People may think you’re crazy for opening up a retail store in this digital age, but we see genius. There are many ways to make your business succeed with same-day eCommerce deliveries and social media advertising. So, how to open a store?
It’s been a long time since retail has been dying, it’s just changing. COVID-19 might have changed our spending habits and shopping behaviors for good, but some stores are growing in the face of trends that would suggest otherwise.
The best way to open a store is by selecting the proper structure, writing an extensive plan, and picking powerful tools that work together. We’ll help you do all of those things so your business can thrive in today’s retail environment.
Meet the new era of commerce
For many years, the omnichannel retail experience has been a big part of the future. But what does it mean? Find out how to take your new store and ensure that customers have a seamless, easy-to-navigate experience on all channels. How to start a retail business?
How to open a store
- Define your legal structure
- Write a business plan
- Pick your business name
- Get licensing and permits
- Choose your business tools
Define your legal structure
Before opening a store, it is essential to think about the legal structure of your business. Your choice will affect how much personal liability for any debts incurred by the company and other factors such as tax rates and capital investment opportunities.
A sole proprietorship is the simplest legal structure, but that doesn’t mean it’s always the best choice. Unlike corporations and partnerships, which require more paperwork to form, a sole proprietor can complete one tax return during tax time.
The downside of being a sole proprietor is that if you fail to repay your business debts, the collateral may include your home and other personal assets.
There are many different types of partnerships, but the critical difference is each partner’s percentage in the company. Depending on how much you want to invest, partnerships can be set up as general partners or limited partners.
General Partnership (GP)
This type of partnership is best for people who can work together and have an equal say in the management decisions. If both partners want primary input, this can be very beneficial.
Limited Partnership (LP)
One of the most common ways to open a store is by partnering with someone who provides capital but does not want or need any responsibility for day-to-day operations. This person would be called a silent partner, and they are very often in this position because they don’t have time to take on these responsibilities.
Limited Liability Partnership (LLP)
An LLP is made up of two things:
- Partners are responsible for the success of their company, but only to a certain extent.
- We allow all partners to participate in the management of our business if they want.
A partnership between two people is typically created to prevent one partner from being liable for the other’s debts. This arrangement is typical among law firms, accounting firms, and service professionals.
For example, in addition to standard expenses like taxes and record-keeping for partnerships or LLCs, there are also complicated forms that need filling out when starting a corporation.
A C Corporation is a separate legal entity from its owners. The corporation can make money, record losses and be taxed independently of the owner. A major advantage to this type of company structure is that it protects you from personal liability for your decisions as an entrepreneur because if anything goes wrong with the business, only the company will have responsibility.
The S Corporation is a popular option among retail store owners because it offers the best of both worlds. The profits and losses are passed through to the owner’s personal income tax, just like in a partnership. However, an S Corp also provides limited liability protection which would be similar to that found with corporations.
Limited Liability Company (LLC)
When it comes to taxes, an LLC is a hybrid of both corporation and partnership. This means that profits are passed through the owner’s personal income tax without needing to file a separate corporate return. Additionally, like corporations, Limited Liability Companies enjoy protection from personal liability.
In knowing how to open a store, one of the benefits of forming an LLC is that you will have a formalized partnership without having to file paperwork with your state. You won’t need annual meetings or detailed records.
The best way on how to open a store is to find out the legal structure that best suits it. The most common way is by filling paperwork with a state agency or government office such as an Office of Secretary of State.
Write a business plan
Once you have decided on a legal structure, the next step is to draft your business plan. Most retailers create either sole proprietorships or partnerships for their companies because it can be difficult and time-consuming to start up as a C Corp.
A great first step to writing a business plan is figuring out your vision and purpose. Ask yourself the following questions: What will make my store different from what’s already there? How can I offer something that others don’t have? Why do people come into my store instead of one down the street or across town?
- Why do you want to open a retail store? Is there enough demand for your product or service that it warrants the investment of opening up shop in this area, instead of relying on wholesale channels and other distribution methods?
- Could you provide any data to show that this need exists?
- What are the core values of your business?
- Who are your customers? What do they value most?
- What is your company’s competitive advantage? Is there another business nearby that does the same thing as you do?
- The key to success is standing out from the competition.
- How will you be able to afford a new car?
- How long do you think it will take for your company to turn a profit?
A business plan is an outline of the goals you want to reach and how you will go about doing so. It also acts as a map for your future, outlining where your company should be in three years or five years. Business plans are not set in stone but are instead flexible enough that they can grow with the changes happening within a company.
A business plan should include:
Products and services
This is where you’ll write down all your ideas about what products and services you will provide, how they are going to be provided (i.e., with or without a partner), who the vendors and suppliers for these items will be, as well as any future expansion plans.
