How to Start a Retail Business

What is a retail business?

A retail business is any business that sells products or services to a customer for their individual use. This transaction can occur in a few different ways. Traditional retail businesses sell their items or services to customers in stores, but these transactions can also occur online, over the phone, or even through the mail.

A retailer will buy products in bulk from a manufacturer, either directly or through a wholesaler, and then sell these products in smaller amounts to consumers in order to make a profit. A retail sale is any sales transaction where the end-user is the buyer.

There are many different types of retail businesses, such as department stores, convenience stores, grocery stores, drug stores, and more. This is why it’s so important to find your niche if you want to open a retail business. You have to figure out exactly what you want to sell so that you can open the right type of retail store.

How do you start a retail business?

Opening a retail store starts off with creating a good business idea. The thought of opening up your own business is definitely exciting, but it’s not something that you can do overnight. It’s a complex process that takes time and should not be rushed. As eager as you may be to get started, it’s critical to figure out all the details of your business so you can make sure it will run smoothly.

Before you can go ahead and display that “open for business” sign, you first need to know what the process entails. Here is the step-by-step process of how to start a business:

1. Do your research

The first step of starting your own retail business is doing your research. You need to have a solid understanding of the various retail business services so you can figure out what type of business you’re going to open. To do so, you need to define your company’s niche.

There are a few things you can do to determine your company’s niche. Think about what you’re passionate about and how you can turn that passion into a business. You want to start a business based on something that you’re interested in. You should also think about what potential conflicts you may encounter during your business journey and how you can overcome them. It’s also very important to open a business that you can make money from, so make sure you consider profitability when choosing your niche.

Once you’ve defined your niche, you then need to conduct market research. This includes researching your target audience so you can understand their wants and needs. When you understand your target audience, you can create products or services that are catered specifically for them and fill any gaps in the market. Identifying your target audience can also help you with pricing your products because you’ll have an idea of how much your customers can afford and the price points your competitors are using to sell similar products or services.

In addition to researching your target audience, you also need to research your competitors so you can see how your brand differs. Look at what they’re selling and how they’re selling it and see how yours compares. Conducting market research will give you insight into what your competitors are doing right and what they’re doing wrong.

Lastly, you need to understand your selling proposition. What value do you bring? What are the benefits of your company? What makes you stand out from your competitors? You should be able to confidently answer these questions before moving on with your business journey.

2. Create a business plan

After you’ve conducted some market research for your business and have a better idea of your niche, then you need to create a business plan. Your business plan is the outline of your business and what you and your potential business partners will reference throughout your entire business journey. It acts as your physical roadmap that explains all of the steps you’ll take to open your business.

Your business plan should be detailed and informative, but avoid writing anything that is too long or wordy. Anyone should be able to easily reference the business plan and quickly find what they're looking for. Your business plan is also something that you can continuously edit and add to throughout your journey.

A good business plan should consist of the following components:

• Executive summary: Here, you’ll provide an overview of your business and highlight what the business plan will cover.
• Business description: This is a more detailed description of your business, including your goals and the products or services that you’ll sell.
• Competitor analysis: In this section, you will outline important information about your competitors and how your business compares.
• Products or services: Here, you’ll provide a detailed description of the products or services your business is offering.
• Marketing strategy: This is a description of your target audience, including where they’re geographically located, their demographics, and their primary pain points.
• Operations and management: Here, you’ll provide an outline of how you plan to manage and run your day-to-day operations.
• Financial considerations: This is a financial analysis of how you plan to bring money in and the funding that you’ll need to get started.

3. Assess funding

Starting a business is definitely not cheap, so before you can do anything else, you need to assess your funding. You need to figure out how much funding you need to start your business and where it’s going to all come from.

There are a lot of costs that come with starting a business, such as:

• Employee costs: Your business may start off as a one man show, but it’s probably not going to last that way for long. You’re most likely going to need to hire employees eventually, which means you need to account for things like training costs and payroll.
• Inventory: The actual products that you’re going to sell are going to cost money, too. Before you can start making a profit off of your inventory, you need to make sure your products are high quality and up to par for your target audience.
• Rent: If you plan on opening up a brick-and-mortar store, you need to think about how much rent is going to cost you.
• Utilities: In addition to rent costs, make sure you also think about the cost of utilities, like electricity, gas, and water.
• Insurance: It’s very important that you have business insurance coverage to ensure your company and all property are covered in the event of a natural disaster, burglary, or other occurrences.
• Merchandise: In addition to the upfront costs of buying your merchandise, you also need to account for the cost of storing your inventory.
• Technology: Every business needs technology to function, whether that be computers or a retail point-of-sale system.
• Equipment: equipment costs can vary depending on your retail store, but these costs can include printing presses for apparel, software, electronics, devices, and other equipment to operate your business.
• Shipping: If you plan to do any sort of shipping or delivery with your business, you also need to think about how much those are going to cost you.
• Marketing: Marketing is crucial for a business, especially one that’s just starting off, so you need to include marketing costs in your budget, like for business cards, logos, and a website.

Being faced with all those costs is definitely overwhelming, but fortunately, there are various ways you can secure funding for your business, such as:

• Crowdfunding: Crowdfunding is the process of funding a business by raising money from a large number of people. A bunch of people essentially get together to raise enough money to get a business off the ground.
• SBA loans: SBA loans are backed by the U.S. Small Business Administration to help small businesses get the funding they need.
• Investors: There are several ways you can find investors for your small business. Investors can be your friends and family, angel investors, venture capitalists, or private lending institutions.
• Institutional loans: These are loans that come from traditional banks and credit unions, as well as online lenders.

