How to start a retail business: 9 Steps to get your biz up and running
Many people dream of opening their own business, but not many people realise all the behind-the-scenes work that comes with a thriving retail operation.
The number of companies has increased in the last year by 31,000, and despite challenges, most business owners are pretty optimistic. That confidence most likely comes from the fact that they started off on the right foot, did their research, and have a viable business plan that can guide them to retail success.
That’s what you have here — a retail roadmap of sorts to get you started on your path to success. By taking the steps listed, you’ll be well on your way to starting a retail operation of your own.
1. Determine What Products You’re Going To Sell
The cornerstone of your retail business is the products that you sell, and many factors will come into play when make this decision. The three most important factors to consider are knowledge, demand, and margin.
First of all, you should have some knowledge and general interest in the products that you’re selling. Knowing your product well will help you make the right business decisions, and if you’re already familiar with the merchandise, you’ll find it easier to pick the right suppliers, find the best people, and decide on pricing.
Next, consider the demand for the products you’re looking to sell. You can be knowledgeable and passionate about a product, but if nobody is demanding those goods, they’re going to be a loss. See if people online are searching for similar items, read up on the facts and figures surrounding your market, and consider joining trade organisations like the British Independent Retailers Association, which is a goldmine of consumer data.
Finally, figure out how much it would cost to make or purchase the merchandise and how much you can sell them for. Get in touch with potential suppliers, and compute an item’s direct costs margin by determining the cost of the product, then subtracting that amount from its selling price to find its margins.
2. Decide on a Location and Channels
We’ve all heard it said — location, location, location, and for good reason. The right retail location is critical, but you have to balance the best location with your budget. You don’t want to overspend to be in a prime area, but you don’t want to underspend and not have any foot traffic.
Start by narrowing down your location choices to areas where your target audience is located, find spaces for lease through online marketplaces, and ask a lot of questions. Is it easy to find? Is it safe? What’s the parking situation? Take notes and make sure you get the answers you need before signing a lease.
More than ever, customers are shopping through multiple channels, which means you have to consider omnichannel retailing for your business. Will you also have an online store in addition to brick and mortar store? Will you have a mobile app? Do you have the bandwidth to expand into the social media realm?
Determine in advance what channels you will have for the customer to engage you, and then create a consistent brand experience through all of the channels.
3. Research the Laws
Depending on what type of retail business you’re starting, there are going to be business regulations, licenses, and taxation to take into consideration.
Visit the necessary government websites/offices to find out what list of the permits, fees, laws, etc. are required to get your business up and running. It can also be helpful to consult with people who can help you comply with the requirements for your business, such as a lawyer, accountant, or contractors.
You also want to ensure that your business is ready for Making Tax Digital (MTD), an HMRC government initiative to make the UK tax system easier and more efficient for taxpayers. From 1 April 2019, almost 3 million UK businesses will be required to keep digital records and submit VAT returns using a software solution. To that end, see to it that you’re using certified accounting software that complies with the HMRC initiative.
4. Write a Business Plan
If a plan isn’t in writing, you’re setting yourself up to fail. Writing a business plan forces you to consider all angles and all areas of your business, and will require that you do extensive research and planning. It’s a tedious process, but there is a definite correlation between a well-written business plan and a store’s success.
A solid business plan should include:
- Competitive Analysis (who is already in this retail space)
- Expected Customer Experience
- Employee Analysis (who to hire and why)
- Management Plan (hours, policies, etc)
- Financial Pro-forma (3-5 year projections of your P&L)
5. Figure out your tech stack
Gone are the days when you can run your business using a spreadsheet — or worse — pen and paper. To stay competitive in today’s market, you need to arm your business with solid retail technologies that can help you stay on top of your sales, inventory, customer data, and more.
No matter what type of store you have, make sure you have the following:
EPOS system – Rather than a traditional cash register, get yourself a cloud-based EPOS system that lets you ring up sales with ease. Modern EPOS solutions such as Vend can work on any device with a web browser, so whether you prefer using an iPad, Mac, or PC, you’ll have the flexibility to do so.
