Running your own store could be a dream come true. Set your own hours, delight customers, and when it’s running smoothly, step away and hire a manager. For the icing on the cake, sell it later and retire on the proceeds. But opening a store doesn’t have to stay a dream. With the right plan and execution, you can make it real.
Whether you’re a business visionary or a retail aficionado, you could join the ranks of the 29 million people making a livelihood in retail in the U.S. Be ready though, because you’ll have to clear some hurdles before your grand opening. See the guide below for information on how to open a store.
Opening a store can be a great pick for an entrepreneur who wants to earn money from a local economic base. See if any of these benefits of starting a store are right for you.
- Store owners cover a large part of the retail market, with over 1 million retail establishments across America.
- Store owners create the rules, hire and fire, and keep the profits. If you like things done your way, opening a store may be a good career move.
- When you run a store, you tie into the community in a way no other business can.
- Local stores help people and can create a feeling of pride for their owners.
- As a store owner, you get to experience the joy of seeing your vision grow into reality.
Ready to open your own store? Knowing how to open a store isn’t rocket science. But make sure you follow the right steps.
1. Create a Retail Business Plan
A business plan is a foundation for your store business. Having one in place gives you clear guidelines and direction. It’s also a confidence booster for anyone you may partner with.
Consider the following questions when you map out your business plan:
- Who are your store’s customers? Knowing your target market this will help you understand what you should sell.
- What does your store offer that’s unique? Do other stores have it too, for less? Is it what you sell or how you sell it?
- Are there any issues that could stop your retail business from flourishing?
- Do you have a good, high-traffic physical location in mind? If not, how will customers find you and is your store worth the trip?
- What sort of layout and floor plan will your retail space have? What will make your store design stand out?
- Can you access any support grants or tax allowances for your store?
- How will you handle product pricing?
As you consider each question, assess them against the SMART goals outline. Are they specific, measurable, achievable, relevant, and time-bound?
2. Choose a Business Structure
Your store’s business structure is important. Most stores are either limited liability companies (LLC) or sole proprietorships. Take your time with this choice, because changing your structure later can be expensive and challenging.
Although a sole proprietorship may seem appealing, think carefully. Sole proprietors aren’t legally separate from their owners. That means as the owner, you could incur personal liability as well as complete responsibility for debts or lawsuits filed against the store.
An LLC is a popular option that offers tax savings, liability protection, and the sense of being an official business. It also allows for multiple business owners.
Filing for an LLC can range from $40 to the mid-$500s. Most states let you set up an LLC online, with a credit card in many cases. Some LLCs may need a business license, too. To find out what you’ll need for your new business, visit your secretary of state’s website.
3. Calculating Costs
Setting up a store costs money, but calculating your expenses first can let you go in with your eyes open. The average retail store owner can earn about $50,000 per year, with a brick-and-mortar store costing up to $5,000 a month. Jotting down your costs can help keep you from overspending. Here are a few factors to keep in mind:
- Store licensing and permits can cost up to $2,000
- Insurance can factor in another $2,000
- Legal fees can be $400 an hour
- Rent depends on location, from as little as $15 per square meter to over $3,000 per square meter. Check commercial real estate listings in your area.
- Your empty store may need renovation before you settle in.
- You may need banners or promotional items.
- Consider whether you’ll hire a shop assistant.
- Worker’s compensation costs from $350 to $1,700 per year for each employee, depending on your state.
- Figure in utilities like lights, heat, water, and internet service.
- Consider the cost of starting inventory and whether you’ll take items on consignment.
- Are you eligible for tax breaks and local grants?
How do you fund your startup costs?
When the numbers start adding up, your store may start to look unattainable. Consider these options to help you fund your store:
- Government assistance through the Small Business Administration (SBA) can help, but you’ll have to meet the criteria of government loans and grants.
- Business credit cards are an option, but banks will ask for an operating agreement and proof of LLC status. Paying off balances monthly means you won’t pay interest.
- Business loans also require an operating agreement with the bank, and usually you’ll need to show your business plan. The bank wants to know you’ll be able to repay.
- Looking to friends and family can work, but it’s smart to have a watertight agreement signed by all so things don’t get confused.
4. Name your Retail Business
When it comes to naming your store, you want to stand out from the crowd in a unique but appealing way. When you choose your store’s name, consider signage colors, font, size, and placement. Have fun coming up with ideas, and plug them into search engines like Google to see if your idea is one of a kind.
Once you’ve narrowed your list down, ask friends and family for feedback. Some new store owners open up a poll on LinkedIn or Facebook to take the pulse of the community. If you’re completely at a loss, add keywords to a business name generator to see what fresh ideas appear.
Note that just because your store is “Buddy’s Grocery,” that doesn’t mean your store business needs the same name. That’s where a “doing business as” (DBA) name comes in handy.
5. Register your Business Name
Once you’ve got a great store name, make it official. Hire a registered agent (or be your own) and file the paperwork to launch your LLC. As a business, you’re required to have an employer identification number (EIN) from the IRS. Depending on the type of store you open, you may have other tax responsibilities.
Consider getting a seller’s permit and a resale certificate. If you’re hiring staff, you could be liable for disability and unemployment insurance, social security taxes, worker’s comp, and leave benefits. Most store owners also need general liability insurance and other business insurance. It’s a good idea to open a business bank account, too, to keep your personal and business finances separate.
6. Retail Store Equipment
The initial investment for a storefront can be costly. Smaller stores need less equipment and stock compared to bigger retailers. Most stores will need:
- Point-of-sale system
- Cash register
- Shelving, decor, and display cabinets
- Packaging for items purchased
- Shopping bags or baskets
- Price lists
- Tagging guns
- Labeling machine
- Opening and closing time signs
- Cleaning supplies
7. Advertise your Retail Store
Most startup stores don’t have the luxury of a large advertising budget, so your market strategy may be more organic in nature at first. Start small and then keep at it with these tips:
- Create accounts on various social media platforms. Utilize Twitter, Facebook, and Instagram, as well as Google My Business.
- Post regular content, updates, and pictures from your store to update customers and connect with the community.
- Create retail blog posts with keywords that are important to your brand to build up SEO and convert online readers into customers.
- On social media and in your blog, take potential customers on your journey as the store takes shape.
- Share live videos, specials, events, and sales.
- Offer competitions and opportunities for store discounts.
- Add custom tags to your items with business details.
- Partner with local coffee shops, musicians, and artisans to bring a once-a-month flavor to your store.
- Delight customers to spread word of mouth.
- Advertise in local media.
- Post flyers in local business hotspots to advertise events, deals, and sales.
Store business options are endless, so choose one that suits your personality and the type of brand image you want. Consider the following niches:
- Home industries store
- Consignment shop
- Book shop
- Record store
- Antique seller
- Gift shop
- Craft store
- Thrift shop
- Mobile store
- Gizmos and gadgets
- Makeup and perfumes
A large part of success in the retail industry is knowing how to stand out from the crowd. It can be the difference between sliding into debt and making sales. By offering a fresh and appealing storefront with high-demand products, your store can soar above the rest.
1 All prices and services presented above were reviewed and verified as of 11/2/19.
2 The Starter plan is $49/year the first year and increases to $119/year after that
3 This chart does not include state fees because those will vary in each state.
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