4. Determine your legal structure

Once you’ve determined how you’re going to get the funding for your business, you then need to figure out your legal structure. This step is crucial as your legal structure will determine how you’ll be taxed, what your ownership structure is, and what legal protection you’ll get.

You have a couple of choices for a legal structure, so it’s important to find the right fit for your business. These are the most common business legal structures:

• LLC: An LLC, or limited liability company, is intended to protect the business owner from personal liability for the company’s debts.
• Sole proprietorship: A sole proprietorship is the most common business structure. It’s a type of business that is owned and run by one person and there is no legal difference between the owner and the business entity.
• Partnership: A partnership is a formal agreement made by two people to run and manage a company.
• Corporation: A corporation is when the business is a separate legal entity from its owners.

5. Register your business

In order for your business to be legal, it needs to be registered. Before you can do this, you need to pick a name for your business. You want it to be something that’s unique and reflects your business’s purpose.

It’s important to make sure the name is available to use, which you can figure out with a simple online search. You also need to trademark your company’s name, as well as your products and brand, so you can distinguish your business from others.

Once you’ve picked out a name, you then need to register your business with the government/IRS so you can get your federal tax ID number, or EIN. You can apply for an EIN online through the IRS website.

6. Research retail business laws

In addition to registering your business and getting trademarks, you also need to research retail business laws. There are a lot of retail business laws that you need to know before you can open up your business, such as local permits you may need, business insurance, and labor, environmental, and antitrust laws.

Some states might only require you to get a general business license, while other states may require different or multiple licenses and permits to operate depending on your industry. It’s crucial to research all this information so you can make sure you’re doing everything legally.

7. Find a location

If you’re looking to open a brick-and-mortar retail store, make sure to find a location that works for your company. There are various things to look for in a physical store, including high foot traffic, good parking, accessibility, square footage, and store appearance. You want to choose a location and a store that accurately reflects your brand.

In addition to opening up a brick-and-mortar store, you also need to open an online store. E-commerce is important so that you can increase the range of products and services you sell, expand your business, and communicate directly with your customers. If you do decide to incorporate e-commerce into your business, make sure you figure out the logistics, such as what you’ll sell online and how you’ll sell it.

To start a business online, you first need to build a website and choose a domain name. You’ll then need to grow your customer base, which you can do with social media and email campaigns. You can then use customer insights to build and develop your online store even further.

8. Contact vendors

As a retail business, you’ll need to contact vendors to either help make your product or provide merchandise to resell. The vendors you need will ultimately depend on the type of retail business you want. Finding quality vendors and building relationships with them is one of the most important steps of building a business, as they are who’s providing you with your actual inventory.

There are a few qualities you’ll want to keep in mind when looking for vendors, such as quality, reputation, delivery costs, and customer service. You want to choose a vendor who you can trust and who you know will always deliver exactly what you’re asking.

9. Market your business

Your business isn’t just going to start getting customers the day you open. You need to market your business in order to generate attention. There are various ways you can market your business, such as:

• Creating a website: Every business needs a website. Not only is a website a way to market your business, but it’s also a great way to increase your credibility as a brand and engage with customers.
• Using social media: There are many opportunities for a business to promote its brand on social media. With social media, you can create ads, connect with your customers, create social media campaigns, and develop your brand personality, all of which can help generate attention for your business.
• Sending email campaigns: Sending email campaigns is important for any business as a way to enhance customer engagement and generate sales. Mailchimp is a great all-in-one email marketing service that you can use to manage your mailing lists and create effective email marketing campaigns.
• Buying ads: There are various different ways you can promote your business with ads, such as social media ads, television ads, magazine ads, or even direct mail.
• Influencer marketing: Influencers are a great way to market your business because they can amplify your reach and drive revenue. Influencer marketing can also help boost your online presence and increase your credibility as a brand.

10. Build your team

It’s not likely that you’ll be able to run your business all by yourself. You’ll have to hire employees and build a team at some point, especially as your business continues to grow. When hiring staff, make sure you conduct thorough interviews and hire people who you share similar values with. You’re going to be working alongside these people every day, so you want to get along!

Once you hire employees, you’ll also need to create store procedures and onboarding manuals so you can properly train your employees.

11. Open your doors

Once you’ve completed all of the above steps, you’ll finally be ready to display that “open for business” sign and open your doors. Congrats– you did it!

A grand opening is a great way to start your retail journey and introduce your business to the public. It might be a good idea to start with a soft opening, just so you can get an idea of how people will react before the official opening. You can also run a promotion on opening day to entice people to come into your store or partner with other businesses in your neighborhood to generate attention. Just have fun with it and plan something that you’ll enjoy!

Wrapping up: How to start a retail business

Starting a retail business is a long and arduous journey, but the minute you open the doors to your business, it will all be worth it. But before you can get to that point, you need to make sure you follow the proper steps to open a business so that you can do things right the first time around and start generating revenue as quickly as possible. And if you need help with managing or marketing your business, you can use Mailchimp.

Mailchimp is an all-in-one marketing platform that brands can use to create and send email campaigns, build better relationships with their customers, and drive revenue and growth. When you sign up for Mailchimp, you can get help with everything from creating customer retention strategies to building a website for your brand, so you can launch and grow your retail business to heights you never imagined.