investment of $300K, you could expect to get a return on your investment of somewhere between $30 and $60K Tops (And if you are a sole operator expect to then pay Income Tax on that amount too!) This is another reason smaller shops close, because for $30 -$60K people can get an unskilled or semi skilled job, with all the benefits, 10% super, workcover, and 38 hr working week, compared to at least 50-60hrs a week working in a kiteshop as the owner.
I understand net profit to be after expenses, but I think you are saying 150k profit before expenses hence the discrepancy. I was being a little flippant and do understand the challenges having built and sold several businesses over the last 25 years.
You should place your shop for sale in the classifieds on here mate for $0 just to stir a few blokes up!
Select to expand quoteDave Whettingsteel said..Kitepower Australia said..Dave Whettingsteel said..
in reality around $300,000.00
If you only invested $70K, you will almost certainly fail within 12 months, maybe even sooner. The reality is that a well run business can achieve a NET profit of around 15-20% in the kitesurf industry (but many struggle to achieve 10-15%). So if you had a $1mill turnover, you would net $150K,
So for an investment of $300k you can make $150k / year. 50% ROI sounds pretty atttractive! I presume that doesnt include a wage to the owner which reduces the ROI a bit. Plus more risk than you can poke a stick at of course.
Dave I'm not sure where you are getting the 50% ROI??
I've stated in my post that a very well run store might net 15-20% from a 1 mill turnover, but also that most struggle to achieve 10-15% (or worse I suspect! The shops that fail are achieving negative returns on investment)
For an investment of $300K, you could expect to get a return on your investment of somewhere between $30 and $60K Tops (And if you are a sole operator expect to then pay Income Tax on that amount too!) This is another reason smaller shops close, because for $30 -$60K people can get an unskilled or semi skilled job, with all the benefits, 10% super, workcover, and 38 hr working week, compared to at least 50-60hrs a week working in a kiteshop as the owner.
I understand net profit to be after expenses, but I think you are saying 150k profit before expenses hence the discrepancy. I was being a little flippant and do understand the challenges having built and sold several businesses over the last 25 years.
No worries Dave, sorta suspected you were having us on, but I replied more for the education of the less well informed/experienced. I seriously doubt that any kite/windsurf/watersports retailer is achieving 50% Gross Profit margin.
I think you'd agree that the only way to look at a business's performance is the bottom line, so all expenses are deducted from the Gross Profit, as its impossible to just take home/spend the Gross Profit.
The Nett Profit figures I've quoted are from my own experience, but I also know of businesses that achiever better and less. Higher volume businesses like supermarkets typically work with a Nett profit percentage under 10%, but they are usually medium to larger retailers with turnovers in the 5-50mill range and 5-12% of those numbers would still be a reasonable ROI, when the cash rate is 3-4% in this country.
If anyone in WA is serious about getting into kite/watersports retail then they should have a look at Action Sports WA, its a well run business, based on my experience and observations travelling around Australian doing my job.
Right. Only two kooks left with $0 and not mentioning anything about offers or a price anywhere.
www.seabreeze.com.au/Classifieds/Kitesurfing-Kites/~awnep/2012-Cabrinha-Nomad-7-metre.aspx
www.seabreeze.com.au/Classifieds/Kitesurfing-Kites/~aw5td/2009-Ozone--5-metre.aspx
Crusade to evade the pests almost complete.
I've called one guy and I got the verbal diarrhea but he changed his ad.
Lofty - fighting for you the consumer!
Now onto the other ads. Gee.. Shouldn't Laurie be doing this?
Select to expand quoteLoftywinds said..
Right. Only two kooks left with $0 and not mentioning anything about offers or a price anywhere.
www.seabreeze.com.au/Classifieds/Kitesurfing-Kites/~awnep/2012-Cabrinha-Nomad-7-metre.aspx
www.seabreeze.com.au/Classifieds/Kitesurfing-Kites/~aw5td/2009-Ozone--5-metre.aspx
Crusade to evade the pests almost complete.
I've called one guy and I got the verbal diarrhea but he changed his ad.
Lofty - fighting for you the consumer!
Now onto the other ads. Gee.. Shouldn't Laurie be doing this?
$0 is a fair price for both of those kites, so maybe its staying.
Select to expand quoteKitepower Australia said..Dave Whettingsteel said..Kitepower Australia said..Dave Whettingsteel said..
in reality around $300,000.00
If you only invested $70K, you will almost certainly fail within 12 months, maybe even sooner. The reality is that a well run business can achieve a NET profit of around 15-20% in the kitesurf industry (but many struggle to achieve 10-15%). So if you had a $1mill turnover, you would net $150K,
So for an investment of $300k you can make $150k / year. 50% ROI sounds pretty atttractive! I presume that doesnt include a wage to the owner which reduces the ROI a bit. Plus more risk than you can poke a stick at of course.
Dave I'm not sure where you are getting the 50% ROI??
