Here’s the must-read article if you’re planning to start a retail business. We’ll go through a complete checklist of how to open a retail store and win your customers.
1. Internal preparation
Write a business plan:
Any company starts with a solid business plan and strategy. In the plan, you should list out in detail your goals and vision for the next 3 to 5 years.
In general, the business plan includes an executive summary, business description, market analysis, competitive analysis, service and product line, operations, and management plan, and financial analysis.
When you conduct your business plan, ask yourself what your unique selling points (USPs) are and what values you can offer to your target customers. A clear business plan will guide all activities and operations to ensure your team is working towards the goals.
Map out startup costs:
Next, pay attention to your budget. While the total cost can be overwhelming, you can simplify it by breaking it down into 9 main expenses: rents, facilities and furniture, utilities, insurance, merchandise, employee costs, technology, and marketing cost.
After calculating your startup costs, you can refine your financial plan and forecast your profitability and break-even point. Thus, you can decide how to finance your business and whether you should seek a loan offer.
Register your business:
After that, think about business registration. It isn’t only about choosing a brand name, and you also need to determine your business structure, such as sole proprietor, partnership, corporation, etc.
Make yourself familiar with the business law in the country you’re registering in and prepare legal documents as required. In addition, you can consult a lawyer or tax advisor if specific issues arise.
Decide your distribution channels:
Select a distribution strategy suitable for your retail. You can choose either brick-and-mortar eCommerce or combine both in an omnichannel strategy. To decide which way works best, get back to your target customers and see where they’re likely to find you.
If you’re selling offline, find a location where residents match your customers’ demographics and preferences. Besides, consider the competitiveness and space you’ll need, including merchandise display areas, inventory storage, and back-office space.
If you go for online retail, here’re some channels you can think about: your website, social media channels, or eCommerce platforms like Amazon, Tmall, etc.
2. Supplier selection and management plan
The suppliers you choose to partner with can greatly affect your business, from product quality to ordering costs and delivery speed, which in turn affects your customer’s satisfaction. This makes supplier selection and management a top priority for the success of your business.
Here’re the criteria to choose the best suppliers:
- Supplier’s reputation: Research reliable vendors and discuss purchasing and delivery processes with them.
- Product quality: You should ask for samples and compare different vendors to filter out who meets your quality requirements.
- Cost of goods sold: Check who offers the most competitive prices. This cost will influence your pricing strategy.
In addition, while an exclusive supplier relationship sounds excellent, relying on only one or two vendors can be risky. You should be flexible and have a few vendors as alternatives.
After you have your suppliers, consider these best practices for your supplier management plan:
- Agree with your vendors on each party’s benefits and obligations to set expectations correctly
- Communicate your inventory needs and whether you can apply drop shipping methods.
- Identify key performance metrics to evaluate suppliers.
- If anything goes wrong, address the issues and work it out with your vendors immediately before it becomes a bigger problem.
3. Inventory management system
As mentioned above, a good supplier plan can positively affect your bottom line and your brand image. Thus, you need an efficient inventory management system to control your business operations.
The system will empower you with many features:
- Centralize sales data and inventory quantities across all channels: You can keep track of the inventory flow and the performance of all SKUs and your sales teams with detailed and real-time reports. This makes counting, adjusting, and transferring stock among your stores easier and faster.
- Analyze data and improve inventory control procedures: With the on-hand data, you can find out best-sellers items, turnover rates, reorder points, and suitable lead time for your inventory. Identifying bottlenecks will help you focus on the central problem and not waste resources on other minimal issues.
- Integrate with a POS payment system: The inventory management system can be connected to a POS system, creating a seamless customer checkout experience.
4. Market your business
Once you’re ready, it’s time to launch your business with a marketing strategy. Here’re a few ideas to get started:
- Build a brand positioning: This is how you want your customers to perceive your brand and products. It must be distinctive that sets you apart from other competitors. To make a strong positioning, you need to understand your customers, their pain points, and what solution you offer to help them.
- Develop a brand message and style: You need a consistent message and style when talking to customers and partners, in both verbal and visual ways. This means all content from your website, online platforms, your stores’ decoration, and how employees talk to customers should convey the same energy and style.
- Market your brand: Now you’ve set up your positioning and created a cohesive message, you can focus on retail marketing strategies to get closer to your customers. A thorough marketing plan will help you get their attention, engage with them, and make them loyal.
Follow the checklist to have a thorough plan for your retail business. If you can reach a match between suppliers and customers with good internal operation management, you’re getting closer to success.