6 Steps How To Start A Small Retail Business

doylc.com - How To Start A Small Retail Business - If you are an aspiring or established entrepreneur looking to open a small retail business, there are many things to consider before opening your doors. There are numerous options in terms of location, the type of goods you will be selling, and other factors that ultimately affect the success of your business. It is important that you, or someone you work with, have extensive experience in various roles in a small or large retail store to navigate the process of opening a retail store.

• How to decide what to sell

Choose a product that you are interested in and knowledgeable about. You don't need to be an expert, but you should have working knowledge and a genuine interest in the product you are going to sell. Understanding your product can help you make good business decisions in the future. Also, you may already have contacts with suppliers and other professionals in the industry who can help you get your business up and running. To decide what to sell, you have the following options:

Rate your hobbies. If you have a passionate hobby, see if it could turn into a sales opportunity. If you already spend a lot of time on something, you probably know a lot about it. Your enthusiasm for and knowledge of the product can help you educate customers, which translates to more sales.

If you are an avid gardener, you should consider selling gardening supplies.

If you enjoy refurbishing items bought at flea markets, consider opening an art and antique shop.

Be inspired by your job and your education. Your education and work experience have likely provided you with useful knowledge that you can use to run a retail business. Think of the skills and practical knowledge you've acquired as you build your career. Ask yourself if you could see yourself selling related products.

For example, a hairstylist might consider running a cosmetics business.

Measure the demand for a product. No matter how much you love something, it won't sell if there's no real need or desire for it. Do some market research. This way you can tell if people will buy your product or not.

Study if people buy a product. Visit online marketplaces like Amazon or eBay. Amazon has a Best Sellers page that lists products that are selling well. On eBay, you can search for completed sales within a category. Examine how well products have performed in auctions. If it sold quickly or there was a bidding war over the item, it could be a product worth selling.

Visit the Google Adwords Keyword Planner. Enter keywords related to the products you want to sell and see how many searches have been made on those terms. This can help you gauge demand for a product.

Visit retail stores that already sell the product you want to sell. Evaluate performance by noting how long products sit on the shelf and whether they sell at full price or only when they're discounted. Ask the owners what their bestsellers are.

Read trade magazines and academic journals related to your industry or target market. These provide you with a comprehensive understanding of the market. Find out about market trends. Find feedback about the product you want to sell. Evaluate the ads displayed in the publications. If someone was willing to buy advertising space for a product, they're probably a good seller.

Look for current facts and figures. This information will not only help you gauge the market, but will also be useful in making the financial projections you need to obtain financing. Read retail sales reports published by the US Census Bureau. These are updated every five years and provide information on sales trends in various sectors. Also, join a trade organization like the National Retail Federation. Their Retail Insight Center lists industry and consumer data collected from government agencies and consumer surveys.

Estimate your potential profit margin. Find out how much it will cost you to produce or source the product you want to sell. Compare this to the amount you can sell it for. Determine if the profit margin is sufficient to make the business worthwhile.

Meet suppliers through trade organizations, attend trade shows or visit online platforms such as Thomasnet.com. Compare wholesale information, retail prices and minimum order requirements.

Determine the selling price by researching what other stores are asking for the product. Visit an online marketplace or brick-and-mortar store to do this research.

Calculate an estimated direct cost margin. The formula is Direct Cost Margin = Selling Price Total Direct Cost.

If an item costs $5 to make and you sell it for $20, your direct cost margin is $15.

Calculate the percentage of direct expense margin. The formula is Direct Cost Margin Percentage = Direct Cost Margin/Sales Price*100.

You would expect the above example.

• How to write business plan small retail business

Write a business description and market analysis. Provide a general assessment of the type of business you intend to open. Describe the types of items you want to sell. Identify your target customers, their differentiators, and how you will meet your customer's needs. Identify your competition and explain how you have a competitive advantage.

Suppose you want to open a small pastry shop. The items you will sell are gourmet coffee and pastries.

Your target customers could be commuters on their way to work or guests from nearby restaurants looking for a place to enjoy dessert.

You can plan to meet your customers' needs by offering expedited service, dedicated seating, or even a drive-through window.

Advantages over your competition can be your location, a well-known pastry chef, or a special recipe you use.

Describe your organizational structure. Provide details of business ownership and information about your management team, including their qualifications and how those qualifications complement your skills. Write an organizational chart with narratives of who does what and who is responsible for each function. Ownership information should include the names of the owners and the percentage of the business that they own. Enter the legal form of your company.