Inventory management solution – Your products are the lifeblood of your retail business, so staying on top of stock control is a must. It’s important that you select an inventory management solution that allows you to track, manage, and transfer stock whenever necessary.
Customer relationship management system – Today’s consumers expect personalized experiences. In order to fulfill that, you need a robust CRM that allows you to collect shopper data and segment your customer base with ease. This, in turn, can help you craft tailored marketing and communications that drive traffic and sales.
Reporting and analytics solution – There’s no room for guesswork in retail. Having the right data is critical when you’re making decisions on what to order, what to put on sale, and how to market your products. That’s why it’s important to use a reporting and analytics solution that can surface insights into your sales, margins, revenues, and more.
For best results, consider an all-in-one retail management system like Vend, which offers all of the above features. Running your business from a single platform streamlines your operations and helps you run a tighter ship.
Accounting – As a retail business, you need to stay on top of sales, revenues, and taxes. Keeping records of all those figures requires a robust accounting solution that can help you track and reconcile your finances.
To get the most out of the system, consider using accounting software that integrates with your POS system so sales information smoothly flows from one platform to the next. This prevents double-entry and human error.
And as mentioned earlier, you should select a system that’s HMRC compliant, so you’re ready for MTD. You can visit the UK government website for more info.
6. Hire a High-Performance Team
The greatest asset to your business will be the people you hire to make your business a success. They’re the face of your brand, so make sure that you’re hiring people who are passionate about your mission and your business goals. Customer experience is key, and the only way to deliver on that is to hire top talent.
Start by touching base with your personal and professional contacts and letting them know you’re looking for people to help you out in your store, then ask for referrals. Post a job listing on LinkedIn or other career sites, and then evaluate applications before starting the interview process.
Take detailed notes through each interview, and if possible, have other people (advisors, managers, investors) also meet with candidates so you can get different perspectives. Remember that experience isn’t the be-all-and-end-all. You can teach someone about products and the logistics, but you can’t teach them how to be magnanimous, compassionate, and passionate about customer experience.
7. Define Your Store Policies
The planning stages are an important time to establish policies and procedures for your retail business. Start by anticipating problems and defining how you’ll handle special situations, in addition to the normal day-to-day operations. This helps prevent any mistakes you might make once you’re faced with customers.
Train and role-play with your employees on these policies and potential situations so they’re aware, educated, and can deliver the best customer experience.
8. Market Your Products and Services
It’s great that you have a new store and eager employees, but if nobody knows about how great your products and services are, it will all be for naught. Before you ever open your doors, start spreading the word.
Create a retail marketing plan, brainstorm promotional sale ideas, and brand and advertise your retail store. Your marketing plan will greatly depend on where your customers are most often found. For example, some businesses will find great success funnelling their marketing dollars on Facebook or social media, whereas others will get a better ROI through print or direct mailings.
Regardless of the channel(s) you employ, it’s key that you learn how to use loss leaders, media buys, and sales events to achieve the greatest benefit for your retail operation.
9. Prepare For Your Grand Opening
You’ve done the research, found what you hope to be the perfect location, hired rock star staff, armed yourself with the right tech, and have a store filled with in-demand products. Now you’re ready for the grand opening — which is no easy feat.
This is your only chance to make that great first impression, so make sure all of your employees know how to handle every situation. Check that every sale, every sign, and every product is ready to go, and make sure you have enough staff to handle the crowds — staff that can tell each and every customer about why your store is unique and the mission behind the brand.
And it is a “grand” opening, so plan on making it special. Figure out your budget, a theme, and any special events/promotions you’ll launch on that day. Spread the word to your network through social media, and reach out to reporters or bloggers with an interesting angle in an attempt to get coverage.
The Bottom Line
Owning and running your own retail store is a highly rewarding endeavor, but not for the faint of heart. It takes a lot of planning, a lot of money, and a lot of hard work. Take the time to talk to others who have been in your shoes and talk to them about the challenges that they’ve faced so you can better prepare yourself.
But at the end of the day, remember why you’re starting this in the first place — you have a passion for what you do, and when customers feel that passion, you’ll be well on your way to success.