Possible Opportunity to own a dispensary

[Audiyoda]

I think anyone who's been on here long enough knows my feelings towards my current employer. He simply doesn't have the business skillset required to own a dispensary. Clinically he's the best I've ever worked with - but is flat out clueless on business acumen.

So for the past so many months I've been job searching - but Michigan is about as bad as it gets for jobs - optical or otherwise. So I was talking with my wife the other night and she mentioned this new retail build that went up about 6 months ago in this older part of town - a very well liked district with many small shops designed around a specific theme. Well this new build has two retail spaces available that are both around 1200 sq ft. One is next to this very hip photo gallery, the other is next to a popular barber that offers some very unique services (nothing wierd or dirty - stuff like serving guys a beer while they are getting their hair cut).

Now I don't have the capitol to start my own business - not enough equity in my home, not enough savings - but I did call some friends that do and they may be interested in a partnership or investing in the idea. So...that being said, anyone want to throw in any ideas (random or otherwise) to how I proceed? I'm working on a business plan this weekend, I have all the neighboorhood demographcs and such for that. One thing I really need to consider is competition - there are four optical shops within 1.5 miles of this location - one is right down the street and I used to work for him. But none of them do anything remotely close to what I want to do - higher end boutique style optical. When I did work for the aforementioned doctor, we had all sorts of high-end names in that office that sold very, very well. But he's another doctor that's really clueless - he bought that practice from a optician who had a OD come in 2.5 days a week - otherwise took walk-in scripts. The entire shop was high-end and did very well. When this doc bought the shop, rather than build a client base he spent his time out golfing with buddys and was never in the office - sales dropped significatly. He also changed the inventory to refect his personal taste - I went buy there last evening and I think about half his frame boards were empty. I was really astonished - so I don't really even see him as competition. There is one competitor that has a very dedicated clientele - he doesn't employ a OD - purely a dispensary in this older victorian house. Pretty cool actually. But he carried predominently Marchon, Safilo and Luxottica - nothing fun or exciting. And when I spoken with him before he's told me his clientele is a bit older - that would explain his inventory.

So again - any insights you may have - any personal experiences - anything that would help me out. There is room for a lane in this location - so do I hire a OD or keep it a dispensary only? If I hire a OD, how do you pay them? A pecentage of their professional fees? Some other pay structure? Anything and everything would be of help at this point.

TIA.

[Dave Nelson]

Don't count on your competition continuing with his existing line. If you open a boutique near him and begin selling high end designer lines, he will simply bring in some similar merchandise, and your'e competing with a cool boutique in an old mansion. Are there any non-dispensing ophthalmologists in your area? What about a partnership with an optometrist?

[EyeFitWell]

I think it's best to have an OD on site, otherwise you'll need to spend a lot on advertizing.
Here in NC, it's illegal for an OD to work "for" an Optician so the usual set up is that the OD rents the exam lane from the owner optician, and the OD collects his/her professional fees. The OD pays for the privledge, so to speak.
Owning is a long-term dream of mine, and I wish you the best of luck! Be sure to advertize and let people know where you are!

[HarryChiling]

Definately have an OD on site (two or three days). I don't know what the laws are where you live but you could rent them the space for a dollar and let them keep the professional fees, after all it's the spectacle sales that you want. You may want to also consider giving a percentage of CL sales, as a bonus; (1 year supplies only) to keep the doc motivated and working.

[Audiyoda]

Don't count on your competition continuing with his existing line. If you open a boutique near him and begin selling high end designer lines, he will simply bring in some similar merchandise, and your'e competing with a cool boutique in an old mansion. Are there any non-dispensing ophthalmologists in your area? What about a partnership with an optometrist?
The shop where I used to work has really gone down hill - I don't think he's in a position to bring in similar merchandise. The cool boutique in the victorian home is not really a boutique - he has as well established older client base - I'm not going to market myself to his clientele. I've known him for many years - he's happy with what he's doing and has not desire to build beyond what he's doing.

