Opening a Retail Store: How to Get Started
Opening a retail store has always been my dream. When I was a child, I would spend hours in department stores just browsing through all of the merchandise. To this day, I still like to window shop and browse in retail stores. There’s just something about the whole experience that makes me feel so fulfilled.
If you’re thinking of opening a retail store, then this guide is for you! We’ll cover everything from the legal basics to finding the right location and building vendor relationships. By the end of this guide, you’ll be ready to open your doors and welcome customers into your very own shop!
What is a Retail Business?
A retail business sells products and services to customers for their consumption, pleasure, or use. Retail businesses sell products and services in-store, but some items can be sold online or over-the-phone and shipped to customers. These businesses include grocery, clothing, drug and convenience stores.
Opening a Retail Store: Important Tips
1. Create an idea and a business plan
The first step in opening a retail store is to come up with an idea and create a business plan. First, you’ll need to decide what type of store to open. Each of the following questions will need to be answered:
- What can you sell your business?
- Who are your target customers?
- What price range will your business charge?
- What are your local competitors?
- Who will be part of your team?
There are many other questions you need to answer, but opening a retail store is just like any other business. It is crucial that you know what you want to sell, and who your target audience is. It is important to create a retail shop that fulfills the needs of your customers.
Juli Lassow, founder of JHL Solutions, a retail management consulting firm, stated, “Know your competitors. No idea is original today. Know what options your customers have for you and your product. It could be as simple as doing nothing.”
Once you have a good understanding of your competition, create a strategy to compete. What about price? On quality? Service? What about variety? Be specific about your competitive advantage. How you will communicate this to your customers through marketing or presentation is key.
You should also consider marketing ideas and business funding. Are you going to need business loans? Are you willing to take on investors? What marketing channels will your team use? Do you need people to help with social media marketing? What online channels do your customers use to communicate with you?
Also, consider all your costs. Make a list of all the fixed and variable expenses that could affect your business. It is easy to think up a great idea, but forget about the hundreds of thousands of dollars of costs.
It is possible that you will discover that the cost of opening a brick-and mortar store is too high for you. Instead, you can start an online business to save money and eventually open a small location.
2. Choose a Good Business Name for Your Retail Store
Your business name is one of the first things customers will learn about your company, so it’s important to choose a good one. A good business name should be meaningul, simple, and unique.
Although the name of your retail store shouldn’t be the main focus when opening up shop, it’s still important to put some thought into what you’ll call your retail company. Keep in mind that you’ll want to avoid any names that are already trademarked or taken. A quick Google search can help you determine if the name you have in mind is available.
3. Take care of legal requirements
Choosing the correct business entity, complying with regulations and getting the required business licenses or permits are all important.
If you are opening a retail store, you’ll need a few standard government-issued documents. These include a basic business operations permit, which grants you the right to operate your retail business within a particular city, county, or state. An EIN, which is a tax ID number that is necessary to hire employees and ensures that you collect taxes.
A seller’s permit, which depends on your type of business. Check with the state government to determine if you need one.
When it comes to selecting a legal structure for your business, you may want to consider becoming a sole proprietor. While this option can be risky for retailers, it can provide some benefits.
Using an LLC or corporation for your business is a good way to insulate yourself from personal liability for your business’s debts and obligations.
Most businesses, especially retail, choose to form LLCs or Corporations to limit their liability for the business. These legal entities can protect the individual owners if the business is sued.
4. Find the best location possible
When you’re opening a retail business, it’s important to find the best location possible. This means considering things like foot traffic, visibility, and accessibility. You want to choose a spot that will help your business thrive.
While it can be tempting to save money on rent by locating your business in a less busy part of town, it doesn’t always pay off. Sometimes, the busier the location, the more business you can potentially get.
Downtown businesses tend to bring in more customers than other locations, but it comes at a cost. The rent may be higher, but if you’re bringing in thousands of new customers, it may be worth the extra expense.
When deciding where to open a business, it’s important to consider where your target clients spend their time. If most of your customers are out of town, opening a business in a central location might cost you more and result in less sales.
If you are planning on having a lot of products, you might want to find a warehouse or storage facility that can store your inventory. This will keep your costs low, which will enable you to keep your product pricing competitive.
5. Make a personalized experience
Retail success is often the result of adding a personal touch that your competitors aren’t. This typically involves personalizing your interactions with customers.
Some stores allow their customers to physically try their products.
