Reading "How to Open a Small and Charming Store"
The above picture was drawn by Wenxin Yiyan of Baidu using the title of this book, “How to Open a Small and Charming Store”, as a prompt. I feel it doesn’t accurately convey the meaning of the title, but it’s quite interesting, so I put it here.
I started reading this book in August and read it off and on for two months, finally finishing it at the end of September.
I got my house the year before last and started renovating it in October of that year. During the renovation, I found that there was no decent fruit store near the new community, so I had the idea of opening a fruit store. Although it didn’t come to fruition later, the thought of opening a store has always been in my mind. That’s why I was eager to read this book when I saw it.
My wife really wanted to open a dry - cleaning store at that time. I thought the investment was a bit large, so we didn’t actually do it. As it turns out, a dry - cleaning store really opened downstairs in our community this year. Looking at it now, the business seems to be quite good. I feel like I missed a great opportunity to make money…
Judging from the book, the author should have opened many stores. Before publishing the book, the author should have had quite a few fans on Ximalaya and Knowledge Planet.
Should You Franchise When Opening a Store?
The author doesn’t support franchising.
Franchising a small brand has little effect on increasing the success rate of opening a store, while franchising a big brand comes with a high cost.
The author believes that franchising, originally a brand - expansion method and an enabling system, is now increasingly being used by manufacturers to turn enabling into exploitation, or even fraud. And these franchising companies are good at disguising themselves.
The author mentioned that franchised stores keep the costs of equipment, supplies, and raw materials high. Because franchise contracts often require franchisees to purchase these supplies only from the headquarters in the name of quality control, but the prices offered by the headquarters are much higher than the market prices. What’s more, the contract may also stipulate the purchase frequency, for example, a certain amount of raw materials should be purchased every 10 days. If your store has poor business and can’t sell the products, but you still have to purchase raw materials from the headquarters at a high price on time and in the required quantity, it’s almost a sure - fire way to fail.
Not Failing is the First Goal of Opening a Store
The author believes that the first goal of opening a store is not to make how much money, but not to lose money. This is probably different from what many people think.
There is a case in the book. A boss took out a loan to franchise a Malatang (a popular spicy - hot pot - like food) store. More than a month after opening, the store was losing money every day. The boss was very depressed and was already hesitating whether to transfer the store.
In this case, the boss was opening a store for the first time and had a low tolerance for losses. Coupled with the fact that he opened the store with a loan, he was even more anxious.
I had a very similar case around me.
A few years ago, a relative opened a store selling goldfish, mainly selling various goldfish and also selling some fish tanks and the like. Although they didn’t open the store with a loan, opening this store almost used up all their savings. And at that time, they had just started paying the mortgage, so the pressure was also great.
The business was quite good in the first month after opening, and they could earn a lot of money every day. But from the second month on, they almost lost money every day. They quickly became very anxious because not only was the loss on the books increasing every day, but they also invested two people’s efforts, which was equivalent to losing two salaries at home.
The store was closed after about six months, mainly because of the daily losses, and the psychological pressure was too great.
So, generally speaking, especially for beginners and in the early stage of opening a store, not failing (not losing money) should indeed be the first goal of opening a store.
The 80 - point Location - selection Strategy
The author dedicated a chapter in the book to elaborating in detail on how to select a location. It was very detailed. If I really want to open a store someday, I should read that chapter again.
The author finally summarized an 80 - point location - selection strategy in total. He listed 7 factors that should be considered in location - selection, and then asked readers to choose 5 of them according to their actual situations and assign a proportion to each factor. For example: (1) * 30%+(2) * 10%+(3) * 40%+(4) * 10%+(5) * 10% = 100%. As long as the final score of a location is more than 80 points, it’s a good location.
The specific 7 factors are as follows:
- Whether it exceeds the investment budget
- The size of the flow of target customers and their consumption potential
- The level of operating costs
- The intensity of competition
- Contract terms
- The investment return period
- Other possible criteria
Three Things to Do Well During the New - store Preparation Period
The author defines the new - store preparation period as the time from when the store location is determined to the trial operation.
The three things refer to decoration, equipment and supply procurement, and market pre - heating.
Regarding decoration, the author specifically mentioned that if you hire a decoration company or a decoration team, you should let them make some profit. Don’t try to push down the price desperately. Only a win - win situation can lead to a pleasant cooperation. Otherwise, there will definitely be conflicts in the end. I have a deep understanding of this because I started renovating my new house in October the year before last and experienced a lot of similar things.
How to Understand the Operation of a Store
The author presents the view of understanding the operation of a store from three perspectives: the functional components of the store, traffic, and profitability.
For a novice like me, this part was really eye - opening. It was very detailed and comprehensive. From the perspective of profitability, the author mentioned a saying: Money is saved from trifles. And told a real case of Yoshinoya.
Yoshinoya got a new general manager in 2020. He wanted to cancel the tray paper (a low - value consumable). Although each piece of tray paper is only about 10 cents, canceling this paper can save 500,000 yuan a year, which is equivalent to earning an extra 500,000 yuan a year.
The day before yesterday, I went to have a meal at Lao Xiang Ji with my wife. I found that Lao Xiang Ji also used tray paper, so I told my wife about this case in the book. She didn’t agree with this view as much as I did. She thought that the tray paper could beautify the tray and also had a certain promotional effect.
But I don’t think so. The trays can be purchased to be relatively beautiful when buying. As for the promotional effect, to be honest, when we go to places like Lao Xiang Ji or KFC to eat, how often do we really look closely at the content on the tray paper?
Overall, I highly recommend this book. Even if you don’t plan to open a store, it’s still worth reading, just as a storybook.