Even if you don’t sell online, your skateshop can still benefit from SEO. If you’ve got a skateshop in New York, then there are sure to be kids and parents going to Google and typing in “new york city skate shop” or other stuff like that, because they want to take their kid to a skateshop. If you’re showing up at the top, that parent might bring their kid into your store for back to school shopping and drop $500. But if you’re down at #20, they’ll probably go to one of your competitors who comes up higher.

So here’s the thing. I need skate stuff. I need shoes, decks, clothes, etc. I know how to get your site ranking in the search engines. I own a search engine optimization firm, after all, and have done this for years. I already did this for one skate shop here in Utah and was able to bump up their rankings dramatically within one month. And whereas I normally charge clients $2-5K per month for SEO, I’m willing to cut a stellar deal with you independent shops, maybe as little as $100/month in trade, because I don’t really care about making money, I just want to feed my skate habit and if I can help out the independent guys a little, so much the better. So if you have a skateshop, and you have a website, then hit me up at jsteimle@mwi.com and let’s work out a trade deal.

Generally you need to register your business with the federal government, the state government, and the city government. Each of these are separate registrations with their own unique paperwork and fees, none of which is terribly expensive. From the feds you’ll get what’s called a “tax id” or EIN. From the city government you’ll get a business license that you renew each year and you hang on the wall. And you’ll need to register with the state, although I can’t remember if they give you anything that you use very much. If I don’t sound terribly knowledgeable it’s because I don’t do this every day. A lot of this stuff you do once and then leave it and it’s hard to remember four years later exactly what the process was.

Hopefully your state government has good instructions on their website as to how to do all of this. In Utah you can do all your business registration stuff online without ever needing to go downtown or mail anything in. It’s great, and really easy. Maybe your state has it together as well and will make it easy for you, maybe not. Either way, don’t ignore this stuff, because it will bite you if you do, and like I said, it’s not really that hard to take care of.

One question you’re going to have to answer in the beginning is what kind of business entity you want to be set up as. Your choices are sole proprietorship, LLC, S-corp, or C-corp. Chances are you’re going to want to be an LLC.

What I would highly recommend doing is spending some extra money to hire an accountant or small, local accounting firm to help you get things set up. You don’t need much, just somebody who has experience with helping small retail businesses get started. If you don’t know where to find somebody, go to a few retail stores, not necessarily skateshops, and ask them how they do their accounting. Maybe they can refer you to somebody local, or maybe you’ll find someone who works at another store who’s willing to help you get things set up for $20/hour.

If you have zero accounting experience DO NOT just go out and buy Quickbooks and expect that it will take care of everything for you. At a minimum you’re going to want an experienced accountant to take care of your tax filings, if not your month-end bookkeeping. This is not do-it-yourself stuff if you don’t already know what you’re doing.

There are accountants all over the place, so it really shouldn’t be hard to find one. But in order to make sure you find the right one, follow these tips:

1. Don’t hire the first accountant you talk to. Plan on talking to at least five, no matter how much you like the first one.

2. Hire an accountant who currently works with other small retailers. They don’t have to be skateshops, they can be just about any type of retail store. On a business level it doesn’t matter whether you’re selling skateboards, women’s shoes, beds, or scrapbooking supplies. The accounting side is pretty much the same. But if you hire a guy who hasn’t done accounting for retail stores then he might lack the experience you need him to have.

3. Make sure the accountant knows Quickbooks inside and out. He doesn’t necessarily need to be certified, but he better know it really well. And yes, I recommend you use Quickbooks as your accounting software. But that’s just me, and if you talk to other skateshop owners who use something else and they really like it then feel free to try something else out.

4. Check references. That means you contact other people the accountant works with and you ask them how they like working with him.

5. Hire your accountant on an hourly basis, don’t pay a flat fee per month. Chance are you’ll end up paying a lot more in the first few months this way, but you’ll get two benefits out of doing things like this; 1) you’ll have an incentive to learn accounting yourself to save money, and 2) once you do, then you won’t have to pay him as much.