Of the other two competitors -one is a mall retailer (local chain) and their buying strategy is carried through to all their locations, so they won't be bringing in anything similar. They are located in a low-volume enclosed mall. The other shop is fairly well established but is also the furthest away from my possible location. They are heavy into Safilo and Marchon. They take just about every insurance you can think of and their inventory refects that.

So from my persective, I'm looking at working into a nitche that otherwise doesn't exist. They only true high-end optical shop is about 10 miles away - they carry some great lines. But one complaint I hear from people I know that have gone is there is that if you aren't 'somebody' in the community they don't give you the time of day. But if you are a 'somebody' they pamper the heck out of you. I want to pamper the heck out of everybody - make their eyewear purchase worth while and enjoyable. Make the eyewear purchase an experience worth remembering.

[Audiyoda]

Definately have an OD on site (two or three days). I don't know what the laws are where you live but you could rent them the space for a dollar and let them keep the professional fees, after all it's the spectacle sales that you want. You may want to also consider giving a percentage of CL sales, as a bonus; (1 year supplies only) to keep the doc motivated and working.
That's exactly what I was thinking. We have the Michigan College of Optometry about 50 miles north of here - I'm thiking I hire a forward thinking doc ready to work hard and have him/her rent their space for a $1/month and they can keep all the professional fees that directly reflect into eyewear sales. Professional fees that result in CL sales would be split say 50/50. I'd let the doc maintain the contacts and they can keep any revenue from those or split the revenue 75/25. But I want to keep the doc motivated - if they are recouping all the professional fees then it's their business and they are more likely to get out there and actively promote my business.

[Audiyoda]

I think it's best to have an OD on site, otherwise you'll need to spend a lot on advertizing.
Here in NC, it's illegal for an OD to work "for" an Optician so the usual set up is that the OD rents the exam lane from the owner optician, and the OD collects his/her professional fees. The OD pays for the privledge, so to speak.
Owning is a long-term dream of mine, and I wish you the best of luck! Be sure to advertize and let people know where you are!
If I can make this work I'm going door-to-door to introduce myself to the community. I'm going to do anything and everything to get my name out there.

[Fezz]

I thought that you had previously mentioned that you don't plan on staying in the business, and that you had planned to open a recording studio or something like that?


You either love the business and have at it or, go find your real calling.


This is a tough business. I have seen some true talent fail.

[35oldguy]

It is better to take the risk and fail than take no risk and continue down the same path! Why make your employer rich when you can put the profit in your own pocket! Go to the bank with your idea! Get that venture capital by applying for an SBA loan!I thought that you had previously mentioned that you don't plan on staying in the business, and that you had planned to open a recording studio or something like that?


You either love the business and have at it or, go find your real calling.


This is a tough business. I have seen some true talent fail.

[Fezz]

It is better to take the risk and fail than take no risk and continue down the same path!



I have seen both sides. Believe me.....failure can be devastating.

I think if someone is not truly dedicated to a particular business, why risk the failure? The failure rate for new business is staggering. A high percentage of the failure comes from people who LOVE there particular field, and still fail.

Our original poster doesn't have the capital to start a new business. Starting a business and turning a profit may take years. If the poster is underfunded now, how will he/she survive? And why take friends and family take the risk with you? If someone doesn't have the money, maybe it is not the right time. I have seen first hand what a toll failure can take on mental, physical, and emotional health. Failure is terrible.

[Audiyoda]

I thought that you had previously mentioned that you don't plan on staying in the business, and that you had planned to open a recording studio or something like that?


You either love the business and have at it or, go find your real calling.


