Home Staging – Transitions… Taking Things to the Next Level Of Your Home Staging Business
Simple Elegance TX opened our doors to Houston the fall of 2010 as a window treatment business. In 2011 Mary really wanted to add home staging to the services of Simple Elegance. She took the Accredited Staging Professional class via Stagehomes.com in 2011. Being new to Houston, TX, Mary had to build her network of realtors to really get into the home staging business as this business is very dependent on partnering with Realtors. To do this, she got involved with Women’s Council of Realtors (WCR) Great Northwest. It was through being involved in committees that the initial relationships were built and to this day, many of those initial realtors are still major clients of Simple Elegance.
The Home Staging Industry is a very funny industry. Many start their “businesses” as a hobby because they love to decorate. However, home staging is so different from decorating. In fact another stager said this recently, “Even though I’m a Professional Interior Designer, graduating with a BA and Masters in Interior Design, I cannot stage and design in the same day because they use 2 different sides of my brain that don’t work well together.” Interior Design is all about the homeowner and their style. Professional Home Staging is all about the buyer and the lifestyle experience the home presents. Professional Home Stagers present many emotional touch points throughout the house for buyers to experience what life in the house will be like.
This being said, one question you need to ask yourself when beginning a home staging business is, “Do I want to own my inventory or do I want to rent it?” This is a huge question to answer and can you start one way and go another? Of course, you can. In today’s world of the corona virus we are learning to “Pivot” our businesses! In addition, in 2020 we have so many more resources for purchasing home staging inventory at wholesale than we did in 2011. However, the original question must be answered. The pros to owning your own inventory is that you have control of your styles and being able to stage a house to the style of the house. The major con to owning your own inventory is that your overhead will constantly increase. The major pro to renting your inventory is that you do not have the overhead of storage units/warehouses. Of course, the major con is that you inventory is limited to the available rental companies and their policies in your area.
What did Simple Elegance do? We first started renting from a rental company that did not have a lot of options but we could work with what they had. We rented many of the same things over and over again, changing the look by adding our own accessories. This then called for a storage unit to store the items in…. In storage units, they get cluttered quickly and many times you have to empty the whole unit to get what you want. Time is money and this becomes very inefficient quickly. We had grown to 5 storage units before considering our first warehouse. 5 storage units in 1 complex but of course not next to one another as you are at the mercy of their availability!
Mary was at a Home Staging & Redesign Association Summit Conference and she asked Carole Morgan, owner of another Professional Home Staging Company, “When do you know when it’s time to move into a warehouse?” Carole’s response was, “If you are asking the question, you should have moved yesterday!” One other big mistake Mary did was because resources were short for buying inventory at reasonable prices is she rented from the rental company to own. NEVER, NEVER, NEVER do this. It was a huge loss. Taking Carole’s advice, Mary went in pursuit of a warehouse with a small budget. The first warehouse was around 2500 square feet, paying around $2500/month plus 2 month’s up front security deposit. In addition, racking was needed for the warehouse. The only resources Mary knew about at the time was paying full price through U-line. U-line is a great resource. However, there are so many other resources that you can find good shelving for less.
Within 2 years, the business had outgrown this space but the lease was written for 5 years which is very typical in commercial leases. With some experience and knowledge about rentals via conferences, she learned that she needed a commercial realtor to negotiate the next lease. Simple Elegance obtained an additional 1700 square foot warehouse in the same complex for the remainder of the initial lease for about $1,900. All was great for a couple of months until that warehouse became inundated with furniture. The question became where do you obtain commercial furniture racking at a reasonable price. The internet is an amazing resource. There are companies that sell used commercial racking. We used Massey Racking. It was “inexpensive” (about $5,000) but not with issues as our communication was not good and only half of what was needed arrived. A few more phone calls and of course more dollars, the new warehouse was built to hold the maximum amount of furniture.
In the Home Staging Business, there are feasts and famines… or all your inventory is out in homes making you money or the reverse, everything is in the warehouse and you are in need of more storage with nothing making you money. When we did add the second warehouse, much of our inventory was out in homes making us money, but then that little storm known as Hurricane Harvey happened. At the time we had 45 houses staged in Houston. 3 houses were totally lost to flooding and the market slowed drastically. So people decided to de-stage versus keep their houses staged. In addition to the 2 warehouses, we took on storage units again at a nearby storage area costing up to an additional $1000/month. Warehouse costs are just one cost to consider. There’s also insurance for everything. Do I have employees or contractors? With employees come taxes that you need to pay. But with contractors, there are several questions that your state will make you answer to verify that they really are contractors. Then of course there are computer/internet expenses, electric expenses, merchant account fees for credit cards, office supplies, telephone expense, pest control, trash removal… and finally how are you going to transport your inventory to your projects? Are you going to hire a moving company? Rent trucks? Own a truck?... advertising expenses, professional association memberships, professional fees, repairs and maintenance, continuing education, travel expense, staging inventory… Just to name a few expenses.
Simple Elegance’s leases on the 2 warehouses were up March 30th, 2020. However, it’s very important to begin thinking about where you are going to move to a year in advance. In addition, having a really good commercial realtor is very important for negotiating your lease. While we started a year in advance, the actual signing of the final lease happened within weeks of our move. That sounds great but within a lease you want to negotiate a build-out for your new space that will be beneficial for your place of business and how you operate. The build-out should be paid for by the landlord. Sometimes, negotiating a longer lease is better. We signed a 7 year lease with a $60,000 build-out. Build-outs tend to take at lease 4 weeks. We didn’t have this time as we had to move to be out of the warehouses by our date. Otherwise we would have been charged double the rent/month. All of this during the corona virus pandemic. We moved into the back warehouse first with everything. As space for our different areas needed became available we moved into them. However, if we had been fully staging during normal business time, we would have been in a horrible state as we couldn’t get to what we needed. The pandemic actually gave us the time to move.
Our realtor also negotiated things like we could not be ousted by a large commercial lease for the whole building, we have first dibs on either side if they become vacant, 6 months free rent (huge especially during the corona virus pandemic)…. So many things that I had no idea you could negotiate. The one thing that our new landlord would not budge on was the deposit and first month’s rent… over $27,000. However, after 3 years of paying rent with no late fees, we will get $10,000 back. These are huge upfront costs that you need to consider.
Finally, leaving the old properties, you need to leave them in better shape or at least how you found them. We chose to make sure they were cleaned and left how they were given to us. Return your keys via certified return receipt mail to make sure the landlord has received them back. In our case, we did this but everyone was in shelter in place and no one was at the landlords to receive the keys back. I’m not sure where they are floating around currently!
One other option, we have chosen to offer is to rent to other stagers. The reality is that do you want to own everything and have the extra expenses you have with owning your inventory? Or do you want to rent from Simple Elegance on a 30-day basis and have your staging excellence be your revenue from the beginning. We have invested over $800,000 in inventory at this point plus all the overhead expenses. In addition for renting from Simple Elegance, we offer you if we do not have exactly what you need in our inventory, we will purchase it for you, deliver and set-up for you.
We at Simple Elegance are passionate about what we do. Our goal is to make a difference in people’s lives one person at a time by either assisting them with getting top dollar for their house in the quickest amount of time or by assisting them with creating the home of their dream through interior decorating.