Are you considering opening up a retail shop? In today’s day and age when eCommerce reigns supreme, this could seem like a risky endeavor to many. But the truth is traditional retail isn’t dead, it’s simply changing.
In fact, although the pandemic has affected people’s buying behaviors, some retail shops are actually growing. In other words, opening and running a successful retail store is possible if you choose the right business structure, create a detailed business plan, and select powerful tools to help you along the way.
In this article, we will help you achieve all of these things and more so that you can start your retail business on a solid foundation.
1. Create a Business Plan
Having a great idea for a retail shop isn’t enough. You need to have a detailed plan that will serve as a roadmap consisting of every step you will be taking to start and operate your new business. Begin by answering questions related to your business model, such as what types of products will you be selling? Who are your target customers? What will you do to distinguish yourself from the competition?
Your business plan should also include details about your processes. Try to provide answers to questions like who are your suppliers and vendors? How many employees will you need? How will you store your inventory? How much money do you have to invest to get your business off the ground?
Bear in mind that this version of the business plan is preliminary and you can go back to make updates, additions, or changes as you start running your store.
2. Register Your Retail Business
Before registering your retail business, you will need to decide on its legal structure. There are many business entities to select from—Sole proprietorship, Partnership, General Partnership (GP), Limited Partnership (LP), Limited Liability Partnership (LLP), Corporation, C Corporation, S Corporation, and Limited Liability Company (LLC). Consider consulting an accountant or business attorney to help you choose the best business structure for your retail store.
Once you have decided on the legal structure, you can register your business with the Secretary of State. After that, go to the IRS site to apply for an employer identification number (EIN), which is necessary if you plan to apply for a business loan in the future and will also serve as identification for tax reporting purposes.
3. Obtain the Necessary Permits, Licenses, and Insurance
Depending on the state, you might need to acquire permits and licenses at an industry level or a general business license. You might also need to get local licenses and permits, as well as retail licenses, such as a seller’s permit and a resale certificate. The Small Business Administration website is a great resource for permitting and licensing information at both local and federal levels.
In addition, don’t forget about insurance. As an employer, you are required by federal law to have workers’ compensation, unemployment, and disability insurance for your employees, and as a retailer, you should consider retail shop insurance. This insurance is specifically designed for retail businesses and will help protect your business from the financial impact of damages caused by the products you sell.
4. Hire Employees
When hiring for a retail position, you’ll need to interview your candidates not only for their experience but also for their attitude. While you can train your staff to manage your inventory and use your POS system, you can’t teach them to be kinder or friendlier.
Before you start hiring, be sure you understand the employer requirements in your state. For instance, your state may require you to purchase certain types of insurance for your employees. In addition, you might need to complete other steps, like reporting new employees and creating a withholding account for payroll.
5. Get Your Finances in Order
Starting a business with no money is impossible, so whether you’re operating on a tight budget or you have large startup capital, it is important to get your finances in order.
First, open a business checking account and get a business credit card. Separating your personal and business finances is important for tax reasons but, more importantly, it helps you protect your personal finances.
In addition, consider getting funding. Most entrepreneurs need financial help to get their companies off the ground. This might be especially true for retailers who have a few extra startup costs.
There is a lot you will need to consider before your retail shop’s grand opening, but doing enough planning upfront will prepare you to start a successful business. The 5 tips outlined here cover only the basics but should be enough to give you an idea of what you can expect.