New VAT rate

[Roboframer]

Is anyone going to offset this in any way, or just put everything up 2.5% across the board?

I did a moulding stocktake last week, it's the first time I've known exactly what I have and where it is! Was thinking of offering jobs from those mouldings ( a LOT)! at a pre-increase rate, but in the end we though 'blow it' we'd still have to pay the VAT at the new rate and we regularly offer bigger discounts than 2.5% to clear stock/prevent ordering new when it suits anyway.

So up it all goes I'm afraid - in addition to that our photocopying service is going up 100% for B&W - it's been 5p for A4 and 10p for A3 for over ten years! But the colour copying is having a 50% reduction to 50p for A4 and £1 for A3 - we hardly did any colour copies at the old rates.

Had a couple of supplier price increases effective from Jan 1st that doesn't help matters much either.

[Gesso&Bole]

I'm definitely putting everything up by 2.5%.

VAT is a tax that we are obliged to collect on behalf of the Government, subsidising the Chancellor out of my earnings does not figure as an option to me!

[Graysalchemy]

I think unfortunately our customers will have to lump it. I believe that price increases from suppliers will far worse. A little bird has told me about 6% and mountboard from one supplier 10%.

So really 2.5% is rather insignificant compared to what we will be hit with by the end of Jan.

But on the bright side an increase in material cost (not the VAT) is an increase in profit (as long as you maintain your mark-up)

Cheers

AG

[Not your average framer]

But on the bright side an increase in material cost (not the VAT) is an increase in profit (as long as you maintain your mark-up)

That's assuming that your overheads and sales volumes are going to remain at the same level. Fat chance of that I reckon!

To me the VAT increase is a non-event compared to other effects upon our businesses, as I suspect that we may need to take account of the following factors:

The govenment's own predictions and bodies representing businesses have stated that the VAT increase will result in a reduction in sales volumes.

All our utilities and overheads are likely to increase in real terms.

The VAT increases are likely to impact upon cash flow and so are customers who may take longer to collect and pay for their work.

In my own location, I now have about 50% less competitors than the previous year, due business closures. I have yet to see any sign of extra work coming my way as a result of these closures.

2011 is gonna be a very hard year for almost everyone. If you are not already watching your businesses "Key performance indicators", it's time to start doing so and to manage all of your expenses accordingly!

[Roboframer]

In my own location, I now have about 50% less competitors than the previous year, due business closures. I have yet to see any sign of extra work coming my way as a result of these closures.

What did you do to make people aware that you had survived those competitors? You can't just assume that the laws of average will dictate that you will be busier because you have less competition.

I know, (e.g.) from (drum roll) the other side of our place that when a favourite shop goes down, people look to the internet and the shopping channels - can't do the latter but do have a presence on the former, plus we spend a small fortune in radio advertising .... and the station has a website, which we're on.

You cannot just work on the "If you build it, he will come" principle. Word-of-mouth is great but it takes time to build, and, in time, shit happens.

[Graysalchemy]

I know retail is tuff and is unlikely to ever get back to the heady days of the mid nineties but we have to move on and our business models have to evolve to suit the ever changing landscape. Negative attitudes bring negative results.

I had my worst month ever last month I will have made a severe loss but I have already got orders worth 3 times last months turnover which will be invoiced out by the end of the week. Yes I am a commercial framer and it is either feast or famine, but I am genuinely confident about the next 12 months.

I have spent the last two years steering my company in a slightly new direction which I should see the benefits of this year, plus there is a slight uplift and confidence in my sector which all in all should see me back on the road to recovery this year.

You can't just sit back and expect as Robo has said expect the law of averages to increase your turnover because it won't. Their are far more hidden competitors on the internet which will be nibbling at your trade.

Yes Vat increases will affect the high street, but in this day and age the high street is an ever decreasing proportion of the market, there are other sectors which are prospering.

What I am trying to say is don't just batten down the hatches get out there and fight, look at the market place and your strengths and weaknesses and find a path back to prosperity because there is one... you just need to find it.

I hope you don't take offence to this post but I have written it to genuinely encourage and enthuse you and other framers.

Regards

Alistair

[Not your average framer]

Hi John & Alistair,

Firstly Alistair no offence taken. Secondly, up until now my own business levels have been o.k., not as good as they were before the recession, but I did not expect the recession not to affect me.

In three nearby towns (Chudliegh, Newton Abbot & Ashburton) the number of framers has been reduced, but there is still a remaining framer in each town and the word is that they have not benefitted in any significant way from losing their competitors which they used to share the town with. Chudliegh had two framers, now only one. Newton Abbot had three framers, now only two, with one more planning to close down some time soon. Ashburton had two framers now only one. In each of these cases the longer established shop has been the one which has closed. There are other towns in Devon where the same thing is happening.

