Last updated on February 8th, 2019
Retail is the business sector in which goods are sold individually or in small quantities to consumers. Dating back to antiquity Retail market and shops have a very ancient history. Over the centuries, Retail business got transformed from little more than rude booths to the sophisticated shopping malls of modern era.
Everyday is a new chance to jump up on new business opportunities because of Globalisation. With continuous improvement of technology it has now become easier for the people to do business. There are even instances when you can make business transaction with people who are halfway across the world from you. This bring light to the fact that how easy it is to do business?
All you need is right inspiration and couple of ideas to get you started.
Here Are 15 Best Tips For Starting A Successful Retail Business In
Table of Contents
- Write A Business Plan
- Set Your Goals And Objectives For The Business
- Define Your Unique Selling Proposition
- Know Your Market
- Analyze Your Industry
- Make It Legal
- Innovation Around Customer’s Money Making Model
- Positive Cash Flow
- Retail Packaging Design
- High Performance Team
- Product Positioning
- Keep A Source Of Cash
- Build A Cash Reserve
- Create Entry Barrier
- Scalability With Recurring Revenue Model
#1. Write A Business Plan
If you are thinking of starting a business you should know how to make a business plan. A good retail business plan can help you realise you dream and make your business flourish. It is usually observed that despite of having a great startup idea most businesses are not successful.
According to statistics of IBM institute for business value and oxford economics, 90% of the businesses fail in first five years of operation and out of remaining 10%, only one out of 10 business lasts past the first five years.
What makes one business fail and other successful ? There may be several reasons including but not limited to poor customer service, poor logistics and cost management and inadequate product, but the major reason is the lack of a business plan.
Business plans help to find goals and achieve them.Writing down your vision for the company will help you to find it as over the time you tend to forget your brilliant ideas. All daily activities of business can then be aligned with the vision of the business.
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#2. Set Your Goals And Objectives For The Business
A goal without a plan is just a wish. Define your strategy and tactics for execution of special activities including key dates, deadlines, budgets and cash flow. Never assume that your goals need to be small to accommodate your limitations, Think big.
Clearly define your short term goals that you wish to achieve with in 12 months, Mid term goals that will take between 2 to 3 years and long term goals . Consider all aspects such as number of outlets you want, number of customers you need in your database , the target population and the age group as well as amount of possible income that needs to be generated in the future.
#3. Define Your Unique Selling Proposition
What is it about you that is different from the crowd ? How is your product or service different from the others in the market? It could be anything from additional services to personalized customer services.
Your unique selling proposition will make you more attractive to potential customers. You can even offer them better sales warranty and support. While writing a business plan you just need to highlight the extras your customers are getting from you to make your business stand out.
#4. Know Your Market
It often happens that you have a brilliant ideas but someone else has already started a business with similar plan. You should not let this stop you. Several businesses can provide the same service and still survive as the market place is huge and it can sustain more to more businesses, but for this you should have a great knowledge of current market trends.
Research and find out how many competitors you have? What services they offer? What are the current and future trends of the industry? Know the larger picture of bench marks than can be used to gaze your business performance such as gross turnover, profit margins, etc. Once you know the inner workings of the market you can manipulate them in your favour.
#5. Analyze Your Industry
Who will buy your product or service? Who would be your competitors? How much money will you need to start? These are the questions that you must have the answer to.
#6. Make It Legal
Name your business and register it. Get the proper business license and permits. Check into your insurance needs. An employer identification number (EIN) is used to identify a business entity. It is required if you have employees in your retail business.
#7. Innovation Around Customer’s Money Making Model
Base of a good retail business should be centered around the innovation of customer’s need and acquisition. Usually most of the businessman focus on their money making model instead of taking care of customer’s money making model.
What problems are you solving in your customer’s life which they can’t solve on their own? This should be one of the focus point to consider while starting a business.
