New business advice please - Farm Shop

[Upinflames]

Hi,

So a quick scene setting.

I live on a farm in the country on a busy trunk road but close enough to 4 towns. The area is a bit of a tourist destination, there are craft centres, caravan sites, destination pubs, garden centres etc dotted around.

On the other side of the road from us about 200 yards away is a farm shop. And this is a farm shop extraordinaire - 6 tills going flat out when I called in on Saturday, yesterday (Monday) when I passed there were about 50 cars in the carpark. It is a busy operation and extremely well run. If you call in at 8 am the staff will be polishing the fruit and veg while they wait for customers. You get the idea.

But they don't do anything remotely healthy or organic. Bookers cash and carry supply their fresh stuff and a lot of the shop is high end confectionary and 'Mrs Darlington' type jars.

I want to start an organic shop here. It's a livery yard with 40 stables so a decent 'captive audience' for starters. There's an organic wholesaler who will deliver a great range of stuff at a price that I can easily make 100% margin going on Waitrose etc prices. And obviously it's free - no rent, rates, power etc.

https://www.organicnorth.co.uk/

I have a field opposite the exit of the place down the road - no trouble at all to put a sign up.

I have for starters a 4 metre square room which I've cleared out - if I make money in there I will chuck some horses off and convert a bigger building.

Soooo reason for writing all this:

I want staff asap, we have a nice life already and this shop needs to add to it not detract from it. What is the real cost of employing someone full time?

Would you go for planning straight away or fly under the radar until it's proven?

Do I need a fire certificate?

I have spoken to the farm PLI about the shop and they seem cool but are there insurance requirements I haven't thought of?

Anything else?

I've never done anything like this before so anything else you can think of would be gratefully received!

Cheers all.

[eliot]

so to be clear, you want to setup a 4sq-mt shop opposite what is presumably a few hundred sq-mt shop with 6 tills and parking for 50 cars and you think it will be successful?

[SmithCorona]

I see them as complimentary businesses, not competition.

There are many "farm shops" which are cynical marketing ploys, your neighbours sound like one of them.

I think all you will need to draw people over the road is a decent sign. Maybe consider a veg box service too.

[Chainsaw Rebuild]

A risk is that if it’s successful the shop over the road will just add an organic section and you will be a bit screwed.

What about if instead you did a local organic food delivery service - a once a week delivery day type of thing.

Then you just use your existing space to prep the orders and deliver them locally yourself at first.

[lizardbrain]

Better to set up shop next to successful competition than int the middle of nowhere. Businesses tend to cluster.

[Hammersia]

It might work, but you've highlighted how the other operation is completely committed to what they do, polishing turnips.

Setting aside a 4m square horse stall with no clue who to employ, what to pay them, planning, insurance, business rates, sounds a tiny bit half arsed tbh.

[eltawater]

Are you a) filthy rich and b) committed to a penniless future?
If yes, this is absolutely the right thing for you to do

I've watched two local farm shops go under in recent years, one of which I'm quite close to.

Never mind the planning, insurance etc, the biggest issues you will have will be wastage, footfall and costs.

• If it's not in a jar or has a long shelf life, you will be losing money every day throwing it out when it rots or trying to keep it chilled / frozen 24/7.
• You will not have the scale or buying power to purchase enough volume to compete on price. Customers may tell you that they love what you offer, but they will almost always vote with their wallets.
• Don't believe that your organic buying target market is large enough to sustain your business. The odd customer here and there will absolutely not be enough to pay your bills, especially when they can get the same or similar produce at a supermarket.
• Your staff costs will be at least £11.44 an hour from April + employer costs

[jonsp]

lizardbrain said:

Better to set up shop next to successful competition than int the middle of nowhere. Businesses tend to cluster.

That was my thinking too.

Say you want to set up a gourmet burger place in a town, sit in or takeout but nicer more expensive than McDonalds. Would you set it up close to the existing (obviously successful) McDonalds or as far away as possible? I'd go for close. Hungry people in town already know about the McDonalds so will go there - you can potentially "steal" some customers from McDonalds by offering a different proposition.

As pointed out above the risk is if business takes off the competitor would add an organic section to their operation - presumably there's nothing to prevent them doing this. But the OP would have first mover advantage - he started building a customer base of people interested in organic before the competitor. Clearly he'd look to offer online delivery as well.

Maybe an option is for the OP to position himself as somebody who's genuinely passionate about organic vs somebody who just happens to sell it because there's a profit in it. I'm assuming people who buy organic, and are willing to pay a premium price to do so, are passionate about organic on principle rather than just because it tastes nicer etc.

[Austin_Metro]

Could you open one or two days a week, weekend, when footfall and attendance for discretionary purchase at its highest?

[hidetheelephants]

Chainsaw Rebuild said:

A risk is that if it’s successful the shop over the road will just add an organic section and you will be a bit screwed.

What about if instead you did a local organic food delivery service - a once a week delivery day type of thing.

Then you just use your existing space to prep the orders and deliver them locally yourself at first.

If they were going to do that they would already; it's just a shop, possibly posh, on a farm, not a farm shop.

[Hammersia]

I guarantee the person running the successful operation next door has got a permanent headache, regardless of whether they are raking it in or not.

