If you’re thinking of starting your own upscale resale clothing business you need to ask yourself candidly — Do you want to be successful and profitable like a Major League baseball team? Or do you want to operate like you’re in the minor leagues? Looking at it another way, do you want all your time and effort to be rewarded like a Grammy-winning recording artist or like a singer in a local bar? This may sound overly dramatic, but it highlights your future paths as an owner of an upscale retail business.
If you ultimately want to be financially successful running your own upscale-resale store — and not simply take a “Hail Mary” shot at success or wind up running a side hobby shop — you need a serious upfront investment; a detailed business plan; and experienced guidance along the way.
THE GO IT ALONE TEASE
All too often people decide to go it alone when opening a resale shop. They are attracted to a no minimum investment requirement, no franchise parent oversight, and full autonomy to do whatever they want in all aspects of the business. This sounds exciting and wonderful as a concept or on paper, but all too often leads to a very challenging journey. Typically, it is a road fraught with unnecessary recurring stress, expensive lessons, years to achieve profitability (if profitability is achieved at all) and sub-optimal returns over the long haul — for the few that actually make it for the long-haul.
For those Mom & Pops that do survive going it alone in resale, gross revenues for the typical store (defined as revenues before deducting all inventory acquisition and store operating costs) usually average $150,000 – $300,000 within 3–5 years. This compares with a range of $500,000 – $1,750,000 for NTY Franchise Company’s leading Clothes Mentor (women’s upscale/resale clothing, shoes and accessories) brand over the same time frame.
Looking beyond the vast difference in annual gross revenue generation potential; gross margins for Mom & Pop resellers (The critical measure in determining a retailer’s performance; defined as gross revenues less cost of inventory acquisition divided by gross revenues) typically averages 25–35 percent. This compares to 65 percent across the vast majority of upscale resale Clothes Mentor units.
UPSCALE RESALE: A BETTER WAY
The glaring differences above are the key reasons why – after doing their homework — so many people chose NTY Franchise Company as their partner in owning an upscale resale shop. NTY’s senior leadership team has well more than a combined 100 years of experience in resale — that’s right — more than a century of direct experience in this unique business. They work with franchisees at every stage of establishing one of its brands including Research & Discovery; Business Planning & Budgeting; Store Location & Leasing; Financing, Design & Build-out; Point of Service Software & Systems — as well as Coaching, Managing, and Marketing.
SO HOW MUCH IS NEEDED AND WHAT DO YOU GET?
NTY knows it takes money to make money. That is why the initial required investment for their Clothes Mentor concept ranges from $225,000 – $350,000; with the average running around $300,000 of late.
Before you freak out, realize that by utilizing an SBA backed small business loan with securitized collateral (securities holdings, 401k, home equity, etc.) you will only need about 25–30 percent of the required investment down in cash. That would equate to about $85,000 for the $300,000 cost to launch a typical Clothes Mentor.
The beauty of the 25–30 percent in cash dynamic is that — once the business is up and running — you’re then paying back the loan with cash flow out of the business while your other assets and investments remain intact, continuing to earn returns on their own. That’s a very low “cash on cash” investment to generate the sort of long-term returns possible in the business.
The initial required investment figure covers critically important items such as Leasehold Improvements; Fixtures & Supplies; Inventory Acquisition; Pre-opening Expenses; POS Systems; Several months’ worth of Operating Funds “runway”; Initial Franchise Fee; and Licenses.
“You have to decide upfront if you are in this to play or win,” says James Wollman, Vice President of Franchising at NTY Franchise Company. “As we get older, our time becomes more valuable; with less time for learning curves, rookie mistakes, and yes — failures. We at NTY realize this and have the tools and infrastructure in place to rapidly bring you up the learning curve to generating sustainable, attractive, and — if desired — scalable returns.”
In addition to working with you throughout the entire discovery through the launch (and beyond) process of establishing a successful franchise brand like Clothes Mentor, NTY’s well-proven business model is centered on a cloud-based computer system. This allows store owners to continuously acquire and price store inventory with dynamic market intelligence that reflects both national and local trends. Importantly, the cloud-based system also allows owners to monitor all performance aspects of their business in real-time remotely; freeing up time for them to pursue other interests while scaling their investment into a portfolio of units if one desires scale.
“It all boils down to this,” says Wollman, “You have to decide right up front if you want to be a day-in, day-out shopkeeper in the trenches; one who works for years all day in the store working to cobble together the right pieces of the puzzle to make your grassroots resale store viable. Or, if you want to be a sophisticated businessperson running a high-revenue, high-margin, sustainable and well-scalable enterprise built on the unique combination of a bedrock foundation with a century of experience along with the latest technology.”
ABOUT NTY FRANCHISE COMPANY
Founded in 2006 and Located in Minnetonka, Minnesota, NTY Franchise Company is one of the largest forces in the rapidly growing category of upscale resale. It is the umbrella organization for three proven national resale clothing franchise brands: Clothes Mentor (women’s designer clothing franchise); Children’s Orchard (kids clothing franchise); and NTY Clothing Exchange (teens and young adults clothing franchise).
NTY also has two other successful national franchise concepts: Device Pitstop (electronics repair and resale franchise).
To learn more about franchising a Clothes Mentor — or about NTY Franchise Company and the other lucrative opportunities in upscale resale franchising — explore our main page or feel free to give us a call (952)-923-1223.