This is a tough business. I have seen some true talent fail.
It's true my degree is in media arts and I'm pursuing my masters in digital media arts and technology. But...I am doing this soley because I see no further potential for myself if I'm working for the OD. I do love optical - I don't love what OD's (at least many in this market) have done to it. Opticians deserve better than living paycheck to paycheck while the doctor is wondering if he should buy his second Harley or get a 'Vette to go along with the Lexus and the soccer Mom's SUV. If I can own the business success or failure is on me and me alone. And I know from talking with countless patients, friends, friends of friends, and others that they'd like to see a higher-end dispensary that focuses on service in this area. I have 0 (zero) doubts I can make it happen - what I'm looking for is the process. What have others that were in this position done - success stories - failure stories (so I don't follow in those boots) - planning ideas - anything that will help me figure this out.

[Fezz]

Business 101:

1.) Develop and write a sound business plan. Do the research, analyze, formulate decisions and proceed with structuring the plan.
2.) Get educated on tax laws, business management, P&L statements, marketing, etc. Talk to your local S.C.O.R.E. chapter, take there course.
3.) Get enough cash reserve to support you for at least 3 years. Anything less is begging for failure.
4.) Debt is not your friend, avoid it at all costs.
5.) Get a back-up plan, better yet, get two back up plans. You will probably need them.

[Fezz]

And I know from talking with countless patients, friends, friends of friends, and others that they'd like to see a higher-end dispensary that focuses on service in this area.



I have heard this same thing over and over again. Everybody wants to see a nice, fancy, upscale, higher end optical....until they have to pay for glasses. Or, until they decide that they can't use there insurance at your joint, although they "want to", and go somewhere else. You mentioned that the other boutique, or higher end store is only 10 miles away. Thats not very far. Does the local demographics support two higher-end opticals?

[tmorse]

I have heard this same thing over and over again. Everybody wants to see a nice, fancy, upscale, higher end optical....until they have to pay for glasses. Or, until they decide that they can't use there insurance at your joint, although they "want to", and go somewhere else. You mentioned that the other boutique, or higher end store is only 10 miles away. Thats not very far. Does the local demographics support two higher-end opticals?

Fezz is right... and you friends will want their high-end frames purchases from you at a special discount. How will you handle that?

Even opening those high-end frome accounts can be problematic, too.

Most want a minimum number of pieces purchased, photos of your storefront and store interior, minimum distances from their earlier accounts, proven track record, payment for frames up front, etc.

Without these you won't even qualify for their high-end frame catalogue.

[harry888]

I agree with getting the part-time OD, but getting one straight out of optometry school is a mistake. Recent grads tend to be prima donnas and are pretty clueless with dispensing. You need someone to recommend A/R or a progressive when the patient is in the chair. New ODs just LOVE to treat pink eye, and that is not going to help your business at all if it takes away an exam that may buy the specs.

And new ODs aren't on many of the insurance plans yet, getting on Medicare can take 6 months. Took me 4 years.

Get someone who opened a private practice a distance away and needs extra hours or someone recently beat up by the chains. Frame reps are the best source for leads.

My story: Opened private practice cold, not busy full time. Went to private optician who wanted 2 full days. Told him "no", I'll do 3 half days, works better for you because you have coverage almost every other day. And I get to deduct mileage because I drive from job 1 to job 2 (I did the AM in my private practice). And I already was a provider for the worthwhile insurances.

We became good friends and we learned much from each other. After 5 years it ended because he died and the widow couldn't sell the store because the lease was month to month.

Harry

[DocInChina]

I think you have received some very sound advice. The cost for you to inventory upscale eyewear is prohibitive and most patients will opt to go to a location that accepts there insurance. It is possible to import branded product which would give your business the same look and feel as the brands you have in mind but for a lower cost as compared to bread and butter lines.

If you are only seeking a higher end client you might not have enough business to survive and certianly not enough capital. Borrowing money from friends and family sounds good on paper but if your business fails you have to pay back real dollars. If you are living paycheck to paycheck now, how can you manage paying them back? My suggestion is to find a way to supplement your income now and save that money until you can afford to fund the project yourself. If you are set on using your friends/family's money, have them become investors and not bankers.

