Retailing is one of the biggest and fastest-growing sectors and is a major contributor to the UK economy. There are around three million people currently employed in retail in the UK. With this in mind, the UK’s current economic turbulence and a shift in consumer interest towards online-based business means that it is getting tougher for shops to succeed and scale in today’s climate.
As one of the nation's largest employers, the retail industry provides excellent business opportunity. With the right preparation and planning, you could become a successful retail business owner.
In this blog post we will provide seven key considerations for starting and running a retail business.
1. Choose a Legal Structure for Your Business
A highly important and primary decision that needs to be made is choosing the right legal structure for your retail business. It will affect how you pay taxes, the amount of personal liability for any debt, and the ability to raise capital and have shareholders. These are all factors that have a significant impact on how you operate your business.
It is possible to change your structure further down the line of business, but this can be costly and difficult. Therefore, making the right decision before you start your business is advisable.
Some business structures include:
- Sole Trader – A sole trader is responsible for running their business. As a sole trader, you can keep your profits after tax, however, you are personally responsible for any debts of your business.
- Partnership - A legal agreement between two or more individuals who form an agreement to be co-owners of the business and can have varying degrees of interest. Partners share the business profits, and each partner pays tax on their share.
- Limited Liability Partnership (LLP) - All the partners share limited personal responsibility for the business and can participate in operations.
- Limited Company (LTD) – Perhaps the simplest structure to use and a more formalised partnership. The company is responsible for everything it does, and its finances are separate to the personal affairs of its owner(s).
Once you have decided the business structure best suited to you, you can register your business.
2. Have a Solid Business Plan
A business plan is an outline, or roadmap, for your business detailing goals and objectives and how to reach them.
When you plan on running a business to grow it to its full potential, then a business plan is essential. You cannot think about growth if you do not have a business plan in place. It is a way to ensure you take advantage of the opportunities you may have and mitigate the weaknesses of the business.
Extensive research and planning and considering all angles and areas of your new retail business will take time and effort but there is a proven correlation between the success of a business and a well-written, high-quality business plan.
Business plans will not just be been seen by you; potential partners and investors will want to understand your business model and objectives, too. Your plan will be written to achieve your goals, with content relevant to your business proposition. If you need any help with your plan, contact us.
3. Determine Your Channels
Each and any way a customer can do business with you is known as a channel. It should be pointed out thar retail is in an omnichannel market filled with diverse opportunities. You will need to determine which channel(s) you will utilise. There are a few routes to explore when first starting a retail business:
- Brick-and-mortar shops –The traditional form of retail business where customers are served face-to-face in a premises that the shop owner has bought or rents long-term.
- Pop-up shops - Temporary stores which ‘pop up’ in rentable venues, staying there for anything from a few hours to several months. An excellent way to test demand for your product in different areas before committing to a certain location.
- E-commerce – An option with significantly lower overheads. You may want to consider selling your products through a purpose-built website or through a platform such as Amazon, eBay or Etsy.
- Market stalls – Well-suited to food, drinks, hand-made products and gifts. This can be a great way to get some brand recognition in a certain location.
4. Craft your Marketing
Marketing your retail business is essential to get your products and brand out there and recognised.
Within your marketing plan, you can look at where you want to spend your money to market your retail business. For one business, social media advertising may be great for your demographic. For another business, Pay Per Click (PPC) marketing may provide the return on investment that you desire. Theses choices all come down to your preferences, financial state, demographic and so many more factors. The main aim is to build your customer base, so you need to use mediums that your customers do.
5. Establish Vendor Relationships
A successful retail business depends on offering the right product, at the right price, at the right time. This means that to be successful you must find the best vendors for your products. Finding the right vendors who you can trust and build a good business relationship with will provide you with support and peace of mind.
If you are wondering what type of merchandise you want to offer, part of your business plan will look at the finances and your offering. For example, for a retail business you may wish to do your buying breakdown on the basis of clothing brand names.
6. Craft a Brand
Branding ties together all aspects of your business. It is not just about your logo or name; it is about all of the facets that are recognisable as a part of your unique business.
A great piece of advice is to consider your unique selling points as a retail business and shape you branding around these.
7. Research Your Market
You need to know retail trends and how to customise your offering to suit your consumers’ needs. You will benefit greatly from knowing how you will keep your customers consistently happy and finding out what other retailers have done well that you could learn from.
Analysing your target market is vital - you can create a focus group or survey your target audience and get their feedback and opinions.
Further, seeing what a competitor does well and learning from this is very different to doing something overtly similar. Remember that you want to stand out and utilise your unique selling points.
A prime example of this is that each UK supermarket has a colour associated to their branding - for Tesco it is dark blue, for Sainsbury’s it is orange. But, a lot of supermarkets recognise the value in advertising low prices in their slogans: Sainsbury’s is ‘Live well for less’ while Tesco’s is ‘Every little helps’. Each store has a distinct colour scheme, but many recognise that price is important to most supermarket shoppers and is a part of branding to be capitalised on.
Having looked at just a handful of the initial steps you should take when starting your retail business, a key point to take away from this blog is planning. A great plan will set out your business goals, the reasons these goals are attainable and a plan to reach these goals.
Every new business needs a plan. At CBM we will produce a bespoke business plan, tailored to your business and your requirements. If you would like any help with writing your business plan, we’d love to hear from you. Call one of our friendly and professional business plan writing experts on 01604 420 420 or contact us using the form on the right.