I’ve been speaking lately to more and more people who are thinking about starting up a retail business. For the most part, these are folks who’ve not been in retail before, but have great ideas for offering customers something new, something different, something compelling. They’ve got the entrepreneurial bug.
If you think about it, this interest is not very surprising. There is a growing sense that the economy is putting in a bottom, and that things might start turning up before long. These entrepreneurs are at a point in their lives where they want to do something different, they want to follow their passion. They have cash that they’re ready to invest and put to work. They just want to be sure they’re putting it to work prudently and to the best effect.
I’m very pleased to speak with each and every one. There is an enormous amount of planning and work that goes into opening a new store. If you’ve caught the bug and are thinking about going into business, here are a just a couple of core thoughts to keep in mind.
Carefully define the niche that you want to pursue, and construct a plan to own and command it. Cutting edge retailing today isn’t about selling stuff; customers can get just as easily buy stuff on the internet. To be successful today you must engage your customers in a personally meaningful way, around a specific shared passion. That passion might be a mindset, a lifestyle, or an active pursuit. It’s important to them, and that makes you important as well.
The shared passion is what will keep them coming back to your store, that will set you apart, and, last but not least, earn you the margins you’ll need to be successful. Day in and day out, execute your passion. Create a compelling retail experience around that passion, and design every last detail of your business to work in complete harmony to captivate your customers. Everything, from store design and build-out, to decor and layout, to merchandise presentation and assortment, to lighting and music, to fitting rooms and cash wrap, to your employees and their passion, to your policies and procedures, must be pulling in the same direction, and with the same intent; to provide each customer with a memorable experience, worthy of telling their friends about.
Make your financial investment wisely, then manage it prudently. That requires a comprehensive and detailed set of plans, not just through Grand Opening, but for at least the first year you’re in business. In retail, that means not just having a financial plan, but also a merchandising plan. You’ll need a detailed set of sales, margin and inventory plans, broken down by category and subcategory, in units and dollars. When these plans are completed, you will have the essentials of an Open-to-Buy, with a detailed Buy Plan, by month, to guide your initial purchases. You’ll also have a dynamic plan that will provide critical benchmarks, and that can be continually adjusted once you are open to reflect actual results and emerging trends.
In addition, I also recommend developing a companion monthly cash flow plan, derived in part from the sales, margin and inventory plans, that also takes into account every other cash expenditure as well. This takes you beyond pro forma financials, and provides you with a cash budget, and benchmarks for identifying variances and potential cash shortfalls in a timely manner as you go along. More than many other businesses, retailing is a cash business, so having a plan to manage your cash, and being able to self-finance your seasonal cash needs, is essential to success.
These are but a few general thoughts to guide your thinking. Most importantly, plan. It’s easy to lose sight of the big picture once you’ve become immersed (if not overwhelmed) by all the details. If you have a passion, then plan carefully and execute your plan smartly, there’s no better time to get into the retail business.
Ted Hurlbut is a retail consultant, coach and speaker who helps independent retailers increase sales, profitability and cash flow by leveraging his deep expertise and proven retail know-how, Get his FREE report “The 16 Essential Elements of a WINNING Independent Retail Strategy” Visit: HurlbutaAsociates.com