Doc

[cocoisland58]

That's exactly what I was thinking. We have the Michigan College of Optometry about 50 miles north of here - I'm thiking I hire a forward thinking doc ready to work hard and have him/her rent their space for a $1/month and they can keep all the professional fees that directly reflect into eyewear sales. Professional fees that result in CL sales would be split say 50/50. I'd let the doc maintain the contacts and they can keep any revenue from those or split the revenue 75/25. But I want to keep the doc motivated - if they are recouping all the professional fees then it's their business and they are more likely to get out there and actively promote my business.

Michigan College of Optometry? Must be Ferris. A newly liscensed Optom can make more out of the chute working at a chain than you can offer. I would assume you want a moonlighter a day or two a week. That would be 70.00 per hour or more. A forward thinking young Optom will be thinking how much money he can make while saving to open a private practice. Even the retirees ask for the going rate. No doc is going to sit in the exam chair and wait for patients to make money. Would you? And you would be taking a huge chance opening up anything in MI right now. It is glutted with optical. Look how many have tried and failed in the last few years. All with the idea of "high end and unique". You might want to do some research on that. Buying an existing practice would be your best bet. I have someone who has wanted to bankroll me for years to open a private store. No way in this economy and with all the competition. Good luck.

[Johns]

Does this description of the location of your possible optical sound like the kind of place that can support ONE, let alone TWO, high end opticals?

... but Michigan is about as bad as it gets for jobs - optical or otherwise.


If it's a hard place to get and/or keep a job, where is all this cash going to come from ?

[pinto]

Where in Michigan are you located?

[Audiyoda]

DocInChina - I have a number of contacts that do higher-end (wouldn't call their product true high end - but unique and not commonly available in the area) and in talking with them a number have indicated a willingness to consign product if the numbers are right.

Johns - The other high-end shop has done a fabulous job of insulting a good number of people in the area. They live and breath on their reputation within a sector of the community (aka - people who know they have money are have no problem telling anyone willing to listen) - I want the people that want a unique look but don't want the atitude they get from this particular shop. So I guess when I'm saying 'high-end' I am more referring to a look than a price tag.

Cocoisland58 - Great points about new grads. But I don't think there is the glut you think there is - at least not here in West Michigan. I think a shop that markets itself well within it's given community and has the product to back it up has a chance when the area competition is not taking advantage of the area's demographics. I drive through this community every day and see the neighborhoods and how people live and the toys they have. There is money in this particular community - and as far as I know, I would be the only shop where the owner lives in the neighborhood. And I know that this community values that atribute simply by looking at the shops in the area that are successful.

Pinto - West Michigan.

[DocInChina]

DocInChina - I have a number of contacts that do higher-end (wouldn't call their product true high end - but unique and not commonly available in the area) and in talking with them a number have indicated a willingness to consign product if the numbers are right.

If you can do consignment and swap out product as needed, and you think it will sell then the risk is lower than we have been speaking about. If you decide to move forward and would like advice, pm me and I will see how I can help you.

Doc

[35oldguy]

I have read everyone posts. Making a sound business plan in writing is a necessity!

A lot of good advice out there! If you are tired of working for the other man, he is driving his mercedes etc., why not take the plunge! Stop making him successful! Become successful yourself like a lot of other people who have offered their advices. Unless you yourself take the risk then you will not ever find out if you can do it or not. Many businesses fail within the first 5 years. A lot is at stake, but if you research your project and make the right decisions you could possibly become successful. If you continue working for the other then you will never know!

Business 101:

1.) Develop and write a sound business plan. Do the research, analyze, formulate decisions and proceed with structuring the plan.
2.) Get educated on tax laws, business management, P&L statements, marketing, etc. Talk to your local S.C.O.R.E. chapter, take there course.
3.) Get enough cash reserve to support you for at least 3 years. Anything less is begging for failure.
4.) Debt is not your friend, avoid it at all costs.
5.) Get a back-up plan, better yet, get two back up plans. You will probably need them.

