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Furniture Business - good or bad to get into?

I am looking for a good retail business to start and I'm looking into the furniture business. I see many furniture stores for sale with an impressive cash flow of $500k - $1m+. My issue is this: over time (not just in the current economy) it seems like furniture businesses are the ones frequently going out of business and holding store closing / liquidation sales. Anyone have experience or knowledge of the furniture business? Is it considered a riskier investment than most? Are the ones with these impressive cash flows rare?

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Answers (6)
Paul E
Front Line Plans
Business Plans for Entrepreneurs
Westchester County, NY

I served 17 years as VP of an upscale furniture chain. That was during the GOOD times and it was a very tough business. The flagship store at that time did over 10 MIll a year. That same store is now doing around 4 MIll.

Everyone here has said basicaly the same thing. It is a big cash flow business BUT a very big expense business. Retail floor pace required is outrageous, floor samples, besides deliverable inventory, is a huge capital cost. It is also seasonal, although most would not think that, so you need strong cash reserve for the off seasons.

The upscale stores are at about half the volume of a few years ago and the margin is very squeezed. The one company that is doing well is "BOB'S". That is a low priced high volume chain. You either have to go that route or VERY hi end in a VERY upscale area to have a chance.

On the other hand, you can probably pick up a distressed store at a bargain and might be able to renegotiate the lease and try to hang on till it all turns around.

The one good part is that you do have a unique cash flow situation. You collect 40% to 50% deposits on special orders. Assuming you have terms with the suppliers you can collect the deposit prior to ordering and the balance prior to paying the invoice. if any questions

Jul 24, 2010
Buy-a- Company

I have/had family/friends in the business. It is a tough business. Warren Buffet's company is big-boxing the smaller stores to bankruptcy. The manufacturers give better pricing to the big chains, and is makes it tough to compete. Your friends will think you overcharged them, because they can buy the same thing at a big store for less than you paid for it wholesale.

Plus, the furniture stores are dead right now, with high rents and few buyers. Manufacturers have gone bk, leaving the stores in limbo.

Not the best of businesses to enter, imho. But, then again, I am partial to highly efficient business models, with no bricks, mortar, employees, chemicals, etc.

Jul 24, 2010
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k b

Because the business is awful. You are a slave to the manufacturers who decide your profit. They sell to everyone and as a result your margins are pressed so low it is hardly worth it anymore. They don't care... customers look at your business and see the store front and blame you when manufacturers make errors... you are the go between and the manufacturer and the customer and many many manufacturers are often aggressive enough to call your customers their customers... People are not patient and want things yesterday... it is NOT an easy business. Forget home life. Retail is basically 24/7 these days. There is NO time for home life. The big box retailers press and sell on price and you can't really compete in the end. The mom and pop will be replaced soon enough sadly. Impressive cash flows are super rare..

Jul 24, 2010
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Before you sign a lease, you will want to hire a professional to help you with this. I work with individuals to ensure that they sign a lease that is in their best interest. When dealing with large spaces such as furniture busiensses and large dining facilities I have often been able to negotiate leases that have saved over $100K with minimal personal guarantees and large buildout allowances. Please feel free to contact me if you would like some help. 630-842-2662

Sep 24, 2009
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The BAF Group LLC

Mr. Lin would know better than I. However, the one thing I do know about the business is from a bankruptcy deal in which we were involved. I learned that a number of the larger furniture companies were failing, predominately because of the massive amount of money they had tied up in Inventory and Rent. Those two items go hand-in-hand.

Depending upon exactly how you are operating, many of these companies invest in large amounts of Inventory, in order to have a variety of items to show shoppers, and then to have product immediately available. The more you can directly order from the manufacturer when a shopper wants to buy a given item, and not have the product in your warehouse, the better off you are. There are risks to both. If the Buyer wants it immediately, and the guy down the street has the item in stock, you could lose the sale. But if you have a massive amount tied up in inventory, and then the market slows - as it did over the past 18 months - it is a recipe for disaster.

The Rent issue comes into play because of the price of Retail Space. If you have to have a Mall or Shopping Center space to do what you want to do, keep it as small as humanly possible. Then rent additional space elsewhere, at lower Rent rates, for your warehouse.

The housing market is coming back, in a number of areas. Mr. Lin is apparently seeing that in his business. Keep an eye on the Government's willingness to continue the $8k Tax Credit for New Home Buyers: if that happens, it could be great for your plans; if that does not go forward, it could be a struggle.

Sep 22, 2009
Franky Lin
Foshan Yalin Furniture Co., Ltd

Hello B Henwood,

Everyone want to have a nice home living, as the economic crisis is going by, the sales of furniture will get better. Here is a website for your reference if you would like to do the business of furniture:

Sep 21, 2009