While the e-commerce marketplace has expanded in recent years, opening a physical retail store is still a great opportunity for entrepreneurs to start or expand their business while integrating into the local community; however, there are some important considerations for aspiring shop owners to keep in mind, especially in today’s digital-first world.
Here is a step-by-step guide for entrepreneurs considering opening a brick-and-mortar retail store.
Start with an idea
Whether you are expanding a digital e-commerce business into a physical space or starting a new business, you need to know what type of retail store you want to establish. Some common types of physical retail businesses include coffee shops, apparel stores, bookstores, gift stores, craft stores and bars.
Write a business plan
Once a solid idea is in place, draft a business plan. When writing a business plan, create a step-by-step outline of how the retail store will launch and operate. In the business plan, including an executive summary — a top-line description of the business and its goals — a description, a budget plan for the first five years, an analysis of the current market landscape, a competitive analysis, a detailed explanation of the service or product line, and an operation plan.
Register your business
When you legally register your business, you’ll need to first choose a name that suits your brand. Brainstorm different ideas and do some research to make sure no one else is operating a business under the name you choose. Once you’ve landed on a name, you’ll also want to purchase the domain name for your business’s website and general online presence.
After naming the business, determine what type of legal entity it will operate as. Whether your choose sole proprietorship, limited liability company (LLC), a corporation or a partnership will determine how the business —and you as the owner — will be taxed. Your structure also informs the legal protections you are entitled to, the ownership structure, and how the business can receive funding.
Each state has different requirements, fees and processes for when and how businesses need to register. n some cases, you may need to register with the federal government. Research what your home state requires so you can file the correct paperwork with the correct agency.
[Read More: How to Choose the Legal Entity for Your Business]
Gather funding
Based on the five-year budget outlined in your business plan, compute costs to create a financial plan for the business — and determine how it will be funded. Entrepreneurs can bootstrap their business with their own money, but because retail stores often incur a lot of overhead expenses, you may need to take out a business loan or seek financial backing from outside investors. Regardless of your funding source, ensure that you have a solid financial plan for how you’ll use the money and put yourself on a path to profitability.
When researching different types of e-commerce platforms to find the best fit for your business, consider how it integrates with your established point-of-sale (POS) system, what your inventory looks like, what the learning curve for maintenance is, and more.
Find your location
Your retail store’s ideal location will depend on your budget and the availability of commercial space in your desired location. General factors to consider include potential foot traffic, the presence of competing businesses and available parking. In addition, the retail location should be accessible to differently-abled customers and include space for offices, restrooms and inventory storage.
Build a website
Having an online store goes hand-in-hand with a brick-and-mortar store, as it enables customers to remain brand-loyal and increases sales without the need for physical interaction. In fact, 77% of small retail businesses have an online presence, according to a recent Digital.com survey. When researching different types of e-commerce platforms to find the best fit for your business, consider how it integrates with your established point-of-sale (POS) system, what your inventory looks like, what the learning curve for maintenance is, and more.
Hire vendors
Every retail business needs vendors for inventory needs, in-store technology like point of sale systems and security systems, shipping (if you offer online sales) and other essential operational processes. When vetting vendors, ask smart questions to help you understand their supply chain logistics, the support they offer and payment options to ensure they’re a good fit for your business needs and budget.
[Read more: Negotiating a Vendor Contract? Here's What You Need to Know]
Market and launch your business
As you approach your opening day, create buzz for the launch with a marketing campaign. Send out press releases, spend advertising dollars on high-converting platforms, and contact local news stations and journalists. While planning and promoting a grand opening will kickstart your retail store’s presence in the community, focus on a long-term plan to the momentum going in the weeks, months and years to come.
[Read more: 5 Small Business Owners on How To Have A Successful Grand Opening]
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