I have a career plan that some people, I guess, would probably call old-fashioned. I want to head back to my hometown and open up a store. It’s not a career that runs in the family, or anything–my dad’s a doctor, actually, and as far as I know I’m the only one in the family who dreams of running an idyllic small-town shop.
I’ve been working hard toward my degree, and I honestly thought that by now I’d be pretty much ready to get started with my new shop. But the truth is that while I feel ready to take on a lot of different types of jobs, starting a store from scratch isn’t one of them. Can you help me plan out my retail future?
Retail is a big business. In the United States alone, retail sales totalled $5,485 billion in 2016. But, of course, that doesn’t mean that it’s easy to get a new retail shop off the ground! Retail establishments face plenty of competition and a lot of challenges. Big box stores like Walmart and Best Buy can cut into smaller business’ profits. And those businesses, in turn, are dealing with a lot of competition from e-commerce businesses like Amazon. All of this drives down prices and makes it harder to smaller operations to compete, because without the power of scale that big companies like these have, it’s harder to get get low prices on goods and sell products at thin margins while still making a large enough overall profit to stay in business.
This isn’t meant to discourage you from your dream, but it is meant to emphasize that you need a great business plan and careful budgeting to succeed in retail. Experts say people who succeed with retail start-ups tend to be good at handling risk and comfortable with uncertainty. Does this describe you?
There’s one other thing you’ll need besides a great plan and a willingness to embrace risk: money. Businesses cost big bucks to get off the ground, and retail stores–with their physical inventory, customer-facing interiors, and staffing requirements–aren’t as easy to run lean as some other start-ups. You’ll need a physical space, cash registers, and much more. Little touches make big differences in customer experience, and things like steel slatwall built to display products can be pricey to install.
Finding this type of funding might mean finding investors who believe in your, or it might mean relying on commercial lending. Business loans are booming right now–November saw an all-time high of $2.1 trillion commercial and industrial loans handed out by banks–but you’ll still need to make the case for your business and your ability to pay back the bank if you want to get a loan.
You’ll want to spend a bit of money on a lawyer, too. A lawyer can help you organize your business in a way that’s most efficient for your work and as safe as possible for you and your finances. Only a third of small businesses stay open for a decade, so no matter how ready for risk you may feel, you’ll want to protect yourself.