Where to place your Thrift Store & other consideratons...

I’ve talked in previous blogs about why non-profits should consider getting involved in business enterprise to take some of the pressure off the donation side of their ministries and at the same time show supporters that they are capable and willing to provide some of their own financial needs, and at the same time, provide a valuable service to

their community.

I’ve suggested that one of the very viable possibilities for business enterprise is the thrift industry and have suggested some of the things involved in starting a non-profit or thrift store business and making it stand out. I’d like to build on that theme a little further by addressing the issue of where one would start such a business and what some of the important considerations are in acquiring a site.

Property Search

Many organizations will lack the skills internally to do a proper search and many realtors are not familiar enough with the thrift industry to be effective in their search. Don’t be afraid to seek professional help, it will pay off later down the road. Things to be considered in your search are:

  • Competition currently in the market

  • Visibility and synergy

  • Traffic – access and egress

  • Convenience for donations

  • Size of space & amount of renovation required

  • Market demographics

Lease or Buy? These are things that must be clearly understood and defined prior to beginning your search and will be very helpful for a realtor to effectively assist you. To start out you should be looking to lease rather buy. Purchase options are good if you can get them included in the lease agreement and at the right price and timing.

Once you’ve done all your due diligence and have found that right spot, make sure you get a building inspection so that you are aware, as you negotiate the lease, exactly what to expect from the building you’ve selected.

Lease Negotiations

The lease negotiations are next. Make sure you involve your legal counsel in this step of the process. You don’t want to be paying more than $8.00 to $9.00 per square foot gross, you want a three year term on the front end of the lease that leads into the opportunity to renew with perhaps three five year terms after the first term. I have even negotiated leases where if we didn’t hit our financial projections in the first eighteen months we would be able to get out of the lease. Also, make sure that you are not responsible for any exterior maintenance and/or replacement on the building including the rooftop HVAC units.

Building Structure & Floor Plan

Part of the lease negotiation will be the build-out/renovation of the space and it’s your goal to get the landlord to do as much as possible. There will be a need for a back room for receipt of donations, sorting, cleaning and tagging of the goods before they go to the floor. This area should usually amount to roughly 15 to 20% of the overall space leaving 80 to 85% for the sales floor. You will also need dressing rooms, office and storage for cleaning supplies. You may also need to meet new restroom requirements that didn’t exist for the previous tenant.

The layout of the sales floor is critical to making the store feel welcoming when customers arrive and comfortable while they shop. The more comfortable they feel, the longer they stay and the more they buy. You’ll need help with this portion of the project as well as the décor and the communication to your neighbors near the store of who you are and what you do.

Merchandising & Community

Then of course there is the purchase of shelving, racks, cash registers and all the supplies that will be needed to operate the store not to mention developing the strategy for stocking the store and insuring adequate ongoing donations to keep the store stocked. Thrift stores should never look sparse and should have fresh merchandise coming in every week. Developing community, business and church relationships will help immensely in getting the store started and keeping it viable.

There is a lot of work to getting a thrift store up and running and it’s important that you have good council so that it’s done correctly. If done correctly, the payback of your start-up cost should be between 1 ½ and 2 years, with profits that will continue to grow and serve your non-profit for many years to come.

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