My own town Bovey Tracey and it's immediate catchment area is a paticularly affluent one, to some degree the same applies to Chudliegh and Ashburton, but Newton Abbot is not very affluent at all. I scoop a lot of business due to the number of smaller towns and villages, which access the rest of the world by the main road which passes through my town.

I also get a significant level of business from people who live outside of Devon most of the time, but regularly visit family, or have second homes here. Until the recent expenses scandal this also included a number of M.P.'s who used to be good spenders, but alas no more!

Until now I used to advertise in the parish magazine, but this has now ceased (the last issue was in December). I'm looking for somewhere else to advertise, which addresses my catchment area, but there is nothing quite as ideal as the parish magazine. While leaflet drops would work in the town, many of my customers are out in the sticks and well spread apart.

The only advertising which has ever worked for me has been locally based, anything else has been wasted money. I am currently creating the town's first business association website and will have my own page on the site, which I hope will be helpful, but it's too soon to know how much business this may generate for me.

If I'm missing any tricks, I am willing to learn.

[Roboframer]

These are general questions, not singling you out, Mark.

I scoop a lot of business due to the number of smaller towns and villages, which access the rest of the world by the main road which passes through my town.

But do you just hope they see you or do you do anything to maximise the potential of that route?

I also get a significant level of business from people who live outside of Devon most of the time, but regularly visit family, or have second homes here

Again, do you just know that and hope, or do you ...................... whatever?


Far as I'm concerned, my shop window and the amount of time we have been here and the way we have got involved in the community takes care of the local catchment, it's not big enough to keep us afloat by itself anyway. I need to drag 'em in from way outside, and that costs money unfortunately, but it works.

[Graysalchemy]

Hi Mark

Glad you didn't take offence. Is your business mainly framing or do you have a gallery? If you have a gallery what are you selling? are you tied into w&g or demontford? The reason I ask is I know a gallery owner who does probably 90% of his business on line, he has a quiet location in a relatively less prosperous town but does very well.

As robo says his location cannot support his business without bringing business in from outside. Being in a rural location this may be what you should be looking at. Its like I said I have spent the last two years repositioning myself as 70% of my business was with one client and one sector. That hit me hard when the recession hit, but I have survived through some degree of luck tenacity and sheer hard work. Luck is everything but you do need to look for it. I knew my business needed to change long before the recession hit and I was trying to find directions to move into. A chance meeting with someone at the spring fair (who I had known previously) has given us new direction both benefiting from each other, and as I said before my main market is at long last after nearly two and half is showing signs of recovery which is good. It will never come back to the way it was but at least in the meantime I have found new markets and customers.

There is business out their you just perhaps have to look outside the box, I know that is a terrible cliché but I think in this day and age a bit of radical thought might be needed.

Thanks

AG

[Not your average framer]

But do you just hope they see you or do you do anything to maximise the potential of that route?

Again, do you just know that and hope, or do you ...................... whatever?

Hi John,

First question:

No, I don't do anything to miximise the potential of that route and to be honest I don't know how I would go about that. My town (Bovey Tracey) is where a lot of these people shop when they don't plan to go to one of the main shopping towns. I would point out that I am well known in the area, almost everyone one knows one another around these parts and a lot of us are on first name terms.

Second question:

I've never understood how I keep getting these out of the area customers, there just is not any pattern or logic to it. Some have even popped with work for me while on route to somewhere else and I'm not even on what would be a logical route to where they are going. Some people find me while they are on holiday, some have relatives in the area and some don't appear to have any reason to have found me at all. Others have a second home in the area and come down here to escape busy places elsewhere, so they don't want to shop in the big towns, because that's not what they come here for.

We are the nearest framer to "The Devon Guild of Craftsman" which is in the town and some people buy art from there and need it framed in a hurry. They just appear and say "Can you frame this for me now".

The Town's parish church is an ancient church and lot's of couples want to get married there. What appears to happen is that guests to the wedding have agreed to buy a nice piece of art from the Guild and then when they realise that I there, they decide to get it framed in time to give it as a wedding gift.

I expect that you'll remember saying this, My shop looks very old fashioned, cluttered and not at all like most modern shops and people just can't resist checking me out. Oh, and I do a lot of old looking hand finished frames for old pictures to hang in big old houses, cottages and barn conversions around the area.

I never had a proper business plan when I came here, I just arrived and things turned out as they have. I'm very much go with the flow and just take life as it comes. If you like an easy, quiet, rural life, this is the place to be. I even managed to get a flat above the shop next door, how lazy is that!

[Not your average framer]

Is your business mainly framing or do you have a gallery? If you have a gallery what are you selling? are you tied into w&g or demontford? The reason I ask is I know a gallery owner who does probably 90% of his business on line, he has a quiet location in a relatively less prosperous town but does very well.