Describe your marketing strategy. Explain how you will promote your business on a budget and fill it with paying customers. These strategies can include ads in the newspaper or direct mail and flyers. Additionally, you could offer coupons or discounts to attract new customers. Finally, networking is a powerful marketing strategy. Introduce yourself personally to local businesses, join the local Chamber of Commerce, small business associations or local charities.

Explain your plan to fund the start-up costs. When applying for funding, be specific about the amount you are applying for and how it will be used. Enter the desired amount. Explain in detail how the funds will be used, e.g. B. for capital purchases, marketing or starting inventory. Define the type of funding requested, e.g. a debt you wish to repay or an offer of company equity.

Provide financial projections. Write down how you think your coffee shop will develop over the next five years. Create forecast income statements, balance sheets, and cash flow statements. Create a budget for capital expenditures, including food service and countertop equipment, storage and office equipment. Explain your pricing structure, including the cost of making menu items and the prices you will charge to make a profit. Describe discount pricing strategies.

Discount strategies include price bundling (offering a discounted price for multiple items purchased together), complementary pricing (lower price for a common item like coffee and higher price for others), and loyalty discounts.

• How to search for a location retail business

Work with a commercial real estate agent. An experienced retail agent can show you properties that fit your needs and can be let within your budget. You can also contact the commercial real estate development company that owns a specific property that interests you.

A good alternative would be to take over an existing retail business with a loyal customer base. A commercial real estate agent is also familiar with these options.

Conduct research on your potential business location. Search public records of how the location used to be used and statistical data like average income in the area. Find out if there are competitors and similar ventures nearby.

Once you've found a potential site, observe the area for a few hours and analyze neighborhood foot traffic. Is it close to public transport or highways? Is there enough parking space? Being close to the competition can help attract the right customers if you think your products will be superior.

You should also analyze the demographics of the area. Does the income level match the type of clientele you want to attract? Your local librarian or commercial real estate agent can assist you in providing this information.

Once you find a location, buy insurance policies for general liability and fire insurance.

Determine your needs. Find a location that presents you to your customers and matches your image. Make a floor plan and look for a site with a suitable area and layout. Pay attention to the proximity to suppliers. Assess the local job market to determine if the area has potential employees. Find out about local zoning regulations. Find out about the local crime rate to ensure the safety of your customers and employees.

Develop a budget. Determine what you can afford for rent each month. Watch out for hidden costs such as B. Repairs. Startup costs can include renovations and decorating your premises. Budget for local property taxes.

Plan for future growth. If you plan to expand your business in the next few years, find a building with extra space. Communicate with the landlord about the availability of additional space in the future. Additional space may include a second floor or an outdoor space.

• Finding Out Your Finances

Determine your expenses. Lists all of the expenses your business incurs at the start. You may need to invest a lot of money first before you start making money. If you plan how you spend money, you can spend it wisely and make money sooner.

Rental and operating costs include your rent and initially any deposit that may have to be paid. Other expenses in this category include utilities and staff costs.

Property improvements and customizations include construction costs, furniture and fixtures, appliances and office supplies.

Technology and communications spend includes computers, phones, the Internet, point-of-sale (POS) terminals, card readers, scanners, and printers.

Calculate how much you need to spend on inventory to start your business.

Marketing and advertising spend includes print, online, television and radio advertising, opening ceremony expenses, printed marketing materials such as posters, flyers and coupons, and design work for your logo and signage.

Other required fees include licenses, permits, taxes, registration, attorney fees, and accounting fees.

Identify funding sources. Find out where to look for financing to boost your retail business. If you're borrowing money from friends or family members, keep your relationship safe with a written agreement that spells out the terms of the loan. Banks offer traditional commercial loans, and the Small Business Administration (SBA) works with the government to offer several loan programs for entrepreneurs. State, county, and local business development agencies support small businesses that boost local economies by offering funding, loans, and grants.

Contact the SBA for information on obtaining an SBA-guaranteed small business loan. You would then apply for the SBA loan at a local bank or credit union. This type of loan guarantees repayment by the SBA if you default.

Consider a home equity loan. Find a bank that will give you a home equity loan or line of credit. You would use your own home as collateral. Make sure you can pay back this loan or you risk losing your home. You must also have a credit score above 600 to take out this type of loan.

