Starting a Business

Blogs.Starting a Business

Register

How to Start a Retail Business

Comment Count:
5

Comments welcome on this page. See Rules of Conduct.

How to Start a Retail Business

By Caron_Beesley, Contributor
Published: February 3, 2016 Updated: February 3, 2016

'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 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.

Read more about SBA loans here.

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. 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 information on choosing your business structure.

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 knows 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.

About the Author:

Caron_Beesley
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:

I would like to open a small fabric store, but don't know how to go about doing it. this will be my first business venture. any help will be greatly appreciated.
Great information indeed. Being in online marketing, I would certainly like to a have more info on online retail. Hope the same point will betaken care of by the author in future. Thanks.
Looking into a liquor store retail business with options of building up to social entertainment example upscale bar with cigar smoking area. Any suggestions or direction? Why reinvent the wheel. Appreciate input.
Appreciate the blog. Looking to open a chain of retail stores.
Hi , My names Tony and I currently run a online retail business like groupon. and I just wanted to know If there any information that will be different when it comes down to a online retail business vs a storefront retail business.

Leave a Comment

You must be logged in to leave comments. If you already have an SBA.gov account, Log In to leave your comment.

New users, Register for a new account and join the conversation today!