Regardless of what is going on in the world, people still need life s essentials. At the very least, they have to buy food, drink, clothing, household items, and tools. Most people will also treat themselves, friends, and family to something special when they can afford to do so.
So retail is a good sector to be involved in during hard as well as good times. But it is not without its challenges.
There is always a lot of competition and how much profit you can make is impacted by many things that are out of your control. However, there are ways to mitigate many of those risks and improve the chances that your first store will be a success.
Understand your customers
The starting point for any business is always its customer. The more you understand them, what they want, how much they are willing to pay, and how they want to be served the more likely it is that they will buy from you. You can increase footfall in your retail store by providing seamless shopping experiences to customers. The key to a hassle-free shopping experience is the right inventory, enough store space, a fast and secure payment system (such as the posabit system), and most importantly, high-quality products.
There are many blogs and useful resources available online to know more about what customers want. An example would be the interview of 890 shoppers in the US, UK, and Australia to find out what kind of shopping experience they were looking for, which produced some interesting insights. For example:
If you want to learn more about what people want from physical retailers, we suggest that you read The current state of retail
- 67% of shoppers spend more than half of their budget in physical stores
- 66% of the respondents wanted a more efficient in-store experience
- 100% of the shoppers were concerned about either sustainability, diversity, and inclusiveness, or a combination of all three issues
Simply click the link above to get access to the entire report and gain a deeper insight.
Don t fall into the temptation of overspending
When you start a new business, it is all too easy to get carried away and just spend, spend, spend. Instead, set a realistic start-up budget and stick to it.
Don t be swayed by the shopfitters. They will offer you all sorts of extras, things that are not essential and could take you over budget. By all means, listen to what they have to say. But insist that they make the business case to you, before agreeing to buy extras. If you do decide to spend more on fitting out your store, identify where that money is going to come from, before signing the contract.
Track your finances
From day one, invest in sound accountancy software. Use this article to help you to choose one. As a retailer, it is often worth opting for a package that also has Point of Sale (POS) capabilities. It is also a good idea to use project management software like Trello to help you to manage the startup. Include the financial details and make staying within budget one of the targets for each task. This article explains more about how to do that.
Educate yourself about cashflow
Keeping track of your finances from day one will help you to stay on the right side of the tax authorities. It will also enable you to measure ROI for everything you do and each product that you sell. Perhaps most importantly of all, it will also enable you to manage cash flow.
Do not underestimate how important managing your cash flow, from day one, is. Poor cash flow is the number one reason new businesses fail. In the USA, 82% of SMEs fold within 5 years because of this issue.
The nature of the retail business model makes you particularly vulnerable to cash flow problems. So, it is especially important to educate yourself about cash flow. You can read about the 5 most common cash flow mistakes retailers make and how to avoid them, by clicking here.
Start now but start small
If you have been thinking about trying retail as a business model, don t be put off by what is going on in the world, at the moment. There are lots of opportunities for entrepreneurs who are willing to think outside of the box and go that extra mile. Those that look at the problems their customers are facing and provide solutions will always make sales.
But that does not mean that you should go out and spend tens of thousands on stock, right away. A wiser approach would be to start small. Perhaps open an online store and maybe test the waters with a market stall or a pop-up shop. This approach provides you with the chance to get to know your customers and better understand their needs.
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