Business plan and financial forecasts

[southsaxon]

Hello everyone!

 

I'm hopefully going to be taking over a very old forge in a heritage area. It is an old boat yard forge on a canal where they used to make the lock gates and other waterways metal work. The forge has been disused since the 1920's but has just been restored.

 

The current plan is to run it as a business, within public view either every day, afternoons or weekends (still working this out as I'm weighing up how much I can make from the public vs how much they will slow me down)

 

I am currently on the NHIG bursary until August and will be taking over at that point. I went to visit the place on Thursday and impressed them enough that they pretty much offered me the place on the spot, and they are currently working out a draught lease agreement while I am working-out a longer version of my business plan as well as a financial forecast.

 

Which brings me to the reasons I am posting. could anyone give me some pointers as to how much business I can expect in my first year, maybe based on your own experience, and the current climate? 

 

I'll be setting up in a heritage area, and the yard will be open to the public, and I have worked out I will be able to make around £4000 a year selling pick-up lines to visitors (key rings and such like). I have also worked-out that I will get around 6 commissions a month of between £100 and £200 for things like window stays, hinges and suchlike. These figures are based on my craft-show results.

 

However, I am struggling to work-out how many, if any, larger commissions I might get over a 12 month period, and what their value might be.

 

Any help or suggestions would be very welcome!

 

Rowan 

[Glenn]

Once the public becomes aware of your location and skills they will loosen their change purses. 

 

Always have a $5 item, a $10 item and a $20 item in stock and on display. Be sure and display a high end sample NFS (not for sale) and a high end piece that is for sale. Do not be afraid to show your high end stuff  but a fast fiver will out run a slow 20 any day so collect all the dollars from the small sales while you wait for the big one to hit.  

 

DO NOT DISPLAY anything you do not like to make. If you do, that is the one item everyone will want.

[tzonoqua]

Hi Rowan, I sent you a message on that other website! 

 

I just wanted to add, I used to have a showroom at the first workshop I rented. I spent a fair amount of time talking to the public rather than working... which can be quite frustrating, but... you often need to talk to the public to make a sale.... but then sometimes you can get quite resentful however interesting they are, that you've just spoken to someone for an hour and all they bought a £10 keyring or whatever... 

 

with regards to how many major commissions you would get is a bit of a stab in the dark... 

[nuge]

I used to have a gallery in an old cabin in a "Historical Park".  What came through the door most often was old people who wanted to look at old stuff and weren't prepared to spend money.   I learned real quick not to rely on the foot traffic for sales.  

 

Good luck with your venture.

[HWooldridge]

In general, the public tends to pigeon-hole 'smiths into certain types of work so you'll likely wind up making scads of keyrings and triangle bells - or you'll specialize in larger commissons - but not both...it just seems to be how it works out.

[george m.]

Dear Rowan,

 

I suggest that you take a hard look at the lease and make sure there is language which addresses the following:

 

1.  Cancellation.  You don't want to be stuck for rent or any responsibility if you are sick or injured or if it all doesn't work out financially.

 

2.  Insurance:  Make sure everyone knows who is responsible for insuring what.  Likely, the owner's insurance won't cover the loss of your personal property if there is, say, a fire.  Also, make sure there is liability insurance and who is going to pay for it.  If a member of the public is injured in your shop it is too late to start thinking about who could be liable.  Be sure that there is a "no go" area immediately around the forge and anvil or any power tools.  Remember that a child's eyes may be at exactly the same height as scale and sparks flying off the anvil.  I'm sure others have better disaster stories about this than I do.  Do NOT over estimate the common sense of the public.  If you tell them about black heat the first thing they will do is pick up something that is hot but not glowing and burn themselves.  Some people have NO survival instinct or situational awareness.

 

Make sure that their property insurance covers things like active blacksmith's shops.  Here in the states insurers can get the collywobbles for something unusual and which involves fires and hot metal.  I have seen several historic areas which do not have their blacksmith's shop operational because of insurance issues. 

