If you’ve dreamed of becoming a store owner and are thinking about making
the transition from working for someone to working for yourself, there are
a few things you need to consider before making the move.
The allure of “being your own boss” is very powerful, but actually succeeding
at doing so can be elusive. To increase your chances of being successful you need
to do your homework and really think about what you’re about to undertake. Running a business can be rewarding, but it is takes hard work. Below are some of the things you need to ask consider before you go any further.
1.Get the Facts
Do you know anything about the type of store you want to open? In other words,
what kind of experience do you have? Have you worked in retail before? Or do you want to have a store because you like to “shop” or because you love “antiques”?
Be realistic. If you’re lacking knowledge, educate yourself. Talk to people; read everything you can get your hands on about the type of store you want to open and the products you want to carry. Is there a demand for what you want to offer or is the market already flooded with like businesses?
Know your competition. Who are they? What products do they sell? Who are they targeting? What would you offer that they don’t? How and where will you advertise? If you’re dreaming of your grand opening with masses of customers waiting in line because of your terrific location and great prices, think again. Although location is a big factor and lower pricing can help, those factors are not enough to sustain you. You need to have a plan. This brings us to the dreaded, yet necessary, business plan.
2. It’s All in the Details…
Everyone hates to do a business plan, but you should at least make an attempt.
Even if you “guess” at your projections, it’s a starting point. More importantly, it forces you to put on paper all the expenses you will incur before actually opening the doors. For sales projections, a visit to your local library or researching the internet will give you a wealth of information about average sales for every type of business imaginable.
As for start-up costs for a retail store, here are a few things you need to include: rent, phone, electric, credit card processing, signage, business cards, sales invoices, phone book ads, any fixtures like sales counters, shelving, employees, etc. And then there’s product; you want to open the doors with the shelves full. Do your homework! When you’re estimating, round up for expenses and down for income; that way you’re prepared for the worst.
3. Show Me The Money…
Now that you know how much money it’s going to take to get the doors open and how much you think you can bring in, where’s the money coming to sustain you until the store takes off? Your own savings? Family and friends? Bank loan?
Whatever the source, make sure you have enough to cover your opening and operating expenses plus enough to live on for a minimum of one year, preferably two. Make sure you’ve factored in funds for re-stocking your inventory until sales climb so you won’t have a cash flow crunch early in the game. More businesses go under because of lack of funding than any other factor. Don’t be a statistic.
4. Against All Odds…
Speaking of statistics, the second biggest reason that businesses fail is poor management. Maybe you’re great at sales, but lousy at accounting, advertising or store layout. Most entrepreneurs wear all the hats in the beginning; from scrubbing floors to doing the books; running a store requires a number of skills.
You don’t have to be an accountant, but you do have to have some basic bookkeeping skills; without them, you may be getting calls from the State wanting to know what happened to the sales tax report you forgot to file. If you know you’re terrible at paperwork, or sales or whatever, get some help. If you can’t find a family member to help out, then be prepared to hire someone to do the jobs you can’t do.
5. The Long Haul
Passion and a love for what you’re doing are important, but not a guarantee you will succeed. Many people open businesses that started off as a hobby. They loved making widgets and started selling them. The next thing they knew they had a business. And after that the business had them. They could no longer take vacations because they hadn’t planned that far ahead. After a few years the business they loved turned out to be the thing they hated and they wondered what happened.
This typical scenario happens all the time with small business. Unless you plan for growth, you face certain burn out. Think big. Plan before you open your doors to structure it as if you were going to franchise.
Stop and think about the many management positions that would be required if you were running a large corporation. From CEO to Customer Service, start thinking in terms of personnel, policies and procedures. Being a small business is no excuse for being unstructured and sloppy.
The goal is for your business to be able to run without you. Plan every facet of your business and prepare for growth. Hiring the right people when sales begin to soar, frees you up to start planning the next step for your store or maybe just a long deserved vacation. Planned business growth means financial success and freedom! And creative freedom is the reason you chose the crazy world of retail in the first place.