Are you interested in starting a retail business online? If YES, here is a complete guide to starting a retail business from home with NO money and no experience.
When we talk about retailing, we talk about a business that deals in loads of consumer goods; which can be categorized into three major areas and they are: general merchandise, apparel, and furniture. In other words, retailers are engaged in the selling of finished goods; they get the goods from the manufacturers and they sell to the end users (consumers).
Retail goods can also be categorized into durable goods and non – durable goods. Durable goods are goods such electronics, computers and accessories, furniture, and other large appliances et al and non – durable goods are good such as food, toiletries, drinks, beauty products, jewelry, clothing and shoes et al.
It is interesting to note that more retail shops especially lager retail outlets have started to include self-serve checkout lanes in their stores. It creates shorter lines that appeal to consumers; the average customer would not want to stay longer on queue.
Table of Content
- 1 Why Start a Retail Store?
- 2 Interesting Statistics About the Retail Industry
- 3 Market Research and Feasibility Study
- 4 List of Niche ideas Within the Retail Industry That You Can Specialize in
- 5 List of Well – Known Brands in the Retail Industry
- 6 Starting from Scratch vs Buying a Retail Franchise
- 7 Possible Threats and Challenges You Will Face When Starting a Retail Store
- 8 The Best Legal Entity to Use for a Retail Store
- 9 Some Catchy Business Name ideas Suitable for a Retail Store
- 10 The Best Insurance Needed for a Retail Business
- 11 Is Professional Certification Needed to Run a Retail Store
- 12 List of Legal Documents You Need to Run a Retail Business
- 13 Writing a Business Plan for your Retail Business
- 14 How Much Does It Cost to Start a Retail Business?
- 15 Financing Your Retailing Business
- 16 Choosing a Suitable Location for Your Retail Business
- 17 Technical & Manpower Details
- 18 Marketing ideas and strategies for a Retail Business
- 19 Factors That Will Help You Get the Right Product Pricing
- 20 Possible Competitive Strategies for Winning your Competitors
- 21 Possible Ways to Increase Customer Retention in a Retail Store
- 22 Creating a Suppliers/Distribution Network for your Retail Store
- 23 Tips for Running a Retail Business Successfully
Why Start a Retail Store?
The retailing industry is one industry that is so large that it can accommodate loads of entrepreneurs that are into the retailing of various goods. It could be a big retail outlet (shopping malls) or a small retail outlet in a street corner (kiosk, mom and pop groceries shops et al).
Perhaps the retailing industry has the widest range of customers; everybody on planet earth has one or more things that they would need in a retail shop. It is difficult to find people around who don’t patronize retail shops.
Over and above, the retail industry is a profitable industry and arguably the biggest industry in the world. It is open for any aspiring entrepreneur to come in and establish his or her business; you can chose to start on a small scale in a street corner like the average mom and pop business or you can chose to start on a large scale with several outlets in key cities.
Starting a Retail Business Online With No Money – A Complete Guide
- Industry Overview
The retail industry is a major sector of the economy of the United States which generates a whooping sum of well over $4 trillion annually from more than a million retail outlets scattered all around the United States of America.
The industry is responsible for the employment of well over 15 million people which is about 12% of the workforce of the U.S. eMarketer.com published that in 2014 alone, the retailing industry on a global scale generated a revenue of well over $22 trillion; it goes to show that the industry is indeed a very large industry.
Interesting Statistics About the Retail Industry
It is a fact that an estimated two-thirds of the United States’ gross domestic product (GDP) comes from retail consumption. This is why the United States of America’s economy is measured with the yardstick of how well the retailing business is fairing in the U.S. In essence, when there is an unstable economy, purchasing power drops and it impacts the retailing industry negatively which may result in the closure of some retail stores.
In recent time, the retail landscape has seen tremendous changes in the last 20 years; it has grown from the usual mom and pop outlets to a more organized and far reaching venture. The introduction of franchise and online store makes it easier for a retailer to reach out to a larger market far beyond the areas where his physical store is located.
