Published on February 8th, 2016 | by Millennium Magazine Staff0
How to Start a Retail Business
By Caron_Beesley, Contributor
‘Main Street’ has now become a generic term synonymous with U.S. small business in general. But for many entrepreneurs, the prospect of joining Main Street in its more literal meaning – i.e. the primary retail street of a village or town – still holds an enormous amount of appeal as a business venture.
Given the right amount of market research, business planning, and financial support, starting a retail business (and joining the more than 24 million people who earn a living this way) can offer many rewards to the right kind of entrepreneur.
But how do you go about starting a retail business?
Here are some steps that you will need to follow (from a business planning, structure, and legal perspective) to open and operate a successful retail operation.
- Determine which Type of Retail Business Model is Right You
Once you’ve developed a business plan and have an idea of what it is you wish to retail, you will need to decide which type of retail model is right for you. Traditional choices include store retailing, online retailing, non-store retailing (such as door-to-door sales, mail order, etc.) or a combination of any of these three.
You may also want to consider whether you want to launch your own retail business or buy into a franchise opportunity. Both have advantages and disadvantages (which I won’t go into in this post). But, if you consider going down the franchising route, this guideoffers helpful advice on buying and evaluating a franchise and tips on how to avoid common scams.
- Find the Right Location
As a new retail business you definitely need to be where your customers are – and almost certainly need to get it right first time.
The location you choose should dovetail onto the type of retail trade you are starting. For example, a jewelry store might not sit comfortably or profitably in a suburban strip mall, whereas an organic pet food store might. Check local demographics including employment statistics, consumer statistics, and more using these guides from the government.
You’ll also need to check local zoning laws, even if you want to operate a home-based retailing business – many local governments restrict what business can be done from home.
Above all, when it comes to location, you’ll want to ensure you combine visibility, accessibility, affordability and commercial lease terms that you can live with, through the good times and the bad.
Get more advice and tips from SBA.gov on choosing a business location.
- Finance your Retail Venture
The entry costs for retail can vary. If your operation is online or home-based you may not need as much access to capital as a Main Street store-based retailer. Either way, you will need funds to support start-up costs such as inventory, fixtures and fittings, marketing and advertising, as well as employee salaries, and so on.
If you don’t qualify for traditional bank loans, you might want to look to a government-backed loan. What this means is that the government – through the Small Business Administration (SBA) provides a guaranty to banks and lenders for money lent to small businesses, rather than lending the businesses money directly. Don’t even think about a federal government grant as an option — the government doesn’t offer grants to for-profit businesses; there is no such thing as free money.
Read more about SBA loans here.
- Determine Your Business Structure – Do you want to go it Alone or in Partnership?
It’s worth thinking about. If you don’t have family or friends who can help out with the day-to-day logistics of running a retail operation, a business partner can help. They can also help share the risk. For more information about business partnerships, as well as other alternative business entities such as corporations, LLCs, etc. – and how to go about setting them up – refer to this information on choosing your business structure.
- Take Care of the Regulatory Requirements involved in Starting and Operating a Business
It doesn’t matter whether you are starting a retail business out of your home or on Main Street, there are several regulatory and legal fundamentals that you must attend to. This is where many small business owners stumble. What laws apply to your specific business; what licenses and permits are required; what happens when you need to hire your first employee?
This very easy to navigate guide – 10 Steps to Starting a Business – (from the government) walks you through the essential steps you must follow to make sure you properly plan, prepare and manage your business.
At the end of the day, talk to those in your community who knows the market and local regulations. There are many resources- including SCORE, local SBA offices, and Small Business Development Centers – that offer free counseling and training programs to help you get started and expand your business. Find help near you here.