While online retailers may have a more difficult time offering personalized experiences, brick-and-mortar stores can use strategies such as free samples or dressing rooms to create a more customized experience for their customers. By doing so, these businesses are able to build stronger relationships with their shoppers and improve overall customer satisfaction.
Physical stores need to personalize their shopping experience and offer customers a quality experience to continue to attract them.
6. Build vendor relationships
When opening a new store, small business owners have to find ways to please their customers despite the many challenges they face.
Having a good relationship with your suppliers, like wholesalers, distributors, and manufacturers, can help you prevent any potential issues with your supply chain.
If you want your business to be successful, it’s important to develop strong relationships with your vendors. This can be difficult to do if you’re working with overseas vendors.
If you’re looking to find products overseas, it’s essential to partner with experts who can help you with the importing process. This will ensure your products are delivered smoothly and without any complications.
7. Exploring Marketing Opportunities for Your Retail Business
If you’re looking to take your online store to the next level, it might be worth experimenting with physical stores.
Consider opening up a temporary pop-up store! These shops are set up in short-term locations in cities, which can be a good way to attract new clientele. For instance, your clothing company can set up a shop in a busy area of the city for just one day.
If you don’t have an online retail store, opening a pop-up shop can still be beneficial. By having a physical retail location, even for just a few months at a time in different locations, you can reach new potential customers that you wouldn’t otherwise have access to. This could help increase sales and grow your business.
Pop-up shops are temporary stores that can be set up in empty storefronts or in rented spaces.
Other marketing opportunities may come from things like social media or in-store discounts. Sales are always a great way to bring customers into your store! You can get creative with the different marketing opportunities as well.
Hosting events, offering discounts, and giving out free items are all great ways to boost sales during holidays.
Alternatively, you can discount your holiday products. This will encourage customers who need their purchases in advance to purchase from you.
No matter what marketing and sales tactics you use, it’s important to be creative. Find ways to reach your customers with innovative marketing ideas.
8. Plan for a big grand opening
When opening up your retail store, you should plan a big grand opening. You don’t have to spend a lot, but you do want to draw in a crowd.
If you’re opening a new business, be sure to let local media know. Getting media coverage is a great way to spread the word about your company and is totally free. Share your story with reporters about why your shop is unique and how it fits into the community.
When reaching out to a journalist, be sure to do so in a respectful manner.
It’s important to start promoting your business’s grand opening well in advance through social media and other marketing channels. You don’t want to wait until a few days before the event to get people excited.
You need to ensure your grand opening is a success if you want to make a good impression and get people talking about your business. Plan ahead to make sure everything goes off without a hitch.
Resources and software Every retail business needs
Retail businesses often uses the following six software and resources. You may need additional tools depending on the retail store you are opening. This list is a good starting point, but it will likely need to be modified to meet your store’s needs.
1. POS System
A point of sale system, or POS, is one of the most important tools that you will need to manage your retail business.
Point of sales software allows you to accept multiple forms of payment, such as cash, credit card, and mobile payments. The software can also print receipts, scan inventory barcodes, or store cash. There are many point-of-sales systems that can be used to manage customer transactions. We’ll talk about them shortly. It would be extremely time-consuming and difficult to track all sales and payments without a POS system.
These POS systems are ideal for retail businesses.
- Square Point of Sale
An inventory management software may be necessary for your retail business. This software will keep track all information about your inventory so you can see which items need replenishment and how often. Many POS systems, such as the five we have just mentioned, now include inventory management systems. This means you don’t need to look for another software.
2. Stock Keeping Units
A retail business will typically have a stock keeping unit (or SKU) system to keep track every piece of inventory. A SKU, which is usually located alongside an item’s Barcode, is a combination number and letters that is used to identify and organize your inventory according to characteristics such as size and color.
Instead of creating your own SKU, POS systems that include inventory management capabilities have SKU creation capabilities.
3. Retail blogs
Every business owner needs inspiration from time to time. Retail blogs are a great way to keep up with current retail trends and learn what’s working for similar businesses. The Retail Doctor and Medallion Retail blog about topics such as growth, industry trends, new technology, and in-store business vs. eCommerce.
4. Software for Employee Scheduling
You’ll likely be adding to your retail business as it grows. Managing any number of employees and their schedules is easy with employee scheduling software such as Ximble and TSheets. This software allows you to organize, update, and maintain your business schedule so that your employees know when they should be arriving at work.
If you’re thinking of opening a retail store, then this guide is for you! We’ve covered everything from the legal basics to finding the right retail location and building vendor relationships. By following these steps, you’ll be ready to open your doors and welcome customers into your very own shop!