Retailing business has been in existence for as long as human started trading goods, but one thing is certain, the retailing industry is still evolving. The introduction of technology and subsequently online retail store has indeed helped in reshaping the industry.
It is now a common phenomenon for retail outlets to leverage on technology to effectively predict consumer demand patterns and to strategically position their shop to meet their needs; in essence, the use of technology help retailers to maximize supply chain efficiencies. No doubt data collected from customers goes a long way to help retail shops serve them better.
Another common trend in the retailing industry is the pricing system. Aside from having varieties of products in a store, one of the easiest ways for retail stores to sell the goods on their racks as fast as they can and keep re – stocking is to ensure that the prices of their goods are a bit lower than what is obtainable in elsewhere. For example, it is common to see items with prices in this format; $3.99, $99 and $199 et al as against $4, $100 and $200.
Retailers also engage in massive clearance sales and discount sales to attract customers. It is a strategy that helps them welcome new customers and also reinforce the loyalty of old customers.
Some of the factors and incentives that encourage aspiring entrepreneurs to venture into opening a retailing business is the fact that the required amount needed to start the business especially when you choose to start a small groceries store or mom and pop business is not on the high side compared to other small scale businesses.
That makes it easier for loads of entrepreneur who are interested in the business to come into the industry at any time they desire; the entry barriers are quite affordable and any serious minded entrepreneur can comfortably raise the start – up capital without collecting loans from the bank.
Market Research and Feasibility Study
- Demographics and Psychographics
The demographic and psychographic composition of the retailing business cuts across people of all ages and cultures, tribes and political affiliations, races and religions et al. The truth is that anybody who has financial capacity (purchasing power) is indeed a potential client of a retailing business; from school children to corporate workers, from corporate organizations to individuals, from religious organizations to households et al.
Here are a few of the demographic composition for retailing business;
- Corporate Executives
- Business People
- About to wed couples
- Expectant Mothers
- Sports Men and Women
List of Niche ideas Within the Retail Industry That You Can Specialize in
The retailing industry is a very broad industry that has different areas that an entrepreneur who is looking towards starting the business can specialize in. The truth is that almost every commodity that is manufactured can be retailed. Here are some niche ideas within the retailing industry;
- Bricks and Mortal Retailing Store (Shopping Malls)
- Online Retailing Business
- Retailing of Electronics, Home Appliance and Household Goods
- Retailing of Durable Goods
- Retailing of Non – durable Goods
- Retailing of Pharmaceutical Products
- Retailing of Automobile Products
- Retailing of Clothes and Fashion Accessories (Boutique)
- Retailing of Alcoholic and Non – alcoholic drinks
The Level of Competition in the Retail Industry
Even though there are loads of retailing stores that are scattered all around the cities, that does not in any way stop those who are well positioned to continue to generate huge revenue from the business. In other words, despite the fact that there is competition in the retailing business, entrepreneurs who are into retailing of products are still smiling to the bank.
This is so because retailers are always coming up with creative ways on how to sell their products and continue to make profits from the business. Creativity in the industry is obviously what led to online retailing stores, clearance sales, and loads of other marketing strategies that is helping the business to grow despite the competition in the industry.
List of Well – Known Brands in the Retail Industry
These are the list of some of the largest retailing chains in the world;
- Walmart Stores, Inc.
- Woolworths Limited
- GroupeAuchan SA
- Aeon Ltd.CVS Caremark Corp.
- Walgreen Co.
- Target Corporation
- Aldi Einkauf GmbH &oHG
- The Home Depot, Inc.
- Metro AG
- LidlStiftung& Co. KG
- Kroger Co.
- Carrefour S.A
- Costco Wholesale Corporation
- Tesco PLC
- Shoprite (Spar)
- Park ‘n’ Shop
Starting a retailing business just like starting any other business requires that you conduct your feasibility studies and market survey so as to get your economic analysis right. As a matter of fact, you just have to get your economic analysis right if your intention of building the business is to generate profits, grow the business and perhaps expand the business beyond one location to other locations within the United States and other cities in the world.
When conducting economic analysis for your retailing business, you would have to critically examine these key factors; place, product, pricing, and promotion. As a matter of fact, you would have to continue to review these key factors at regular interval while running your retailing business.
