If owning your own retail business is your vision of a perfect career, you are not alone. With over one million retail businesses in the US alone, retailers thrive in online and real-world environments. Moreover, the opportunities for SMEs and micro-businesses have never been greater.
However, opening a small online retail business - with or without a brick-and-mortar store - requires a lot of strategic planning and hard work. So, how to start a retail business in this day and age? Check out our guide, which will take you through all of the steps needed.
Before looking at names for your proposed venture, you must look at the pros and cons of retail to determine whether it is a suitable business model for you. Whether you’ve been planning to start a retail store for many years or it’s something that has emerged following career problems during the pandemic, there is a lot of potential for entrepreneurs looking to enter the arena in 2022 and beyond. Here are just six eye-opening statistics to highlight that:
As the statistics above show, this is an excellent time to consider starting a store. Small retail businesses might not always grab the headlines, but they continue to be the backbone of the retail sector and can achieve significant and stable profits. Moreover, running a business of your own puts you in control of all important work-related matters.
However, be prepared to face a number of challenges. Before looking at how to become a retailer, it’s important to be honest with yourself. There will be long days ahead, particularly in the pre-launch phases. You’ll also need a passion for what you sell and the ability to manage your team effectively. Likewise, you’ll probably have to utilize both eCommerce and traditional selling methods to achieve your business goals.
Still, the best candidates for starting a retail business have never had it better.
If you are going to open a local store or a small online retail business, it’s imperative that you do it properly. After all, retail companies are prone to the same failure rates (20% in the first two years) as companies in any other industry. With the right strategy, though, your business will have a much higher chance of thriving in the highly contested retail market.
When starting a retail business, these tips will point you in the right direction.
Retail is a very broad term., which is why researching the industry and finding your place in the market is the first step you’ll need to take. The results will influence everything from where you look to gain inventory for retail startup stores to guiding your target consumer profile. Finding the right niche is the perfect platform to build your upon.
Very few retail businesses boast a universal appeal. So before starting an eCommerce site or opening a store, you should do the following;
As a business owner, whether you’re in the home decor retail, fashion or food industry, or just about any other niche, there are three main ways to attract customers. You can either bring something entirely new to the table, improve on the quality currently available on the market, or undersell the competition.
Many entrepreneurs (not only in retail) will create a basic business plan because they have no experience writing one and don’t realize its importance. In reality, the document is something that provides continued guidance and clarity as you look to turn a vision into a successful enterprise. A good business plan can increase the chances of growth by as much as 30%.
You may use a lean startup business plan or a one-page retail business plan if you have a very clear idea of what you are doing. A more thorough approach is necessary if you also need funding. Your plan must:
The business plan is made for your benefit as much as for finding potential backers or partners. Besides, adopting good organizational skills and an analytical approach at this stage will serve you well throughout the process to come.
If you’re wondering how to open a retail store with no money, the good news is that there are options available. Making the business a legally sound operation costs next to nothing while online retail startup costs are very low too. Meanwhile, almost a quarter of retail sales are facilitated by drop shipping, which highlights an excellent opportunity to avoid stock costs.
With that said, you’ll still need some funding to get the company rolling - even when you expect to see quick returns. Some good funding options include:
You must have a clear understanding of the total retail startup costs and always give yourself a buffer of at least 10% over the estimates. There is nothing worse than failing even before you got the venture up and running because you underestimated the expenses.
Your ideas for a retail business are little more than wishful thinking until you’ve officially registered the company. You must first familiarize yourself with the different types of entities you could register. In most cases, it will be either a sole proprietorship or an LLC, but partnerships and corporations are options too.
The registration process is these days quicker and more convenient than ever before. Nonetheless, you’ll need to complete the following steps;
This part of the process will impact everything from your level of legal protection to the process of receiving funding. It will also determine the way the income will be taxed. With this in mind, it is often advised to use an accountant or financial advisor to handle this part of the process, especially if it’s your first venture.
There are almost two billion websites online, and many of them are from competing retailers. If you want your retail store website to stand out from the crowd, you must develop a winning brand personality that resonates with your audience. Again, knowing your niche will be essential.
It takes an average of seven touchpoints to create brand awareness, and prospective leads and clients will form opinions based on several factors. So, you must look to perfect the following:
A well-defined brand will help you select the right products, target the best audience for your niche, and perform more consistently.
Obtaining the appropriate business licenses for your shop or retail store website might not be the most exciting aspect of launching your company. Still, it is one of the most significant steps you will have to undertake. It will ensure compliance and help you avoid penalties ranging from fines to enforced closure.
To make your business compliant even before opening its doors, you must ensure that you:
You will also need to consider issues like COVID-19 mandates and health and safety signage. While primarily thought of as an issue for physical stores, online retail companies may still need to take note for the sake of their workers.