The first question you need to answer is who your customers are. Are they consumers or businesses? Next, what do these two groups want from the company in terms of pricing and product quality? Lastly, why should a customer buy from you over one of your competitors (e.g., better prices)?
Your marketing strategy is where you can get creative and figure out how to sell your product. You need a plan that will help people understand what the brand stands for.
When opening a new business, it is important to consider all the ways that you can market your company. Some options include social media posts, online ads and blog posts as well as reaching out to local news sites or online publications for press coverage.
You also want to include information about how you plan on pricing, merchandising and developing partnerships. For example, when it comes to the layout of your store; are you going for a certain theme or do you have high-profit margin items at eye level?
Partnerships with other local businesses and community organizations can help broaden your reach.
Employees and staff
When you grow, the probability of being able to do everything yourself decreases. You will need some help.
I am looking for employees who can work all week, and during the day on specific hours. I will be posting my open job listings in various places such as Craigslist or Monster.com with a screening process to make sure they are qualified.
Finally, a business plan needs to include projections for revenue and expenses.
The best way to do this is with a pro forma statement. This should be done using historical data that can easily be pulled from your POS system, and it will need to calculate how much revenue you had in the past year or month (depending on what time period) as well as any COGS expenses for that same timeframe. You’ll also want to subtract all of your operational costs during the period so you know exactly where money was spent when calculating performance.
If you’re just starting out, it can be hard to estimate how much your salespeople will need in base pay and commissions. You should start by looking at profit margins from the marketing efforts so far, as well as operating expenses like payroll or rent for retail space.
Pick your business name
Choosing a business name is crucial because it impacts your brand identity. You can choose from straightforward, logical names to pun-filled and offbeat ones. If you’re having trouble coming up with one of these, use a free generator to get some ideas.
Once you have your business name nailed down, we recommend checking to see if the web domain and corresponding social media handles are available. We also suggest registering any matching website domains before starting the paperwork.
Get licensing and permits
Getting permits for your business is not the most exciting task on this list, but it’s important. Opening without proper licensing can lead to criminal charges or hefty fines depending on where you live.
Employer identification number (EIN) or Business number
For businesses in the United States, an EIN is a business’s social security number. The good news about getting one of these numbers is that it only takes a few minutes to apply for them on the IRS website and they will be delivered right away.
State and provincial local licenses
The Government of Canada website is a great resource for finding out what licenses are required in your province. If you want to know about federal requirements, the SBA and other websites can help.
Some retailers might not require federal licensing, but others will. If you’re opening a clothing boutique or store that sells food items for example, then chances are you won’t need any licenses from the government to do so. But if your store is one of those selling alcohol and tobacco products such as wine shops or vape stores -then it’s most likely necessary to obtain a license.
If you are a retailer, then you will need to buy items from vendors or distributors and resell them. A resale certificate allows retailers to purchase these products without paying the tax that is associated with it. This interactive map can be used by clicking on your state of residence in order find out where you should go for applying for this certificate.
If you are a business owner, having an active seller’s permit can save your company thousands of dollars in sales tax. To get one, visit the state website for their department of revenue.
Certificate of occupancy (CO)
All brick and mortar stores need a certificate of occupancy to ensure that the building is up-to-code. This can be obtained through your local government.
Choose your business tools
Once you’ve registered your business and put together a plan, it is time to figure out the tools that will help run and grow your company. Here are some of the main things I would recommend:
Retail point of sale (POS) system
A modern POS is not just for credit card transactions anymore. This system will allow you to process all major payment types, as well as offer advanced reporting and inventory management tools that can help grow your business.
Registering for a credit card payment processor is essential to accepting payments at your register. The best processors are the ones that have low fees and easy-to-use interfaces.
Tools for today and beyond
Keep your customers and employees safe by setting up shop with the latest in security measures. Signing up for a mobile payments app will allow you to take sales beyond your store’s walls, while screen guards keep everyone inside protected.
It can be very frustrating to keep up with accounting when you’re running a small business, which is why we recommend signing up for an account software platform as soon as possible.
For small businesses, marketing can be a challenge. Luckily there are plenty of tools to make it easy – for example, you could use your POS system’s email integration tool to capture customer emails and send them special promos directly from the store front. Your business will also have an easier time managing its presence across sites like Facebook, Google or Yelp with help from your POS.
If you’re looking to start an online store, it’s important that the platform is compatible with your point-of sale register. Platforms like Lightspeed make eCommerce easy and user friendly by syncing inventory across platforms.
Get ready for opening day with Lightspeed
Opening a retail store is not easy, but there are tools that can make it easier. Consider all of the important paperwork and research upfront to manage your business better from day one.