I've stated in my post that a very well run store might net 15-20% from a 1 mill turnover, but also that most struggle to achieve 10-15% (or worse I suspect! The shops that fail are achieving negative returns on investment)
For an investment of $300K, you could expect to get a return on your investment of somewhere between $30 and $60K Tops (And if you are a sole operator expect to then pay Income Tax on that amount too!) This is another reason smaller shops close, because for $30 -$60K people can get an unskilled or semi skilled job, with all the benefits, 10% super, workcover, and 38 hr working week, compared to at least 50-60hrs a week working in a kiteshop as the owner.
I understand net profit to be after expenses, but I think you are saying 150k profit before expenses hence the discrepancy. I was being a little flippant and do understand the challenges having built and sold several businesses over the last 25 years.
No worries Dave, sorta suspected you were having us on, but I replied more for the education of the less well informed/experienced. I seriously doubt that any kite/windsurf/watersports retailer is achieving 50% Gross Profit margin.
I think you'd agree that the only way to look at a business's performance is the bottom line, so all expenses are deducted from the Gross Profit, as its impossible to just take home/spend the Gross Profit.
The Nett Profit figures I've quoted are from my own experience, but I also know of businesses that achiever better and less. Higher volume businesses like supermarkets typically work with a Nett profit percentage under 10%, but they are usually medium to larger retailers with turnovers in the 5-50mill range and 5-12% of those numbers would still be a reasonable ROI, when the cash rate is 3-4% in this country.
If anyone in WA is serious about getting into kite/watersports retail then they should have a look at Action Sports WA, its a well run business, based on my experience and observations travelling around Australian doing my job.
What multiple was the 455 based on? did they look at comparable sales and was this off cash or EBIT(/DA)people need need to be aware that profit does not pay anything, suppliers will not accept profit they need cash a business of this nature may be (in my view) tricky to gear up on.
That being said all of this talk of GP%... GP can be doctored by what you consider to be COGS and the treatments used, ROI needs to be looked at in the broader context of the payback period, the investment and weighted average cost of capital, a headline "5-12% ROI" can vanish very quickly when debt loads are considered.
As with any decision it is worth going in eyes open and thinking about the land lord wanting a bank guarantee for rental bond (effectively becomes dead money).
I have seen people become bankrupt chasing dreams throwing good money after bad, passion counts for naught if you can not sell your product/service that being said there is always space in the market for those that have the patience, tenacity, drive and love for what they do
Forget all the bull**** figures and stats, if your passionate and work at it in the correct location you'll do ok, take aks now adventure sport, someone with drive passion and a respected rider will take this and prosper, a slack arse looking to make a quick dollar with little experience will close in a couple of years
Select to expand quoteLoftywinds said..
How much does it cost to open a kite shop??
I dunno. In WA, Toyworld sold heaps of kites, but were pushed out by Kmart and Target etc with their buying power. Bloody duopoly.
But ya know, youse GenY 2.0 crew are pretty cluey with all this interonlinewebs selling stuff, you may just make it work.
Word.
I just had a thought. How many of you guys that are "loyal" to your local kite shop ride australian kite gear, BWS Griffin ect? I bet almost none. How come? would you rather give your money to an over seas company?
Select to expand quotepezzy said..
I just had a thought. How many of you guys that are "loyal" to your local kite shop ride australian kite gear, BWS Griffin ect? I bet almost none. How come? would you rather give your money to an over seas company?
Neither BWS or Griffin are made in Australia. No kite is made in Australia
Select to expand quoteActionSportsWA said..
Start up costs or a shop with a half a chance of making it out of the blocks?
You'd need a minimum of $150,000-$200,000 and that's conservative estimate for a small shop.
Absolutely right - try it for any less and you're dreaming. And doomed to fail.Select to expand quoteActionSportsWA said..
Things you need to know about kiteshops, you don't buy them because you want to work less, you don't buy them to earn big money, you don't buy them to kite more often. I can count the number of times I have been on the water with a kite on both hands this season. You don't buy them to have more free time. There are benefits though, all your kite gear comes at cost! It is a fun lifestyle, but it isn't easy by any stretch of the imagination.
Absolutely right - I wouldnt need too many more hands to count up my total kite sessions over the past 4 seasons either. May sound unbelievable - I find it hard to understand myself & it certainly wasnt part of my plan - but thats the reality.
It is also the major reason for KSS selling up (Yep KSS is also selling if you havent heard yet).
Love the job. Smile on the dial everyday Im driving to 'work'. But probably havent got many more years of kiting ahead of me so its just a matter of priorities. Time on Water is what its all going to be about for this little puppet from now on.
Select to expand quoteBrisKites said..pezzy said..
I just had a thought. How many of you guys that are "loyal" to your local kite shop ride australian kite gear, BWS Griffin ect? I bet almost none. How come? would you rather give your money to an over seas company?
Neither BWS or Griffin are made in Australia. No kite is made in Australia
I never said australian made. Just australian owned.
Shorley the core of thoes companys are based in aus? And I would have though that the ammount of profit thoes companys would make off their sales would be way more than the mark up of over seas brands through an australian kite shop.
