Discussion in 'Picture Framing Business Issues' started by Paul Cascio, Jun 22, 2008.
That's funny! I keep hearing from everyone else that it's George W's fault.
I agree by the way.
Our corner store near the shop is at $3.69 from $3.89. Most places have dropped to $3.79 in the last couple days. We have been averaging $3.89 at most places here in the Montgomery area the last few weeks.
HMMM well at least half of your original thoughts were right. Gas is lower but consumer confidence is still in the toilet.
I agree. Who would have imagined that gas prices are nearing $2.00/gallon and it wouldn't be enough to boost consumer confidence? Wow.
It is hard to be confident, when even though you are not personally feeling the effects of the economic crisis... the news tells you every day that things are getting worse and worse, thus creating a tighter hold on ones money "just in case".
Looks like I called that one.
On the money Jeff. What else does your crystal ball show?
If gas stays around $2.00 gallon for awhile, consumer confidence will rise. Also, there will be $700 to $850 billion dollars going into the economy soon.
In time, the banks will start lending again and if the Federal Reserve keeps interest rates low, it's bound to have a positive impact on the economy and consumer confidence.
I'm thinking positive, and actively looking for stocks to buy in anticipation of a expanding economy next year.
just saw on the am news---somwhere in colorado(i think)) gas is selling for UNDER $2.00 !!!!!!!!!!!!!!!!!!! now THAT'S crazy! I'm in tampa, which has a MAJOR tank farm in the port area for that stuff(as in we get it 1st) and the 'going' rate is between 2.45 and 2.89---go figure:shrug:
Actually it's more like $700-$850 billion going into banks and financial institutions. Whether it comes back out again into the general economy is anyone's guess. Turns out the bailout plan doesn't actually have a mandate that banks lend the money out, and I just saw a story about how the White House is asking pretty please if the banks could start lending again...
Seems to me the Feds would have been better guaranteeing the next $800M in loans, rather than giving it to the banks and hoping they lend it back out.
Well Paul here is my opinion on the general state of the economy. Things will continue to get worse from here. State govetnments are having huge budget shotfalls. These shortfalls are going to force them to raise taxes at the same time that the fed (if demecrat is elected) are also going to be raising taxes.
My plan is to sell off as much inventory as possible. I opened this business just one year ago with full knowledge of how bad the economy would get. I opened with an exit strategy. I set aside $3,000 for a going out of business sale before I opened. I am currently selling down inventory without replacing anything that is not essential.
The major retailers will be selling everthing under the sun for 60-70% off this Christmas season and I want to get to the consumers pockets before they do. Many here have seen my prices but I'm in an area with hudreds of garage framers so I figure I can crush them on price, service and quality.
We all need to be proactive and try to sell what we own already before selling special order items. I can replace 95% of my inventory at a lower price than what I paid previously.
Chops are nice and convenient but if a store had to go out of business they would have nothing to sell off. This is the time for stores to look at buying staple moulding in length or by the box.
Should I decide to run a going out of business sale I will sell all of my moulding at $3 per foot and still keep my cost of materials at about 15%. My average moulding width is 3". I have close to 40,000' and 3 or 4 thousand mat boards as well. I have allowed my framed art to dwindle down to the 500 piece range and am only reprinting items that I know are strong sellers.
I had to close 2 stores during the last housing recession and went home with nothing but bills to pay. That won't happen again. Should I decide to close again I will go home with about a quarter million in my pocket. I rent 3 spaces with no leases on them so I can do anything I want.
I planned this business as a throw away business and sell framing as a comodity. My exit strategy is what I built the business around. A couple of months ago I bought the restaurant next door with the same strategy. I paid less for the business than what I could sell the used equipment for. There are no employees at either business so everything is very simple.
My sugestion is that framers don't wait through Christmas to see whether or not they are going to survive. Be proactive and promote what you own. Use any spare time to cut leftovers into ready made frmaes. Offer paper mat to customers that are framing junk such as posters. Buy some generic glass to offer for less important pieces.
