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How to Start a Retail Business; A Step-by-Step Guide

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How to Start a Retail Business; A Step-by-Step Guide

By Caron_Beesley, Contributor
Published: August 26, 2010 Updated: November 29, 2011

'Main Street' has now become a generic term synonymous with U.S. small business in general. But for many entrepreneurs, the prospect of joining Main Street in its more literal meaning - i.e. the primary retail street of a village or town - still holds an enormous amount of appeal as a business venture.

Given the right amount of market research, business planning, and financial support, starting a retail business (and joining the more than 24 million people who earn a living this way) can offer many rewards to the right kind of entrepreneur.

But how do you go about starting a retail business?

Here are some steps that you will need to follow (from a business planning, structure, and legal perspective) to open and operate a successful retail operation.

1. Determine which Type of Retail Business Model is Right You

Once you've developed a business plan and have an idea of what it is you wish to retail, you will need to decide which type of retail model is right for you. Traditional choices include store retailing, online retailing, non-store retailing (such as door-to-door sales, mail order, etc.) or a combination of any of these three.

You may also want to consider whether you want to launch your own retail business or buy into a franchise opportunity. Both have advantages and disadvantages (which I won't go into in this post). But, if you consider going down the franchising route, this guide from Business.gov offers helpful advice on buying and evaluating a franchise and tips on how to avoid common scams.

Don't forget that many consumer goods and food and beverage businesses are regulated, so check the laws that apply to products you might be engaged in selling before you stock your shelves.

2. Find the Right Location

As a new retail business you definitely need to be where your customers are - and almost certainly need to get it right first time.

The location you choose should dovetail onto the type of retail trade you are starting. For example, a jewelry store might not sit comfortably or profitably in a suburban strip mall, whereas an organic pet food store might. Check local demographics including employment statistics, consumer statistics, and more using these guides from the government.

You'll also need to check local zoning laws, even if you want to operate a home-based retailing business - many local governments restrict what business can be done from home.

Above all, when it comes to location, you'll want to ensure you combine visibility, accessibility, affordability and commercial lease terms that you can live with, through the good times and the bad.

Get more advice and tips from SBA.gov on choosing a business location.

3. Finance your Retail Venture

The entry costs for retail can vary. If your operation is online or home-based you may not need as much access to capital as a Main Street store-based retailer. Either way, you will need funds to support start-up costs such as inventory, fixtures and fittings, marketing and advertising, as well as employee salaries, and so on.

If you don't qualify for traditional bank loans, you might want to look to a government-backed loan. What this means is that the government - through the Small Business Administration (SBA) - provides a guaranty to banks and lenders for money lent to small businesses, rather than lending the businesses money directly. Don't even think about a federal government grant as an option -- the government doesn't offer grants to for-profit businesses; there is no such thing as free money.

There are many different types of loans, including the SBA Express Loan that offers small businesses the chance to get an SBA-backed loan of up to $350,000 to start-up or expand. The 'express' piece refers to the fact that your loan can be turned around in 36 hours.

Read more about SBA loans here and even search for a business loan that fits your need using this Small Business Loans and Grants Tool.

4. Determine Your Business Structure - Do you want to go it Alone or in Partnership?

It's worth thinking about. If you don't have family or friends who can help out with the day-to-day logistics of running a retail operation, a business partner can help. They can also help share the risk. Check out this earlier blog post: 'Is Business Partnership Right for You?'

For more information about business partnerships, as well as other alternative business entities such as corporations, LLCs, etc. - and how to go about setting them up - refer to this Business Incorporation Guide.

5. Take Care of the Regulatory Requirements involved in Starting and Operating a Business

It doesn't matter whether you are starting a retail business out of your home or on Main Street, there are several regulatory and legal fundamentals that you must attend to. This is where many small business owners stumble. What laws apply to your specific business; what licenses and permits are required; what happens when you need to hire your first employee?

This very easy to navigate guide - 10 Steps to Starting a Business - (from the government) walks you through the essential steps you must follow to make sure you properly plan, prepare and manage your business.

Get Assistance

At the end of the day, talk to those in your community who know the market and local regulations. There are many resources- including SCORE, local SBA offices, and Small Business Development Centers - that offer free counseling and training programs to help you get started and expand your business. Find help near you here.

Good luck!

Additional Resources

  • *100+ Marketing Ideas - A comprehensive list of marketing ideas from the SBA; use it to help better understand customer needs and ways to satisfy those needs.

 

Note: Hyperlink directs reader to non-government Web site.

Message Edited by CaronBeesley on 10-08-2009 07:45 AM

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

Very timely business tips. It's wise to make a careful planning and study about the retail business that one desires to start up, because the income opportunities now is vast yet not all establishments survive in the market. Former business experience, business consultants and business tips and guides are indeed important factors to consider before taking a step in the retail business world. http://www.reelezdisplay.com/blog/effective-retail-signage-affects-sales-business/
Thanks Caron for an interesting article. For many people, particularly if they're selling a niche product, may be better off with online retailing first, rather than 'bricks and mortar'. An enterprise-level e-commerce website built on the open-source Magento platform is much cheaper than a physical shop. Alternatively, for a small number of products a retail site built on the open-source Wordpress platform can be even cheaper.
If you're starting a brick and mortar business and playing music in it don't forget that you need public performance licenses so you don't get fined. Looks like these guys are the cheapest way to get legal music: www.cloudcovermusic.com
Good post! Thanks for the step by step guide. Truly many people are lost how are they going to start a business. Anyway, You pointed out some good points. Apartment for Rent Philippines
Take the time to select the retail location wisely so that you get it right the first time. There is nothing worse than selecting the wrong retail location and being locked in a multi-year lease. This can even be worse if the landlord with whom you have signed the lease for your retail space is unprofessional or difficult. Because the landlord will not be sympathetic if s/he is greedy and you'll be stuck with a multi-year retail space until you go broke or have to move.Retail Signs and In Store Signs with Custom Graphics
I would recommend looking into getting incorporated in any self start up business..There are several steps to take to make sure your business will be self sufficient and not reliant on personal credit. Do you agree?
I would recommend looking into getting incorporated in any self start up business..There are several steps to take to make sure your business will be self sufficient and not reliant on personal credit. Do you agree?
You are lucky that you don't live in Poland. It might take one week to start your own company. It is too hard to handle all the paperwork by yourself. You have to hire accountant from the start.

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