A retail business is one of the most profitable ventures you can start in 2023. The demand for retail items is ever-increasing and you can launch your own business and claim a piece of the retail pie.
Global retail sales are projected to reach $31.7 Trillion by 2025, up from $23.74 Trillion in 2020. These figures include both retail and ecommerce sales.
Image via Statista
The key driver of growth in the retail sector is rising incomes. An increase in the average household income gives individuals more purchasing power, resulting in higher retail sales.
Bear in mind that you’re not the only one after these retail sales. There’s tough competition from already established businesses. That’s why you need to plan your business launch well if you want to succeed in the highly competitive retail world.
Here are five steps you need to take to start a retail business.
1. Come Up With an Idea
What will you sell at your retail store? How will you be different from other retail businesses in your niche?
These are some of the important things you need to think about when you start a retail business. To ensure business success, your idea needs to be unique.
You cannot do what everyone is doing and expect to make money from it. If there’s nothing that differentiates you from your competitors, customers will not have any reason to buy from you.
Here are some tips to help you make a space for your business in the retail world:
- Explore Your Interests – What are passionate about? Determine what you enjoy doing and use that to start a retail business. For example, if you love baking, you can start a retail business where you sell cakes.
Lisa, the founder of Sister Pie, has always been passionate about pies. She started making pies in her parent’s kitchen before starting her retail bakery business in Detroit.
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- Find a Market Gap – By carefully studying your competitors, you may discover a gap that you can fill with your business. For example, if none of the cloth retailers in your location sells high-end designer outfits, you can start a retail business in that niche.
2. Create a Business Plan
Once you have an idea for your retail business, it’s time to create a business plan that highlights what you need to do to turn your idea into reality.
Some of the questions your business plan should answer include:
- What will you sell?
- Who are your target customers?
- How will you price your products?
- How will you differentiate yourself from the competition?
- How many people will you hire?
- Will you sell online or offline?
- Where will you open your stores?
There are many other questions you need to answer, but these are the basics you need to cover when you start a retail business.
3. Set a Budget
After coming up with an idea and developing a business plan, the next thing you need to do to start a retail business is to create a budget. Make a list of all possible expenses and how much each item will cost.
The top startup costs you should be aware of include:
- Rent – If you will be selling from a physical location, you need to factor in rent for your retail store. The amount of rent you will pay will be determined by the size of the store in square feet and its location.
- Salaries and benefits – Think about how many employees you’ll need initially and what will be the estimated expense on employee salaries and benefits.
- Merchandise – Estimate the cost of acquiring and holding your inventory.
- Technology – You may have to invest in the best tools and technologies to run your business effectively. Estimate the expected costs for everything you’ll need.
- Marketing – Don’t overlook marketing as you put together a plan to start a retail business. Some marketing costs you may incur include creating a website, social media marketing, and PPC ads.
4. Register Your Business
You will not be able to operate your retail business without officially registering it with the state. There are hefty fines for operating an unregistered business, and you don’t want such unnecessary expenses as you start a retail business.
Registering a business is not that difficult. First, you need to choose a name for your business. Then, you need to choose a structure for your business. Sole proprietorship, limited liability company, and corporation are popular options.
Registering a business can be a tedious and time-consuming process. That’s why it’s advisable to work with a business formation service like Incfile to register your business.
This GovDocFilling’s Incfile review outlines the features, services, and rates of this company to help you decide if it’s right for you.
After deciding on your business structure and registering it, you need to get your unique EIN. You’ll use this number to report and pay your taxes.
5. Market Your Business
Marketing is very important when you start a retail business. How will people know about your business if you don’t market it?
You need to create a marketing plan that will help you capture the attention of your target customers.
Create target custom personas and design a targeted marketing strategy that aims to reach them on their preferred channels. Your choice of marketing tactic and messaging will also depend on your target audience.
Some of the useful marketing strategies you can use to appeal to customers include:
- Social media marketing
- Influencer marketing
- Paid advertising
- Word of mouth marketing
A retail business can be a great venture, but only when you do it right.
This article provides you with a list of things you need to do to start a retail business. Use this to start a retail business effectively and make it a success. All the best!