A good accountant will cost anywhere from $30-$150 per hour. I pay mine $125 per hour. Some months I pay him nothing, other months I pay him $2,000, although the month that happened it was because he did about a year’s worth of work in one month.

As with all these tips, don’t just trust me, go ask around at other skateshops and see what they’re doing. Ask them what mistakes they made when setting up their business.

That might work with some companies, and it might not with others. Most companies would prefer that you’ve got a spot with a sign on it before they start shipping you goods. But if all else fails, tell them you’ll pay $10K in cash up front on the first order and that should do it.

So, you need a location. Here are some tips as to how to find and get the ideal location:

1. Location, location, location. Where your shop is located can make or break you. Malls can bring in a lot of non-skater traffic, but might turn off real skaters, so decide whether you’re going to be a mall shop or a “real” skate shop. Also, mall rents are generally a LOT more expensive than a strip mall. Then there’s the issue of malls renting out space to all your competitors. I met with a shop owner here in Utah last week who is in a mall. Across from him is a non-skate shoe store with an Osiris display in the front. 50 feet away is a Zumiez. Vans just opened a store in the mall, so he stopped carrying Vans. And Industrial Ride Shop is opening a store in the mall in a month. And there’s another skate shop down the street from the mall as well. Obviously the less competition the better, but sometimes there’s not a lot you can do about it.

For me, I would look for a newly-built strip mall or retail area. If not new, then at least nicer than average. A junky retail space is a good sign that nobody goes there.

The reason mall rent is so expensive is because they deliver traffic. If you’re not going to be in a mall, at least find a place that is highly trafficked, preferably by your target audience. Where do skaters go other than to skateshops? Grocery stores, movie theaters, music stores, McDonalds, etc. But don’t just think about skaters, think about their parents and where they go too. There’s nothing better than a mom coming home to her skate-child and saying “Hello dearest guess what I saw today next to the nail salon? A new skater-board store!”

Think about visibility. Can the store be seen easily from the road? Is the road heavily trafficked? If it’s near a freeway offramp that’s good too, since it’s easy for people from other areas to find you if they hear about you.

To sum up–new retail, near a freeway offramp, visible from the road, near other retail that is heavily trafficked by your target audience.

2. Negotiating the lease. If it’s new retail there should be a sign somewhere saying who’s in charge of leasing. Call them up, tell them which space you’re interested in, and get the paperwork. Don’t say how much you’re willing to pay, let them tell you numbers first. Don’t tell them what your business is unless they ask. They don’t care about your story. They just want somebody to sign a commitment for a 10-year lease and then pay it. If they do ask what your business is say “Have you ever seen a Zumiez in a mall? It’s kind of like that.” Hopefully your store is not like Zumiez, but that will make them feel better if they’re worried about you, and to them they wouldn’t know the difference between Zumiez and a true, independent skate shop anyway.

The ideal lease for you would be short and cheap with an option to renew, but fat chance of you getting that unless you’re well connected or they’re having trouble selling out the space. Chances are you’re going to have to sign a multi-year lease. Don’t personally guarantee it unless you absolutely have to. Don’t sign for 10 years. Don’t sign for 5 years. The last thing you want is to go out of business and still have a $4K payment you have to make every month for rent.

Oh, and go talk to somebody who knows more about negotiating leases than I do, like the other people who have leased in the area you’re interested in.

But I’ll tell you the one major ingredient for success when negotiating a lease–have another option that is at least as interesting to you as the one you’re negotiating. If you have nothing to fall back on then you’ve already lost the game. The way you win is by being willing to walk away if they don’t give you a deal you like. That means you’re going to be negotiating two leases, not one. It’s easier to get two good lease deals than just one.

