What it takes to own a furniture shop

Life has become a classy reality and it keeps pushing desires to the extreme. For instance, the desire to have classy furniture both at home and office keeps growing but what does it take to put up an upscale furniture shop such as Nina Interiors and Xing Xing Furniture, among others?

Showroom location and storage
Well, to start with, you need to look at a capital injection of not less than $90,000 (Shs300m). But top on the list of your requirements is a showroom that is properly located which, on average, could take between $4,000 and $5,000 in rent.
But beyond the rent you need to factor in storage space which could need about $1,000,. Therefore, for storage facilities and rent you might need a total of about $6,000 (Shs20.2m). The charges could be required to be paid covering a starting period of six months, which could give you a combined sum of Shs121.3m.

Inventory and logistics
Once you have identified and paid rent for the showroom, the next requirement will be stock and how to secure it from suppliers. Here you could use two preferences including but not limited to importing, preferably from China or Malaysia and sourcing or making the furniture locally.
For starters, let us look at the import element given the level and availability of skill required to tailor make this furniture locally. In China and Malaysia, furniture is made on a large scale by specialised industries, which brings down the cost of production.

In such circumstances, suppliers look at sold volumes rather than cost of production, which, if you choose this route, might on average require you to spend more than Shs80m on a 40 feet container. However, you might need another Shs70m to cover shipping costs and taxes. In China or Malaysia it is possible to spend $150 (Shs500,000) but the product has the capacity to attract a higher cost quotation once in Uganda.

Advertising and sales promotion
Promoting your business is a requisite function of business thus you could need to look at the available alternatives to put your business on the fore. Newspapers, broadcast media, and later social media and bulky messaging, among others could be good domains that could require you to put aside more than or about Shs20m.

Return on investment
A fisherman can either catch a lot of small fish or a big fish. With the furniture business, the turnover could be low but with high profit margins. And as such, we should look at profit margins of more than 50 per cent. This implies that you should be in position to recoup your initial investment within a period of between or less than two years.

Paul Njuguna is a financial and cost accountant: Email:paul@paulnjuguna.com.