The most common question I get from my customers is "Do you have any idea how much M's (my closest competitor) wanted for this job. Usually 2 or 3 times my price. Most customers have 2 or 3 estimates before they get to me. Average design time is less than 5 minutes because of a one price sale. I have customers drive an hour to get to me because I publish my package prices in my ads.
Prepare for this like huricaine Ike is aimed at you and you only have until Christmas to have it all gone.
So you are the sole employee at BOTH businesses, one of which has made a $250,000 net profit in one year? Just want to make sure I'm understanding correctly.
David, just me and the wife. I stated in an earlier post that I will pay no taxes because this is the first year the business has been open and I spent a ton of cash setting it up. The Obama plan will send me a rebate.
Jeff, I guess I'm a little confused too. When you say "I planned this business as a throw away business" and "I opened this business just one year ago with full knowledge of how bad the economy would get. I opened with an exit strategy." it sounds like you are saying you didn't plan on it succeeding. That you opened expecting it to fail. Wouldn't it have been better to just put the money into Treasury bonds?
And when you say "I will pay no taxes because this is the first year the business has been open and I spent a ton of cash setting it up," that sounds to me like you are saying you have not had a positive return on investment, or at least not enough of a positive ROI to trigger any tax obligations.
And I guess I'm confused about the advice to buy a lot of inventory so we can sell it off at a steep discount when we go out of business. "Chops are nice and convenient but if a store had to go out of business they would have nothing to sell off. This is the time for stores to look at buying staple moulding in length or by the box." That doesn't sound like an effective use of capital, spending a lot of money today, so that when I go out of business, I can get some of it back, pennies on the dollar, in a clearance sale. I certainly don't see how that's preferable to ordering chops or short length -- orders that are only placed by me when a customer places a frame order.
Check the sale on my website. My cost of materials at these prices are currently running 12%. Business has not been anything spectacular just provides employment.
I knew there was a very strong possibility that a large percentage of small businesses would fail in these years and the worst is yet to come. Yes I could earn 4% on treasuries but this way I will quadruple my money in the same amount of time.
This is a hard economy especially in a tourist town. I have no leases but only choices. The last time I was responsible for several families that depended on my business providing them with a pay check.
No business should ever open without an exit strategy and I don't mean bankruptcy. We all need to imagine the scenario of our businesses failing and find a way to make that a positive thing. I am prepared for what is yet to come in this economy.
Well, I don't claim to have any answers, but I'm sure glad my business isn't based on selling framing at rock-bottom prices to people whose price point is $120 and under. That's completely disappeared. Those customers don't have any money to spend, no matter how cheap the framing is. Over the past two months, almost all my sales have been higher ticket jobs ($250 and up), and I've sold almost no $49 to $89 poster package jobs. Nobody has even come in looking for that kind of stuff.
Well Paul, my customers come from the Grande Dunes (1-5 million homes, Pawleys Island, Murrels Inlet, Surfside Beach, Sunset Beach, Ocean Isle Beach etc.). These are the folks that are used to paying $400-$800 per pice for framing until their investments crashed. Now they all tell me they are looking to hang something on the wall and the other shops all act like they are framing a Picasso original.
Had one today in a roughly $600k home that bought readymades at M's for $17 each and wanted just mats cut. She is returning the ready mades. $250 job that will take 45 minutes to complete. Next one owns a very high dollar business w/ 3 pieces. 30 minute job for $180.
I do conservation framing as well and my prices for mat, glass etc. is very similar to prices posted in price checks but my moulding is so much less expensive that they still save 1 or 2 hundred dollars.
It is very common for someone an hour away to come to have something framed. I do it while they wait and have lunch next door at our restaurant. My customers are actively scrounging all the things they didn't have framed over the years because the items did not warrant 3 or 4 hundred dollar frames. One customer started with 3 pieces and in 3 months framed 35.
I have hundreds of garage framers as my competition. They are dropping like flies. People would really prefer to use an actual business but the industry has forced them to go underground.
Jeff, I've got to get dowm there to see you. You've got a really pessimistic view of micro business, but I guess you're hardly ever disappointed. I've got slightly higher expectations for the future. If you're right, we are going to have a few years of very hard times. My situation is probably worse because I have employees (7currently) who've been with me at least 12 years and one 28 years. I've got a strong obligation to them to keep this show running so cashing out isn't an option for me.