Hi Alistair,

My business name includes the word "gallery", but I'm mainly a picture framer. I sell a few old prints of the Dartmoor area and a few other odds and ends, but I don't find that art in my main business. I am fortunate to have a large stock of genuine 1920's and 1930's open edition prints of the area, which trickle out the door to tourists and locals alike.

I also have a few thousand antique wood cuts, steel engravings and some reproduction antique maps and prints, which I mount and sell from to time, but it's not what makes the money for me. Most of my prints and engraving are left over from when I had a second hand book and antique print business. Lots of things about my business were never planned, that's just how things turned out.

I can repair, clean and restore almost anything, I'm well equiped, experienced and the local auction house sent people to me to get things framed, restored, or fixed. Local antique dealers get me to tidy things up a little when it suits them, but the antiques business ain't what it once was. I repair, or remake old frames to fit customers pictures. I've never advertised that I do these things, people just keep bringing me this sort of work and I do it. I'm not the worlds busiest framer, but I also employ two part timers to help me get through the work and that's about it.

[Graysalchemy]

You are obviously a very talented bloke, But perhaps a little old fashioned and set in your ways. Your shop is probably quite quaint and quintessentially English, but also quite appealing. Your stengths obviously seem to be in restoration and the more antiquarian end of the market. However people buy local artwork to be framed quickly by you.

First question do you have any moulding display in the The Devon Guild of Craftsman, do you have any formal arrangement with them, do they take orders for you? You could recipricate by giving them some wall space framed by yourself. Giving each other a percentage for goods sold. If you give them a percentage they are probably more likely to say would you like that framed? If a piece of work is framed then it is going to attract a higher price for the guild and greater income for yourself. Even if you were next door to the guild in the publics eyes once they have made a purchase it is another transaction distance and mental effort to go and buy the frame. If it is already framed then problem solved. I know guilds and art societies are the worst customers but if people are buying from the guild and then coming to you then surely it would be a good idea to have the guild have them already framed. I bet you only get less than 10% of their sales for framing.

Secondly are there other galleries in the area which you could take in framing from?

I think your biggest selling point is your restoration of paintings and old frames. Also your hand finished frames, I think you need to find a way of becoming the restorer hand finish framer of Devon or the south west, A destination shop. Website and marketing to other framers that you do this service and also other auction houses. You obviously have quite a specialist niche talent which need to be exploited.

I must say I was surprised when you said you have two part time assistants, I suppose not being in retail for so long I forget that you need staff to run the shop so you can get on with the framing. Perhaps you could revisit you range and evaluate if there is anything else I could sell in the shop. Perhaps slightly modernise you framing as you said you get people buying wedding presents perhaps these are a younger market. Traditional styles with a slight contemporary twist perhaps, price pointed items which the casual browser may buy for perhaps £10-£20.

You admit yourself that you tend to go along with the flow and don't have a plan. Plans aren't always the best thing as plans should always be re evaluated and modified. Perhaps a little focus will open up new ideas which you can embrace.

Once again sorry if I seem to be rambling on but I get enthusiastic about business and I like finding solutions.

Regards

AG

PS. My goal this year after following prosperos 'one big one for Christmas' is to teach myself how to make hand finished frames and to include them into my range to offer to other galleries and interior designers. It is an Idea which I think will fit into my changing market.

[Not your average framer]

My goal this year........ is to teach myself how to make hand finished frames and to include them into my range to offer to other galleries and interior designers. It is an Idea which I think will fit into my changing market.

You won't look back! If you are in the right location for that sort of market, it will transform your business.

I appreciate your advice and I am a bit behind the times and stuck in my ways, but although I have tried to do many of the things you say, I haven't found many of the more mainstream stuff very successful in my location.

I think this is a subject for another thread, as we have rather hyjacked the original subject.

[Jonny2morsos]

Getting back on track!

I am passing on the increase in VAT and make no apology to my customers. If they have a problem with VAT at 20% then they should take it up with their MP not me.

I have eased myself back in to work this week and one thing I have done is raised my prices across the board by 5%. Thats 2.5% for the government and 2.5% for me as virtually every domestic item I buy will now have gone up by 2.5% and I need to fund it. I have also been through my supplier's price lists to be sure I am applying up to date prices and adjusted them as necessary.

I don't have a huge amount of competition locally and this year I intend to seek out the more profitable business and send the others to the local discount warehouse for ready mades.

[Graysalchemy]

Wait for the expected moulding and mount board increases they will be greater than 2.5% mark my word. I have heard around 6% from one supplier however this will not be across the board some mouldings will stay put others will be considerably higher. Mount board is set to rise because of pulp increases last year.

But as I said before if you increase by the full amount then more profit so every cloud does have a silver linning.

AG