Owning your own retail business is often a dream for many people—maybe you've always wanted to own your own bookstore, boutique, or bakery. However, we have to warn you: not every retail store is profitable in the long run.
Small businesses make up the vast majority of the retailing industry, although they don't get as much media attention as larger chains. Supermarkets and franchises are popping up like mushrooms, but your own retail business services are still a good idea for a brand-new company!
What is retail?
Retailers source their goods and services from other companies and then sell to the general public with a profit margin. In fact, almost everything you buy, you buy from a retailer, from food and clothing to home furnishings and cars. There are just too many types of stores to name: for example, a book store retails books, while a boutique retails clothes and accessories.
What is the retail market? This is a total of all retail business services and companies in a given area. The retail market is very receptive and can almost always accommodate more retail shops, but entering the retail industry is always a risky venture due to the high level of competition.
Therefore, if you want to join this dynamic sector and start your own retail outlet, you should familiarize yourself with the basics of opening a retail store.
In this article, we will explain how to create and develop your own retail shops, and how to promote it efficiently. If you want to enter the retailing industry, we have plenty of advice for you!
Step one: Get an idea
You may already have an idea of the type of business you want to start, but you may also be struggling to narrow down your retail business. Think about what you like to do and sell. If you are a fashion expert, it is obviously worth opening a boutique. You need to know the market inside out and work at it with passion. Some of the most well-known examples of retailers started because the owners knew what they were trying to achieve.
While you’re thinking about your new store, it’s also important to choose a business name for your company. Think about what you’re going to sell, what’s your main mission.
Think about the bottom line: If you are retailing, you want to make money, so you should focus on a market segment that can make a profit. If there are no other companies in your target market, there is probably not enough interest to support a profitable niche. However, you will be much more successful if you know the market well yourself—if you know the fashion industry, you have a better chance that your boutique will be successful. Don't feel compelled to open a mail order gadget store just because those types of stores get good business!
Step two: Write a business plan for a retail outlet
A business plan is a written document outlining goals, strategies, and timelines for achieving those goals. It's the first thing you need to start for all retailing businesses around, because without one you won't get investors. What's more, a well-thought-out business plan is also there for you—it will help you organize your efforts, think through methods and means, and help you analyze the retail market.
You will find a great guide to writing a business plan for a small business on our blog. Check our site for more information for beginning entrepreneurs!
Step three: Think about methods of acquiring goods
How to open a retailing business? Buy cheap and sell expensive! But where to get the things you will sell? Finding a trustworthy source is your next step. When writing your business plan for a retail store, develop a strategy for sourcing products.
You can produce them yourself—a good option for craft businesses. Maybe you are retailing handmade costumes for cosplayers, or hire a professional to craft wooden toys. This approach provides the greatest degree of customization of the final product, but it takes the most time to implement.
You can also buy goods from a manufacturer or wholesaler. A typical retail store buys goods at a wholesale price and retails them at a higher price. This is the fastest way to get the product, but it also gives you the least say over the final product.
Dropship is selling items to customers without holding inventory. You buy the goods from the manufacturer and give the destination shipping address right away. This requires the least effort on your part, but also yields the least profit. You can learn more about dropshipping by reading our blog.
Step four: Get funding and investors
To open your own retailing business, you will need to prepare some money. You'll need to purchase inventory, rent or lease premises, hire employees, prepare advertising…. and that's just the beginning. Many novice business owners, and even some experienced ones, will need to raise additional funds to cover these expenses.
There are many ways to finance a small business, for example:
- Government subsidies (especially for innovative companies)
- Loans from the bank
- Support from business angels
- Advances on future profits
Step five: Make sure your licenses are in order
There are legal requirements that even the smallest retail shops must meet. You need to register your business—depending on your country or state in the US, whether with the chamber of commerce or your local government office.
You also need to obtain the necessary licenses, depending on your industry. Examples of retailers requiring licensing are the sale of, perishables, imported goods, food, and medicine. Without the necessary licenses, operating a business can be illegal in some areas and result in heavy fines in others. Contact the relevant offices in your city to find out what permits and licenses your business requires.
Step six: Choose a physical location
Even if you want to do online retail or drop-shipping, it's a good idea to have some sort of office or warehouse for your retailing businesses. Consider how far you want to commute every day for the foreseeable future. Go to locations that are convenient for getting to and from home.
However, when you choose a brick-and-mortar store, you may or may not want to put it where your customers are. For example, boutiques and bookstores do well near the university where you can find young people window-shopping—but if you're presenting costumes for cosplayers you probably have little traffic and the customers will come to you.
Consider other aspects of physical location as well—for example, is there a garage or parking lot that is exclusively for building use? This can determine whether your customers will enjoy using your business! Retailer companies should also take into consideration availability of outside advertising—can you put out signs and banners?
Step seven: Plan the interior and marketing of your business
Retail industry is not only about trading, it is also about marketing your own business. You need to take care about your own image so that potential customers can find you. Think about how to define your company's identity; what customers remember most about your company. Choose your style, logo, and font. Many stores have a distinctive color scheme—for example, black and orange for amazon.com.
You need to plan the entire customer experience carefully and plan the interior of your store. Take care of how your customers feel when they shop with you: this includes everything from the initial greeting to the ease with which customers are able to find certain products and even try them out themselves. Arrange your shelves accordingly, place your cash register in a good spot, and think about your storage space.
Step eight: Plan the opening
Kicking off your advertising campaign with a grand opening is a great idea. This way you will attract new consumers and make those who leave on opening day return. Hold a sale or discount with prices for one day only.
Use social media to spread the word and make sure you have a media presence in the locality. Also use outdoor space to maximize your chances of attracting customers, deploy advertisements and banners.
Starting your own retail businesses isn’t hard—especially if you have help! Check out our guides and helpful reviews, and come back to our sites to find more advice for beginning businesses!
