Things To Consider When Opening A Retail Store
There are a lot of good reasons to open a retail store, despite society’s love of online shopping. For entrepreneurs, it’s an opportunity to make money while pursuing their passion. Some business owners will be following in the footsteps of their family before them while others will be chasing a dream that is entirely their own.
Whatever the reason for starting a retail store, there are important considerations to be made before flipping the lights on and turning the “Open” sign over. Here are some things to think about when opening a retail store.
What Business Structure Will You Use?
Not all business structures are built the same, and there’s no one size fits all approach. There are a lot of different factors that should influence your decision in this matter. Are you operating as one person, with partners or with numerous investors? Will your business be crossing borders at all? How much separation do you want between your personal finances and those of your business?
Whether you have a California LLC, a Florida sole proprietorship, or a New York S-Corporation, there are pros and cons to each type of business structure. Many aspiring entrepreneurs opt to have an LLC when opening a retail store due to the simplification of taxes and the fact that they’re in one location rather than operating in multiple countries. Others enjoy the separation that a corporation provides.
What Are Your Fixed and Variable Costs?
One of the biggest challenge retailers face is the high overhead cost associated with running a brick and mortar location. You need to think critically about what your costs will be. How much will you be spending on inventory? How much will your rent or mortgage and utilities be? On the flip side of the equation, what margins will you require and does the pricing required to make those numbers a reality work for your demographic?
Assessing your fixed and variable costs will create the foundation of your budget. It’s important to look at these as a part of your business plan before investing too much time and money, as you may find that your current plan isn’t feasible.
What Will Your Web Presence Be?
Retailers know that they can no longer afford not to have a web presence, even if they opt not to sell products online. You need to consider if you want to have an e-commerce portion of the business and what that will entail or if the internet will be a branding tool to entice people into your store.
Having an e-commerce element will add a lot of complexity to your business, as you’ll have to consider shipping and order management in addition to the day-to-day work of operating a brick and mortar store. Alternatively, you can use social media marketing and focus on doing in-person sales well.
Who is Your Target Market?
As with any business, you should take the time to create a business plan and assess your target demographic. Who will be purchasing your products? Who will your advertising be targeted toward? Does the market have enough of these potential customers in your area to validate your business plan?
Knowing your customers will not only help you figure out some of the economics of running your retail business, but it will also lay the stepping stones to figure out your brand strategy and how you communicate with customers.
Do You Have a Supplier?
Where are you going to get the inventory you wish to sell? This consideration links back into your costs, and it is absolutely essential to understand where you’ll get supply and what it will cost you before getting your business up and running. Customers don’t respond well to businesses that are out of stock – make sure you have all your proverbial ducks in a row ahead of time.
Opening a retail store is a significant investment of both time and money. Do adequate research and planning in advance to create a successful retail business model.