3. Build-out. If it’s new retail then it’s not built out. You’re looking at metal studs and a dirty concrete floor. If the space has never been built out then the builder will generally offer you a dollar amount per foot to cover the buildout. This is rarely enough to do what you want, and chances are you’re going to need to kick in some cash of your own. If you want the place to be really nice you might have to kick in $10-20K or more.

If the space is already built out, but doesn’t look exactly how you want it, you still might be able to negotiate with the landlord to get him to cover some of the costs. Make it seem like it’s in his favor. “This place is horrible, you’re going to have to gut it anyway to get anyone in here. Look, if you give me $10 per square foot I’ll take care of the rest, and this place is going to look awesome afterwards, and if I ever have to move out then you won’t have to redo it.” It could work. Especially if the landlord is desperate and you’ve got just as good of a deal waiting for you down the street.

4. Signage. If it were me I’d have the word “skateshop” somewhere on the front of the building, even if that’s not part of the name. If you’re just starting out then nobody knows who you are, so you might as well tell them. Putting a huge banner out front for the first month saying “NEW SKATESHOP” wouldn’t hurt either, but you might have to ask the landlord about that one.

Get a sign with canned lighting, or a cut out sign that is backlit. Don’t get one of these signs that is just printed on a white piece of plastic and placed on the front of a lighted box. Lame! Get a real sign from a quality sign company. A good sign company will also monitor your sign and fix it immediately if anything goes wrong with it. Trust me, the maintenance package is worth it.

Do you not get a lighted sign that is the color blue unless it’s a light blue. The human eye has serious issues with certain shades of lighted blue at night, rendering signs illegible. Red is good. White is good. Black letters backlit with a white light are good. Not blue.

5. Parking lot. Not for parking, but for demos. If you have a huge parking lot right in front of or near to your shop then that’s a plus for getting companies on tour to pass by your place, and a demo can bring in tons of business.

6. Neighbors. Be aware of who your neighbors are. Are they going to throw a fit if you start bringing a bunch of skaters into the area, or are they going to be cool? Skaters will skate around your store. Do you have windows that go down to the ground or do your neighbors? The last thing you want is one of your customers sending his board through your neighbor’s front window and then running away, leaving you to take care of the fallout.

As with all these tips, don’t take my word for it, go talk to 5-10 other skateshop owners and ask them about their experience, and you’ll learn 10 times as much as what I’ve told you here, and something you learn might save you a lot of time, money, and stress.

You’ve got two options–debt, or equity financing.

First, let’s define what is meant by “debt” and “equity.” Debt is when you have to pay the money back to someone or something. We’re talking about loans. Loans from banks, loans from family, loans from friends, credit cards, stealing money from your boss’s till with plans to pay it back, etc. Equity is when you get someone or something to invest in your business. They give you money, and they own part of the company.

Pros of equity financing:

1. No debt. Or anything that comes with debt, like monthly payments, dings on your credit, etc.

2. I can’t think of any other pros.

Cons of equity financing:

1. You’ve got a partner. When someone invests in a business, they want to get their money back, plus a healthy return on it. Let’s be clear here–anyone who invests in your business is NOT going to be happy if you blow their money and then say “Sorry, it didn’t work out, but you knew the risks.” If you just give them their money back, they will not be happy. They will not be happy unless you pay them back within 1-3 years, plus 25-50% more than what they put in. They’re thinking they’re going to get rich off of you, so you’re pretty much set up for failure unless you do really well, and the sad fact is, you’re probably not going to do really well if you’ve never done this before.

If a partner doesn’t think you’re running the business right, they’re going to start giving you suggestions, and they’re going to expect you to take their suggestions seriously. You’re going to start getting all sorts of advice and criticism. “Why don’t you sell the stuff they sell at Hot Topic? Aren’t skaters into that? Why don’t you have a swimsuit section? Why don’t you turn this into a skateshop / bike store? Why aren’t you selling rollerblades? I don’t want you selling Zero, I’m just not into all the skulls.” You get the picture?