I love your web sight. It gets right to the point. BTW, I just checked and your prices are right in line with our Outlet prices, slightly lower than the Frame Works. Both stores are looking for areas where we can lower prices further. I know in my bones that survival is going to depend on low prices. BUt why exit if you can churn your inventory as quickly as you suggest? Just keep buying and churning. We're redoing our web sight and I'm going to lift some ideas from yours for the Outlet.
Paul, the $120 and under price point hasn't disappeared here. It's the bread and butter of the Frame Outlet and currently, the Outlet is outperforming the Frame Works (more upscale). Lower priced framing is keeping this show going. If you buy in quantity, you can sell framing to price sensitive customers (as Jeff is demonstrating) and these days that's all customers.
My advice is be nimble, take opportunities when they present themselves, don't be tied to a particular strategy.
You hit my point right on the head. I opened one year ago with full knowledge of the economy and that is why I don't have any employees. I would love to provide for many families but am afraid that the future may not be rosie.
As far as churning moulding, I will do it for as long as I can get them coming in the door. Moulding can be replaced in 1 or 2 days and it keeps getting less expensive right now. When the economy levels off I will have to make some decisions about employees.
I do miss how rewarding it is to frame that one of a kind incredible design but I really like having people walk through the doors throwing fifties at me. I would like to have them throw $500 bills at me but I am in protected mode right now.
I hope you get a chance to pop in some time.
I've never heard of opening up a business, that you could "throw away".
It would seem that type of business would be doomed to fail.
The only way a business makes a profit and stays in business, is if the owner puts his heart and soul into it, and never gives up. IMHO
I was betting that the economy would continue to get worse. I did not hire antbody that would later be in jepordy of losing their job. I live a very modest life style and know what it takes to continue that.
Bill, in the past I was a manufacturers rep for mens clothing and learned that many small businesses become a huge success during the "GOING OUT OF BUSINESS SALE". There are companies that actually come in and finance these things because they are so successful. Part of my intent was that I don't want to work that hard right now but would be glad to step up and be the hardest working framer in the country if I saw that it was going to be sustainable (economic recovery).
Until the recovery I would rather not put too much at risk. I have anywhere between 2-5 other individuals (family) that rely on me 100% for their survival. I have been dealing with selling a couple of houses (lawsuit on one that has cost over 50k), my mother's near death and rehab and GeAnn's father who should be dead from cancer within a couple of weeks. The shop opened last Thansgiving so there was no Christmas for us. I have spent 1 1/2 months out of state this year alone and GeAnn has no framing background. I am in a safe place in my business but as things change I am able to react very quickly.
In the meantime if someone wants to step up and match my investment, give me a modest salary, include health insurance, add 1 full time employee and take over the book work I would gladly partner up and set the world on fire.
I've heard of throw away businesses. I seen a number come and go. They are usually started by realtors or attorneys or their spouses as tax shelters. They can lose money and use that as a deduction. Usually they last less than 5 years since after that you have to show some profit or the IRS starts to look into things and declares them "hobbies", which means they would owe back taxes.
So what am I then? Am I a Realtor? Nope, I turned that license in in 2002 because of what they were about to do to this economy. They are 90% responsible for all of the pain we are feeling right now. Those shady deals that inflated the value of your home (with 100's of thousands of dollars in cash being passed back to the buyers under the table) only to crash the value once everybody jumped on board.
Am I an attorney, nope never got a license but wrote and taught those courses for years and quit 5 years ago because again nobody actually cared about the law once they passed an exam or continuing education requirement. The Govt agencies that were supposed to protect you told me they couldn't concern themselves with the protection of the consumer because they had devoted all of their staff to counting money and processing liccense applications.
I am just one guy who tried to make a difference and was scoffed at by the Govt and homebuyers/owners that thought this ride would last forever. I was the guy telling everybody that this ride ends by hitting a brick wall and then the wall will topple over onto the innocent victims that did the right thing.