At this stage, it will be worth finding the right business insurance too.
New retail businesses are unlikely to have an HR team, especially when it’s a home-based online retail business. But that doesn’t change the fact that assembling a great team is one of the most important tasks you’ll face.
There is a long list of workers you may need, from factory workers to shop floor assistants. When starting a retail business, this is one area where you will have plenty of options to consider. You can:
Not all of your employees will be needed right away. Even so, it’s essential to plan ahead so that your retail business keeps running smoothly. Otherwise, you could hit numerous setbacks along the way.
Finding the right inventory for a retail startup can be tricky. Whether it’s a greenhouse retail business or a food venture, you need to prioritize top-shelf goods to make a dent in the market. Ultimately, you will achieve nothing if the product quality isn’t up to scratch. Returning customers spend 33% more than first-time visitors. Giving them a reason to return is vital, and products are the answer.
There are various options at your disposal. If looking at how to start a fashion retail business, for example, you may wish to;
Whether it’s fashion or not, you need to focus on quality and be able to provide a wide range of options for consumers. Don’t forget about product personalization, though. 93% of B2B professionals believe it has a significant effect on revenue growth, so it’s definitely worth considering. If using outside vendors, be sure that they are trustworthy and will represent your brand well.
When starting a merchandising business, you have to create the right store to attract traffic. For a brick-and-mortar store, you’ll need to find a location where foot traffic is viable without spending a fortune.
It’s important that your retail store website ticks a number of boxes. You need to:
In short, your online store is a storefront and shop floor at the same time. If you do not make the right design and marketing choices, even the best products will fail to convert leads to sales. Conversely, an attractive-looking store that’s easy to navigate keeps users interested for longer, translating to more revenue.
Even with a strong marketing strategy, it will be difficult to get people to find your store at first. Therefore, you may want to consider starting an Amazon retail store too. Around half of all US eCommerce goes through the platform. You’ll still be competing against other companies, but displaying your goods in the largest shopping window around will give you a better shot at success.
You may find that consumers buy from Amazon at first because they trust it more than a newly opened store. Give them time, though. Here are some things you can do to draw potential prospects in faster:
Other popular options include Etsy, eBay, and Walmart. However, the right choice will depend largely on the type of products you sell.
If you want your in-house retail store website or physical store to perform well, you’ll need to use a variety of tactics. Partnering with another local non-competing business or playing an active role in the local retailer community will help greatly. You should also consider your retail POS system carefully.
Omnichannel integration works great for retailers in both eCommerce and offline ventures. Here are some other factors that you’ll want to consider at this stage:
Even as a new retailer, you must look to set high standards right away. It is the only way to win new customers and set the foundation of a long-lasting relationship that will see them spending big on your brand in the years to come.
At this stage, you are finally almost ready to open your doors and start selling products. A good local advertising campaign for a brick-and-mortar store will go a long way towards generating hype for your products. The same goes for your online store, which you’ll need to advertise well on social networks and in the relevant forums and chat groups. At this stage, you should know your target audience well and can make the most impactful advertising campaign.
Thousands of entrepreneurs will start an eCommerce retail business this year, while many more will open brick-and-mortar stores. While some will be destined for failure, those who take all the necessary steps to prepare properly and enter their niche with the right attitude will see their retail business thrive and generate profits quickly.
Consumers are far more interested in quality products, customer experience, brand authenticity, and corporate responsibility than the brand's size. Find the right audience and meet their needs well, and success should follow.
Home-based online retail business ventures remove the costs of renting premises. Meanwhile, you can look to free online website builders and eCommerce strategies like dropshipping or affiliate marketing to save even more funds. Some money is needed for registering the firm and hosting your site, but you can save these funds in no time.
Successful ones certainly are. Research shows that brick-and-mortar stores can expect to make around 4% profits while online shops see 6% returns. While this may be smaller than some industries, companies that perform well will see far larger profits. Better still, unlike many business ideas, retailers can see those profits as early as year one.
Timescales will vary from one business to the next. You’ll have to consider issues such as what stage of planning you are in and whether it is a full-time venture or a side hustle. On average, though, a new business owner can expect to open a brick-and-mortar store in around six months or an eCommerce retail store within a few weeks.
If you’re looking at how to start a retail business, the good news is that officially registering an entity and launching an eCommerce store is now more affordable and accessible than ever. The real challenge comes from sourcing and marketing the right products to the right people. Traditional brick-and-mortar stores will need a longer preparation and will cost far more to get started, but it’s still a worthy consideration, especially if you have premises you could use for your business operations.
Ivan is an energetic ambivert with a passion for creative writing, music, languages and technology. He loves writing about small businesses and startups, and is on a constant mission to help you make the most informed choices about the various aspects of running your own business. In his free time, he enjoys playing and listening to music, biking, cooking, reading novels and playing video games.
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