Better to own these things rather than run them. Do you own space that they or someone else would be interested in? Be a landlord.

[Upinflames]

SmithCorona said:

I see them as complimentary businesses, not competition.

There are many "farm shops" which are cynical marketing ploys, your neighbours sound like one of them.

I think all you will need to draw people over the road is a decent sign. Maybe consider a veg box service too.

Yeah I see it as a massive plus having them over the road. It means there are already thousands of people a week coming within a couple of hundred yards to spend money on produce.

I sat next to the guy who started the La Tasca chain at a charity dinner once. He said when he wanted to open a new restaurant he just found where the best restaurants were in town and set up as close to them as possible. Seemed to work for him!

[Upinflames]

hidetheelephants said:

Chainsaw Rebuild said:

A risk is that if it’s successful the shop over the road will just add an organic section and you will be a bit screwed.

What about if instead you did a local organic food delivery service - a once a week delivery day type of thing.

Then you just use your existing space to prep the orders and deliver them locally yourself at first.

If they were going to do that they would already; it's just a shop, possibly posh, on a farm, not a farm shop.

It isn't even a farm, I'm sure they're on sketchy ground calling it a farm shop! And posh isn't in it. A steak pie dinner plate size is £15.

I get the risk of them opening an organic section but I think with the right signs we will still pull customers in. Marketing wise we will still be a farm shop on a farm and 100% organic.

[Upinflames]

Thanks for the input. I appreciate there are risks.

Footfall isn't an issue, over the road is rammed full time and I have a field opposite their entrance where I can put a sign. Wastage is going to be a learning curve though

I am not in danger of being beaten on price. Across the road they sell a jar of pickled onions for £11 and a steak pie for £15. It's not costcutter!

I know what wages are, it's the employer costs I was after. I'll speak to my accountant.

[Ezra]

Sounds as if there's a ready made footfall (either your stables or nearby farm shop) to tap into. If it was me I'd be doing baby steps and progress from there. Clear the building, put a sign up, get some stock (not loads initially), display it nicely and open weekends, holidays and run it entirely yourself. The cost is truly minimal as you've got the infrastructure/services anyway. See how it goes...after a couple of months (maybe even a few weeks) you'll have a sense whether you could expand the offering. If so, do it. You'll hopefully then get to a stage where you may want to employ someone part time to help at weekends, etc. If all this works out, clear another stall or open during the week, maybe then look at full time / more staff.

As I say, baby steps, do something right, move on, get bigger. That way, you learn as the business grows and its a relatively low risk approach. As for the logistics of insurance/fire cert etc....don't you have these, or at least an awareness of them, if you live on a farm?

[jonsp]

Upinflames said:

Across the road they sell a jar of pickled onions for £11 and a steak pie for £15. It's not costcutter!

No but 30 mins in the oven some veg on the side and that's dinner for 2 sorted - presumably it is a nice steak pie. Their customers are prepared to pay 3x the price of a supermarket steak pie. Could you offer an organic steak pie to compete with that at approx the same price point? I'm guessing not, there's no such thing as an organic steak pie.

Seems you're looking to totally different customers. They want people who are prepared to pay for nice/quick and don't care about organic. You're looking for customers who'd be more likely to cook from scratch and do care about organic.

[Sheepshanks]

eliot said:

so to be clear, you want to setup a 4sq-mt shop opposite what is presumably a few hundred sq-mt shop with 6 tills and parking for 50 cars and you think it will be successful?

I read it as 16sq metres?

I was a bit worried by:

Upinflames said:

.....a great range of stuff at a price that I can easily make 100% margin...

I know it's just terminology, but it's important. You mean markup, not margin. Selling for twice what you pay is 50% margin. And that's 'gross margin', ie before any costs. Your net margin will be way lower.


My wife goes to a place that sounds like the big place the OP is talking about and it is an absolutely remarkable money making machine - everything is great quality and costs a fortune but a certain type of lady who has nothing else to do (which includes my wife and her friends) absolutely lap it up.

Edited by Sheepshanks on Tuesday 20th February 10:56

[Mr Overheads]

I reckon that in a tourist area I would put a childrens play area in eyeline of the place opposite and then sell good quality ice cream and tea/coffee plus snacks. Doesn't need to be huge. Check out The Milk Churn Scarcroft. Tiny amount of play equipment, sells ice creams coffees and sandwiches.

Then sell the organic veg/fruit alongside as a starter farm shop and expand from there.

Do you have parking too?

[Dg504]

Does the farm shop do coffee, cake and a safe place to let kids/dogs run around?

There are a lot more questions but would something complementary rather than completion not be a safer bet?

If you’re really keen to sell something then maybe look at a side line - plants/sheds/whatever you might know about and be interested in

[Upinflames]

Mr Overheads said:

I reckon that in a tourist area I would put a childrens play area in eyeline of the place opposite and then sell good quality ice cream and tea/coffee plus snacks. Doesn't need to be huge. Check out The Milk Churn Scarcroft. Tiny amount of play equipment, sells ice creams coffees and sandwiches.

Then sell the organic veg/fruit alongside as a starter farm shop and expand from there.

Do you have parking too?

Yeah I could park 100 cars.

I had thought about kids play area but it would have to be outdoors so that's summer only, then there's insurance, crb checks and a lot of hoops to jump through