Some of my areas of expertise are Civil Rights Law, Fair Housing and Consumer Protection. There is very little that has to do with real estate and mortgage that I would not be considered an epert. The reason the lenders did this is because the consumers got greedy and were begging to be taken advatage of during the boom. Without the consumer participation the housing industry would never had gotten here.
When it all washes out there will be a couple million people in jail over what has taken place. When any loan defaults it is audited for fraud and trust me there was as much consumer fraud as there was professional. My advice to consumers is that if you had anything shady going on in the purchase or refinance of your home, don't let it go into default because the FBI intends to put you in jail because you harmed the rest of the country by doing so.
Also forgot to mention that I turned in my Mortgage licenses in 2003.
Jeff, go back and read my post again. I wasn't referring to you but to some local people I know. I knew I should have put a disclaimer on it that this wasn't about you. Your situation is different!
Sorry Anne and you are right in many cases that is what they are used as. I am and always have been a framer that moved in and out of the industry chasing a better living.
The last time I re-entered this industry was during a divorce and I was taking 3 different blood pressure medicatins to keep my pressure at 150/110. I ended up in the hospital with my pressure at 225/128 and they thought I was having a stroke in my early 40s.
That is when I realized I would rather work for meager wages than be dead. I no longer take any medication and my pressure reamains at 115/85. I guess you could say that framing saved my life.
Then you owe Framing an apology, Jeff. Give back what it gave to you.
I try to do just that. I love framing and the customers as well as Grumbler friends. I know that to many I come off as a total A hole. Many Grumblers have met me personally or contacted me directly for assistance and know that I am a nice guy.
I have been jaded by life and try to protect myself as much as possible because of personal experiences.
Thanks for making me consider that Vickie.
Our average ticket is lower than a couple of months ago and the $120. frame job is common here. Without the lower end option, I'm not sure what we would do. I believe this will be a long haul but the optimist in me is hoping for a decent December and a lift after the election, no matter who wins.
You know Paul, I've seen 31 years of ups and downs in the framing business and I have never seen anything like the last two months. Here in my part of the Bay Area there is no consumer confidence. Maybe the upscale shops are doing better, I don't know. When I took a repair into the usually crowded Apple store a couple of weeks ago there was only one register manned. :shrug: Is everyone home watching cable news?
I'm doing more poster specials, and the $120.00 frame job is more common than the $400.00 frame job.
People are watching their pennies, but still getting things framed.
We have a large military presence in our area, and a Master Navy Jet Base 3 miles from my shop which pumps 250 million in wages into the area a year.
I think the stability of the military wages helps keep our local economy insulated from major downturns, even in these uncertain times.
Here's whats going on at our shop:
5 PM today, a customer calls to see if we can still cut a mat before 6PM
She and a friend arrive at 5:15. A half hour of design time is spent agonizing over the price of the mats, how to ship the matted pieces, and so on. At 5:45 they decide on two $25. ready made frames, about 9 x 12, with regular glass and no mats. While two employees rush to slap their xeroxed art into the frames, I chat them up. They leave at 6PM with extra cardboard, bubble wrap, and with great delight, thank me and say they will be back. They are bowled over by the service.
I made no money on that sale. I had to pay two staff members for 45 minutes of time to design, price and assemble two ready mades previously made from scrap on shop time. Put my time in for free, and you have a wash.The employees were there anyway, so I threw in fitting for free, was glad for the last extra sale today, and I put them on the newsletter list, but it was only worth it in goodwill.
We always get customers like this, they are always delighted, and they hopefully come back, but we could not stay in business if all our sales were like this one. It just seems like more and more people are carefully weighing price options before they purchase.
It's exactly the opposite with me. I've had almost no poster special jobs over the past 2 months. Almost all the jobs that have come in have been $250 or more. My October sales were pretty much equal to October 2007, and my September sales were pretty comparable to September 2007, if you remove one oddball sale. On the other hand, traffic into the store pretty much shut down two weeks ago, and I only have 4 jobs on my to-be-done list. I'm hoping that's due to the end of the month, and the election, and that it's not a trend.
Well if the election goes the way the media is calling it we should expect a huge run up in the price of oil very quickly.
Its a shame because I know everybody was enjoying a breather for a minute.
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