2. Personal relationships. If you get a family member or a friend to invest in your business, recognize that this is not equity financing–this is a loan, because you’re going to pay it back even if your business goes out of business, or you’re not going to be very welcome at family reunions or parties.

Pros of 100% debt financing:

1. No partners.

2. No personal guilt if you borrow from a bank.

Cons of debt financing:

1. Debt payments. This is how it’s going to work out if you go into debt. Six months down the road you’ll have spent all the money the bank gave you, you won’t have paid yourself since you started the shop, you brought in $10K this month, and out of that you’ve got to pay $3K for rent and utilities, $5K of it was cost of goods sold, and so you’ve got $2K left over that you could pay yourself with, except that you’ve got a $3K loan payment you have to make, so you’re actually $1K in the hole. And the next month it’s going to happen again.

2. Signing your life away. “If I go out of business I’ll just file bankruptcy and then I won’t have to pay the loan back.” No, it doesn’t work that way, no matter what anybody has told you. When you go to get the loan, they’re going to make you sign what is called a “personal guarantee” and what that means is that you are saying that no matter what happens, you will pay this loan back, and the bank can take whatever measures it need in order to force you to pay it back. If you have a house, they’ll sell it and take whatever equity you have in it. Cars? Yep, they’ll take those too. If you’ve got it, they’ll come after it.

3. Guilt, if you borrow from a human being. If you don’t borrow from a bank then you’re going to ruin your relationship with whoever you borrow from. If you borrow from your dad, plan on your relationship with him never being the same again. Plan on longing for the good old days before he ever gave you that money. If you borrow from your brother, plan on your brother calling you every week asking when you’re going to pay him back. If you borrow from a friend, plan on losing that friend. And plan on lots and lots of guilt, to the point where you feel like you can’t pay yourself or do anything fun until you have that debt paid off. You want to buy a 99 center hamburger? Prepare to feel guilty about it. You want to put gas in your car? Why not fill up your car with guilt while you’re at it?

4. Slavery. The debtor is slave to the creditor. If you own someone money, you are their servant, their slave, their whipping boy. You will do whatever they say. You’re a prisoner until you get that debt paid off, and you will find yourself thinking you would gladly trade places with someone who is in prison if it meant your financial debts would be paid off.

These rules don’t just apply to a skateshop but to any type of business. Think I’m being overly harsh? I’m speaking from experience, so if you don’t have any experience I’d recommend you trust me on this one, because I’ve been through some things you haven’t.

Now that I’ve put some fear on you, here’s the good news. There are some exceptions. The bad news is, it probably won’t be you. If it were me in your shoes and someone were holding a gun to my head telling me to start a skateshop or else, what would I do? I’d go with a loan from a bank. There’s none of this guilt, because it’s an institution, not a human being. They’ll hold you to the rules, but it’s for your own good. And I would make absolutely sure that I had a rock solid plan for this shop, because I don’t want to be sitting there 12 months later with an out-of-business skateshop and $100,000 in debt that I’m going to have to find a way to pay off working a $15/hr construction job. Diving into starting a skateshop because it’s going to be so much fun and I’m going to make money and get all sorts of free stuff is to be an idiot. Granted, some idiots get lucky, but for every one that’s lucky there are 10 who aren’t.

I would never recommend borrowing money from family or friends, nor would I get them to make an “investment” because there’s no such thing as a family member or friend making an investment. I would never use credit cards. If it were me, I’d find some way to save up $40-50K and start with a hole in the wall place and bootstrap the whole thing. That way, if you go out of business you’re out the money, but at least it’s over and you don’t have to pay anyone back. And if you’re spending your own money you’ll be a lot more motivated to make it succeed.