[a1vo]

good and bad about go high end

good - good $$ per sale

bad - few(er) unit sold
more initial capital $$ tie to your inventory (i.e. frames)
more investment to dress up your store front

just my 2cents

[Johns]

If you can do consignment and swap out product as needed, and you think it will sell then the risk is lower than we have been speaking about. Doc

Hign end, designer consignments ?

I'm not a fan of consignment, but even if you were to go this route, how manyn cutting edge, trendy frame companies are going to let you hold on to their product, no money down, while you start up your practice?

[Audiyoda]

Hign end, designer consignments ?

I'm not a fan of consignment, but even if you were to go this route, how manyn cutting edge, trendy frame companies are going to let you hold on to their product, no money down, while you start up your practice?
Actually, I've gotten commitments from five reps that I know. Some are dependant on numbers (carrying say 70+ frames), others are consigned for XX months - after that extended billing. These reps are all friends of mine - two of them are going to do this out of their pocket - so if by some chance this fails they can take what is theirs and sell it to existing accounts.

Again, I would say more designer looks, not the high-end prices (although two lines are boutique lines). But all of these companies what a presence in the area - something they don't have right now.

[Chris Ryser]

Actually, I've gotten commitments from five reps that I know. Some are dependant on numbers (carrying say 70+ frames), others are consigned for XX months - after that extended billing. These reps are all friends of mine - two of them are going to do this out of their pocket - so if by some chance this fails they can take what is theirs and sell it to existing accounts.


Reps do work for a frame company, and it is only the company owner or GM that can make the final decision. The reps might set you up for consignments but if there is movement in the inventory and no payments arriving at the frame company they will come one after another and remove the stock in your store.

On consignments you have to turn over certain numbers of dollars and frame and also pay for them or it is not worth the investment for the company who has to pay for what they have and sell.

A new store is usually slow and you will have a hard time to move the stock from 5 companies the way they expect you to.

I have the impression that you put the financing 100% on the shoulders of others, and that is a dangerous venture. Banks have a habit of not to lend any money to a business before you have survived a full 5 years.

Specially these days where we all seem to be sliding into a recession and maybe even a depression money will get scarce.


I have seen both sides. Believe me.....failure can be devastating.


:hammer: :hammer: :finger:

[35oldguy]

"Build your dreams, before somebody hires you to build theirs!"

Yes their is always a risk! In Michigan around Grand Rapids I am sure their will be plenty of competition, but believe me competition is good for business! In hard times historically people buy eyeglasses so do not let that stop you from going after your dreams of becoming successful!

quote=Fezz;175618]I have seen both sides. Believe me.....failure can be devastating.

I think if someone is not truly dedicated to a particular business, why risk the failure? The failure rate for new business is staggering. A high percentage of the failure comes from people who LOVE there particular field, and still fail.

Our original poster doesn't have the capital to start a new business. Starting a business and turning a profit may take years. If the poster is underfunded now, how will he/she survive? And why take friends and family take the risk with you? If someone doesn't have the money, maybe it is not the right time. I have seen first hand what a toll failure can take on mental, physical, and emotional health. Failure is terrible.[/quote]

[Bill West]

Low rent....advertise cheap.... have a good selection of frames from say $29 to $200....CHEAP GETS THEM IN....people will spend what they have or get what they want....never try to oversale....they know how much they have, don't talk too much they don't come in to hear you talk.Later when you get busy you won't have time to just talk. Stick to basic's they know very little about what they are doing.
Be totally honest with them.. Don't worry about competition it will alwys be there. Do your own thing. If you do it right it will work on the other hand do it wrong you flop.
Word of mouth is the best advertising period. Makes you or breaks you.
I have started 11 stores and never had a bad one.
Never depend on reps to make your business work, never share anything with them, they love to blab.
e-mail me for a source of frames at prices you won't believe, I will share with you privetly and offer tips.
Give up the idea that you can make it big on "high end", can't happen.
I will say it again"you must be dumber than a brick to fail at retail opticial".