It is important for retail business owners to be aware that running their own single retail shop outlet (an independent retail shop) is different from managing or operating a retail shop chain or franchise. Managing or operating a retail shop chain or franchise attracts additional impediments like incentive alliance, bureaucracies, growth strategy, and operational guidelines et al.
Starting from Scratch vs Buying a Retail Franchise
It is important to clearly state that, when it comes to choosing how you intend starting a business, you should be guided with your business vision and mission statement.
In other words, if your aim of starting a retailing business is just to earn money and make a living without much stress, then you can afford to look for a successfully retailing shop chain and buy their franchise but if your aim of starting a retailing business is to build a business that will grow from just one shop outlet in one city to chains of retailing shops in different cities all around the world and perhaps sell franchises, then starting from the scratch is your best bet.
Although, starting a business from the very scratch might not be easy, but one thing is certain, if you are diligent and can apply the right business strategies per time, it wouldn’t be too long before your business brand becomes recognized not only in your city or state, but throughout the United States of America and the rest part of the world.
Possible Threats and Challenges You Will Face When Starting a Retail Store
The threats and challenges that is likely going to confront a start – up retailing business is the fact that they are going to be competing with already established retail shops and also other retails shops that are likely going to be opened within the same location.
You would have to go all out to compete for the available market in the location you choose to set – up your own retail shop. Other threats and challenges that you are likely going to face when you start your retail business are economic downturns which usually affect purchasing powers and also unfavorable government policies.
- Many retail businesses struggle to pay the bills
- Hiring process on the retail industry can be a stressful process
- Time management
- Difficulty in Delegating task
- Choosing what to sell
- Marketing strategy
- Theft and Damage
- Price setting is a risky undertaking in the retail business
The Best Legal Entity to Use for a Retail Store
It depends on what you want and the type of business model that you intend building; you have the options of either choosing a limited liability company which is commonly called an LLC, or a sole proprietorship. Ordinarily, sole proprietorship should have been the ideal business structure for a retailing business especially if just starting out with a moderate capital and a small groceries store.
But people prefer limited liability Company for obvious reasons. As a matter of fact, if your intention is to open several outlets of your retail shops in the different cities and to sell franchise, then choosing sole proprietor is not an option.
For example, setting up an LLC protects you from personal liability. It is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.
Some Catchy Business Name ideas Suitable for a Retail Store
When it comes to choosing a name for your business, it is important that you choose a name that clearly indicates the type of business you are into, it will make it easier for people to identify with your brand name. However, there is no hard and fast rule when it comes to choosing a name for a retailing business; you can afford to name your retailing business any name as long as you have perfected your marketing strategy and promotion strategy et al
These are some catchy business name ideas that you can choose from if you are looking towards starting your own retailing business.
- The Home Appliance People
- Gracias Stores, Inc.
- MercyLand® PLC.
- Winners Shopping Mall
- Pennywise Stores, Inc.
- John Edward and Sons Ltd.
- Pappy Jay Corp.
The Best Insurance Needed for a Retail Business
When it comes to starting a retailing business there are key insurance policies that you must have in place same applies to any other industry you intend starting a business. It is important to note that you can’t be permitted to run a retailing business in the United States, in Canada, Australia and in Europe if you don’t have the basic insurance cover for your business.
These are some of the basic insurance cover that you should consider purchasing if you want to start your own retailing business in the United States of America and also in most parts of the world;
- General insurance
- Health insurance
- Liability insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Credit insurance
- Payment protection insurance
Intellectual Property Protection and Trademark for a Retail Store
If you are running a franchise / chains of retailing shops model, it is compulsory that you file for intellectual property protection. It will become handy and very useful as your retailing chains brand begins to expand far beyond your reach. The truth is that even if you are starting your own retailing business from the scratch, you would still need to secure your brand name from an intellectual property clearinghouse.
It is quite challenging to build your retail shop brand from the very scratch, and then watch the brand name slip off your hands. Even if you intend buying a retail shop franchise, you would still need to contract the trademarks and service marks from the franchising company.
