Retail businesses come with enormous potential and tremendous risk. How do you dramatically tip the…
Getting Started on a Retail Business Plan that Sells
Just the word “retail” can set the head spinning because there are so many options. A retail store can sell everything from mobile phone apps to meatball subs. There is one thing every retail store has in common. It needs a retail business plan that sets out the operational and financial path to success. Sometimes the most difficult step is just getting started on the business planning process.
Reliable Retail Business Plan
A quality retail business plan contains certain elements that set it apart from the ho-hum versions. The first element is that in-depth industry research is apparent. There are excellent associations that track the retail industry and can provide critical information like industry trends, supplier guides, and a host of training and development tools. Reliable industry sources include the Retail Industry Leaders Association and the National Retail Federation.
Plan for Regular Sources of Inventory
One of the quickest ways to go out of business is to not have reliable access to inventory. To write the operating section of the retail business plan, the retail store owner needs to do research on the suppliers who can keep the store stocked. The business plan can name specific vendors, along with the agreement details like price and payment terms.
In today’s business environment, it is also important to address the risks of losing access to inventory sources or resources, and the contingency plan for alternative sources. A lot depends on the business. A business selling precious metals is more likely to have supplier issues than a retail business selling local handmade products.
Prepare to Do Accounting Work
The scariest aspect of running a retail business for many entrepreneurs is learning to keep track of cash flow and the financial condition. There are online worksheets and software packages available that are used to track inventory, staff wages and benefits, and cash flow.
Also, it is wise for the entrepreneur to be in good financial condition before opening a business or seeking investors. If the entrepreneur has personal credit issues like past due accounts or excessive personal loans, the banks and investors are less likely to fund a new business. They may require collateral which can mean putting up personal assets. In addition, the revenue projections must be supported by reliable data and honest estimates. The ability to payback a loan depends on the accuracy of the cash flow forecasts.
Cater to the Environment
Environmental sustainability is a big issue today. The businesses that include elements like recycling and local supply sources can give the business an advantage. Researching and finding ways to make the business as “green” as possible can contribute to a business brand and add a competitive advantage. The added advantage is that retailers may qualify for tax incentives if they can prove environmental sustainability is part of the business foundation.
These are just some of the advance steps entrepreneurs take when preparing to open a retail business. The retail business plan is actually a final step in that it includes the results of extensive research on the retail industry and elements that can differentiate a business. Do the footwork, and the business is set on the right path from day one.
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