 

3.  Maintenance:  Again, the lease should spell out who is responsible for what and how fast the landlord must respond to a maintenance request.  If the roof starts leaking right over the anvil you will want it addressed right away.

 

4.  If part of the deal is for you to make things for the heritage area make sure that is in a different agreement from the lease.

 

5.  Make sure that the lease spells out who is responsible for utilities (electricity, heat, water, etc.) (is "mains" the UK term?).

 

Finally, I very strongly suggest that it is worth your time and money to consult with a solicitor regarding ANY legal commitment.  They will be able to advise you about the above issues and other things under UK law.  I'm only licensed in a couple of western US states.  If something goes bad or there is a disagreement it is money well spent.  Think of it as a kind of insurance.  Don't think that you can't afford it until you know how much it will cost.  It may be less than you think and you don't have to go with the first person you talk with.  Shop around for professional services as much as you would for anything else.

 

Legally,

George M.

 

PS  The above is applicable to legal situations and leases in the US too.

 

G

 

PPS  Don't forget that many smiths have discovered, myself included, that you cannot sell and forge at the same time.  I can keep a patter going while forging but I cannot do a sale's pitch or handle money and still do enough pounding of hot metal to justify having the forge fired up.  You may want to try a trial period of a couple of weeks or a month before committing to anything long term.  6 months or a year into it you will really wish that you had known certain things at the beginning that you know after you have been doing it for awhile.  If you have a wife or girlfriend to handle the sales and/or the patter of expalining what you are doing and why it makes life a lot easier.  It is REALLY tough for one person to try to do everything.

 

G.

[picker]

Rowan,

All this practical advice is valid.

From what I gather, you will be paying to lease the shop to the Heritage organization which operates the area?

Is this a straight up payment per month, or will you be paying a commission on your sales?

Are they banking on making money off of you and your skill?

You may want to consider the commission option if the area operates under a seasonal basis.

You may even want to request they waive your first month or two or three lease payments or commission from sales in order to cover your start up costs and get you up and running.

good luck

[southsaxon]

Thank you all for your replies, I have picked-up a few good tips on here :)

 

I am unsure how they will organise the Lease as they are still discussing it amongst themselves at the moment, then they will send me a draught copy to look at, which I will show to a solicitor. From the discussion I had with them when I visited the site. they are only after a token amount to put towards the maintenance of the building at the moment, especially as the business will just be starting up. They will then review the lease after a period of time to see whether to put it up or not, depending how profitable the business is.

 

I'll have several markets in the area. The first will be from tourists, buying small items - these are the ones which sell at craft shows best as well, so I will aim to make the same type of products as sell there, such as keyrings etc. I can make between 5 and 10 an hour, depending on the one, and sell them from £5 to £15 for the 3D horsehead ones I make. My brother is already on board to sell these to the public for me, as well as my girlfriend and her brother, so that should be covered - of course all this is just in the planning stage.

 

I'm also looking at doing restoration and conservation work, which I am learning during my NHIG apprenticeship at the moment - and I have learned a hell of a lot of new stuff already, I love it! I will hopefully get a decent amount of work of the canal and river trust, which own the site, as they have canalside properties with a lot of period ironwork not only in the county but also up and down the country.

 

After that there are commissions, but I am still trying to figure-out how many of those I might have on a yearly basis, and how much they might be worth, as there are small ones and big ones!

 

Then, I'd like to run classes, maybe three or four a year, as I love telling people about blacksmithing, as well as there being good money in running classes. These would be things like "make your own fire poker" etc.

 

Finally, I want to make reproductions for museums, as I love reproducing old period (or colonial as our transatlantic cousins would call them) ironwork. I am still figuring out how to develop this side of the business, but I figure it could be as simple as creating an item and sending pictures of it to an appropriate museum, such as Tommy spikes to a mining museum, etc.

 

Of course, all of this is still in the planning stage, and I am looking at practicalities and figuring-out how appropriate each side of the business would be!

 

Please keep the help coming as I'm really interested in what you guys and gals think!