#8. Positive Cash Flow
Profit and cash are two important key points in starting a retail business. There is no point of having profit in your books of accounts, if there is continuous delay in your cash payments and you are continuously failing to recover money from customers. Most funded startups like askme.com, fashionara, cab auto etc. closed because of negative cash flow. Maintain a positive cash flow and recover your payments on time.
#9. Retail Packaging Design
Packaging deals with covering a product properly from the viewpoints of safety and ease of handling. Packaging design is more sales driven than any other area of design. While many consumers focus on the features and benefits of a product, the packaging often plays a large role in attracting sales and creating a perception value.
Even if your product is superior in quality it can be outshined by competing product with better packaging. You have to understand that packaging itself is a sales tool. It is all about standing out and making an impression that consumer can’t ignore.
Designhill has a team of creative designers with years of experience, so we can help create packaging that grabs attention and persuades consumers that are trying to make a decision on which product to buy.
A products packaging communicates many things from what the product can do for your customers to your company values. As the consumer moves down the shop , how do we predict which product he or she is going to pick ? Hence packaging is the main way products are advertised and identified.
#10. High Performance Team
To start a successful retail business you need a strong and dedicated team working on your vision. Team composition, team goals, task distributions, communication channels, etc are very important for good work performance.
Problem with most of the team members is that they don’t know what they are aiming for? They don’t know how they fit in? They are just following the team because they don’t want to be rejected. The team members need to have a sense of direction, purpose and should know who is responsible for what ?
Team members need to know that there are some guidelines, some rules, or agreements that they need to follow. You can perfectly execute your business plan by transforming a number of I’s to We.
Characteristics of a high performing team are :
- Rapid interaction among team members.
- Informal, unstructured communications.
- Involvement of all the members.
- Trying to find a common level of ambition and creative thinking dominates.
In the case of a high performing team the team leader ask the team to live through the project as a team. Hence, there are better ideas of handling challenges and crucial problems.
#11. Product Positioning
Product positioning is what your customer thinks about your product? Therefore, it is important that you understand your target market well. Understand your competition’s positioning. It can help you determine how you can position your own products. See if it is worth for you to expand your business. Is there already a market leader?
Your product must meet the needs of the new target market by solving the target customer’s pain. Understanding your product positioning will help you analyze the gaps. This would also help the graphic designers to create product designs, brand identities, etc.
Researching your product positioning before starting a retail business will help you stay away from potential landmines.
#12. Keep A Source Of Cash
When starting your own retail business you need to know that profits will not start coming in right away. Having a source of cash while you are starting your own business helps you in getting through the startup process with enough cash.
#13. Build A Cash Reserve
Financing is a critical part of your business success . While starting your own business you can save up all by yourself, if you can. Else you can approach professional business investors and lenders.
You must be open to different ideas of raising your capital, normally traditional lenders don’t like new idea. They always prefer investing in businesses with proven track records and most of the retail business fail because of the lack of capital.
#14. Create Entry Barrier
The only way to grow sales and profits is to create innovative offerings.The goal is not only to find and successfully introduce such offerings but to create barriers that inhibit or prevent competitors from entering.
The firms that have enjoyed years or even decades of life with no or weak competitors have created such barriers. These barriers can inhibit competitors from getting traction, becoming visible, and being perceived as authentic.
#15. Scalability With Recurring Revenue Model
The recurring revenue model is one that encourages a customer to pay a certain amount over a specific period of time. It is sometimes called as subscription based model .
The main elements that business focus on are customer acquisition, the monetization of current customers and customer retention.
When used correctly while starting a retail business, the recurring revenue model has many benefits, including predictable and measurable revenue, access to growth, higher levels of customer retention and increasing profit margins and sales.
The dream of starting a retail business can easily become a reality . It may take a lot of planning as you start your own business, but with the right strategy anyone can achieve their goals. The above tips to start a retail business should be used as guidelines before you open your store. As a successful retailer always keep in mind that a successful retail business depends greatly on offering the right product, at the right price and at the right time.