In fact, this is a great test to measure whether you’re serious about starting a skateshop. It’s always easier to borrow $100K and blow it because it’s someone else’s money, so think about it this way. If you had $100K in your pocket, free and clear, and you could do anything with it, would you start a skateshop with it? You see, some people get excited about starting a skateshop just because they think they’re going to have all the skate stuff they want. Well, if you had $100K in your pocket you could get all the skate stuff you want, and you’d actually have time to use it. If you run your own shop then you’ll actually feel guilty anytime you take a shop deck off the wall for yourself because you’ll be thinking “Dang, if I leave this up there I can sell it…”

But hey, don’t just take my advice, go talk to at least five other people who have started successful skateshops and ask them how they did it and where they got the money from. I guarantee you’ll learn a lot. And if you still decide to do it, then best of luck to you, because I’d much rather see more independent shops around than these mall shops like Zumiez going up all over the place.

The cost of starting a skateshop depends a lot on how you want to do it. Here are some things to consider:

1. Retail space. Nice space or barely adequate? Are you going to have to build it out, redo it, or can you use it as it is? Small space or large? Where’s it going to be located? If you want a nice store in a nice place it’s going to cost you. You could easily spend $100K just building out a place. If you can find a space that some other retailer just moved out of and that works for you then you can save a ton of money that you can put into inventory or something else.

Even if you think you can just move into a space without spending anything on fixing it up, I’d put at least $10K in your budget just in case. Trust me, you’ll find things you want to change and you’ll be surprised how much it costs.

And then there’s the monthly rent. This can vary a lot depending on what neighborhood in what state you’re in. Around Salt Lake City, Utah, a nice spot costs between $3-6K per month, and that’s not in the mall. What it costs where you are I can’t say, but call a few real estate people and you can find out quick enough.

I would plan on having 6-12 months of rent saved up just in case you need it. If you only have 3 months of rent you might go out of business not because your shop isn’t doing well and progressing, but because you didn’t give yourself enough padding to pay the rent long enough to get established.

2. Inventory. If kids are coming to your store and you don’t have anything, telling them “I’ll have more stuff soon” isn’t going to do much. You’ve got the best chance for success if you can open the doors and it already looks like the place is bangin’. That means somewhere between $50-100K worth of inventory. Anything under $50K is going to look slim.

3. Employees. Employees are expensive, especially if they steal stuff or don’t work hard, two problems you’ll likely experience if you’re running a skateshop. Sure, you can be the only employee all by yourself, but how long do you want to do that for? Don’t think you’re only going to be working at the place while it’s open. You’ll be there before and after for a while, especially when you’re just starting. And at first you might not be making a lot of money so you’ll need to have a few months worth of payroll saved up. Even if you’re the only employee, you probably can’t work for free, so plan on being able to pay yourself something.

4. Utilities. It might cost $25/month for your apartment, but electricity and gas can cost $500 per month for a retail space. Then you’ve got phone, fax, internet, etc. I’d put somewhere between $500-$1,000 per month in your budget.

5. Fixtures. Shelves, display cases, tables, clothing racks, etc. That stuff ain’t free. I’d recommend picking it up used or have a friend who knows how to weld or make nice things out of wood make some for you. The stuff you buy brand new is overpriced for sure.

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All told, if I were starting a skateshop I’d try to start out with about $300K. Considering that some people have made it work with $40K you might think that’s over the top, and you might be right, but I’d rather have too much money and not know what to do with it than not have enough and end up going out of business. That said, if you’ve only got $100K I would say you’ve got a chance of making it, $200K gives you a good chance, and $300K would give you a whopping good chance unless you mess it up somehow.

You’re looking at the inside of Trickwood skateshop in Washington. Click on the photo above to see a much larger version.

So far, that is the closest I’ve seen to what I want the interior of Sublimited to look like. Others have come 80% of the way there, but this is just about 100%.

Here’s what I like:

1. Dark ceiling
2. White walls and fixtures
3. Maple wood floors
4. Not crowded with product, and yet not sparse on product
5. Clean and neat
6. T-shirts arranged so that you can see what they are and they’re not getting the necks stretched out on hangers
7. Good lighting
8. No slotboard
9. Some art on the walls
10. Good branding