Consider microcredit. Internet microcredit services (also called peer-to-peer lending) help borrowers find lenders for relatively small loans, typically under $35,000. Do some research on these pages and familiarize yourself with all the rules and regulations to avoid any misunderstandings later.

Popular microcredit websites include Kiva, Prosper, and Lending Club.

• Compliance with Laws, Rules and Regulations

Choose your company structure. The structure you choose has tax implications. Find out about the different types of corporate structures. Choose the one that best suits your business.

A sole proprietorship means that you are solely responsible for the business. You claim all gains and losses against your personal income taxes.

A corporation is a legal entity owned by shareholders. Shareholders are not personally liable for company losses. Taxes are paid by the company on profits, and then shareholders pay taxes on dividends they receive from the company. Businesses must be registered in the state where they do business. You must file the articles of incorporation with the Secretary of State in that state.

A partnership is an agreement between two or more parties to conduct a business. Each partner contributes to the business and shares losses and profits.

A limited liability company (LLC) offers the liability protection of a corporation with the tax flexibility of a partnership.

Register your company name with your state government if required. You can do business under your own name or choose another name for your business. Check with the US Trade and Patent Office for trademarks and choose a name that is available as a URL address so your website address can be the name of your business. A DBA (Doing Business As) is required whenever you are doing business under a name other than your own. Registration of a DBA name is usually done through your state government or county clerk's office.

Choose a name that not only looks good on a logo or sign, but also reflects your store's philosophy and culture.

For example, if you're opening a chic boutique, you'll want to use words and phrases in the name that indicate style and appeal to your target audience. You can use your own name or integrate your location with a name like "Charlotte's Uptown Closet".

If your store sells cute things and you're targeting a young audience, use a cute name, such as B. Dress Up Shop or Rose Petal Boutique.

If you sell more sophisticated styles and are targeting a high-end clientele, you would choose a name that reflects that image, such as B. La Couture.

Apply for state licenses and permits. Every state requires companies to register with them in one form or another. Licensing and permitting requirements vary from state to state. Visit the website of the state in which you wish to do business. Learn about the procedures for applying for applicable permits and licenses.

Apply for state licenses and permits. Only certain categories of businesses require federal licenses and permits. If you are selling something that is regulated by a federal agency, you must have a federal license or permit.

To sell alcohol or firearms, you must comply with state licensing requirements.

If your business is involved in the sale of products related to aviation, commercial fishing, mining and drilling, marine transportation, agriculture, nuclear power, radio and television broadcasting, or transportation, you must contact the appropriate government agency to learn more about licensing requirements .

Obtain a federal tax ID number. You must file a separate tax return for your business, so you need an employee identification number (EIN), also known as a federal tax identification number. You can find the form online at www.irs.gov.

The most efficient method is the online application. You will receive your EIN immediately.

File the required state tax returns. Almost every state requires corporations to file income taxes. Also, most states require companies to pay payroll taxes. In some states, companies are also required to pay for temporary disability insurance. Depending on your state, you may also have to pay unemployment insurance tax or worker's compensation insurance.

• How to hire staff

Determine how many employees you need to run your business. Write job descriptions that define each person's role, responsibilities, and hours of work. If possible, avoid hiring too many part-time employees. Instead, design a schedule that gives employees more shifts or longer hours.

Part-time employees are decoupled from the success of your business. Full-time employees are more likely to be committed to the success of your business.

Find and screen job applicants. After you've written your job descriptions and identified your optimal staffing levels, it's time to find prospects. Find applicants by networking and posting on job boards. Include the work experience and educational background you want applicants to have.

Ask for recommendations from friends, family, and work colleagues. Employees referred to a company by a mutual friend or colleague tend to stay longer and work harder.

Use the recruitment tools on LinkedIn. Conduct a search for a relevant job title. You'll see a list of members that match your search terms. Check their background, skills and references. Reach out to anyone you wish to interview.

Advertise on job boards like the NRF Job Board, Craigslist, CareerBuilder, Monster and Seek/TradeMe. Thousands of job seekers will see your post.

interview applicants. Sort through all the applications you receive and make a list of applicants for an interview. Stay organized by making a list of questions to ask and taking notes during the interview. After the interview, use your notes to rate each applicant. It is important to meet all applicants in person before offering a position. Sometimes an applicant looks good "on paper" but turns out not to be a good fit for your company.

Speak honestly about the job during the interview so applicants understand exactly what is expected of them.

If possible, invite other people to the interview for additional feedback.