- Copyright laws
- Brand and image rights
- Protection and registration of designs
- Enforcement and dispute resolution
- Anti-counterfeiting and piracy
- Patents laws
- Trade mark filing and opposition
- Brand audits and watching services
- Securing trademarks and passing off
- Domain name strategies and disputes
- Data and database rights
- Competition law
- Protection of technology and innovation
- Advertising and marketing issues.
Is Professional Certification Needed to Run a Retail Store
From a general perspective, you might not have need for professional certification before you can be allowed to run a retailing business in the United States of America, Canada, and Australia and even in Europe. However, if you are into the retailing of foods and drinks, you would need to get clearance from local health authority.
You will also need a kitchen clearance certificate, food handler certificate and perhaps other relevant certification as it applies to your country or even your state. So also, if you are into the retailing of drugs and pharmaceuticals, it is mandatory that you obtain the needed pharmacy license and certification.
List of Legal Documents You Need to Run a Retail Business
The legal requirements for starting a retailing business may vary slightly from country to country, states to states and even from cities to cities. So it is important to contact your local authority to know the legal requirements that you would need in order to successfully start your retailing business in your country without stress.
These are some of the basic legal requirements needed before you can successfully start and run your own retailing business;
- Business and liability insurance
- Foods and drinks handler certificate (for food retailing businesses)
- Health inspection Certificate
- Proof of district-issued food and drinks manager identification card
- Food purchase record storage and record keeping (If you are also involved in the sale of snacks)
- Depot, commissary or service support facility meets vending unit operation needs
- Copy of license for the service support facility and/or a recent inspection report
- Tax Payer’s ID
- Fire certificate
- Kitchen insurance
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Employee’s Handbook
- Operating Agreement for LLCs
- Building License
- Liquor License (for those who are into the retailing of liquors)
- Franchise or Trademark License
Writing a Business Plan for your Retail Business
No matter the type of business or size of business you intend starting, it is a wise decision to first write a good business plan before taking any action. The truth is that, in order to successfully run a retailing business, you would need to have a good business plan in place.
A Business plan is the blue print that is needed to successfully run a business; with a workable business plan in place, you will reduce the trial and error approach of doing business. You will be able to manage your business with purpose and perhaps precisions; you will know what to do per time and how to handle challenges and growth.
So if you want to start your own retailing business, you are required to write a detailed retail business plan that can pass reality test when subjected to it; you should work with the facts, figures and other indices in the industry as it applies to the location you intend opening your retail shop.
The whole idea of writing a business plan is not just for the sake of having a business document in place; but a detail guide on how to effectively run your business from the scratch. Your business plan should outline and cover strategies on how you intend to manage your retailing business.
The rule of thumb in writing a business plan is to try as much as possible to be realistic and never to over project when putting figures on income and profits et al. As a matter of fact, it is safer to underestimate when writing a business plan so that you won’t be so disappointed when reality sets in.
These are the key areas that should be covered in your business plan;
- Executive summary and Company’s descriptions: you are expected to write about the concept of your business, descriptions of your company, your company’s vision statement, mission statement and where your company will be located and also if you intend selling out franchise or opening outlets in different cities in the United States of America and in other parts of the world.
- Other key components that should not be missing in your retailing business plan are product offering, SWOT analysis, competitive analysis, marketing and sales analysis / strategies, target market, market goals, pricing, costing and financial projection, publicity and advertising strategy, expansion and growth strategies, budget and start – up capital generation et al.
How Much Does It Cost to Start a Retail Business?
When it comes to starting a retailing business, loads of factors influences the amount that will be required to successful launch the business. Factors like the location you intend starting the business, the niche of retailing business you want to start, the size of the retailing shop / business you want to start, and of course the state of the economy as at when you intend starting the business.
No matter where you intend starting your retailing business, you would be required to fulfill most of the items listed below;
- The Total Fee for Registering the Business – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $1,300.
- Marketing promotion expenses for the grand opening of People’s Choice Retail Store in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- Cost for hiring Consultant – $2,500.
- Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
- Cost for payment of rent for 12 month at $1.76 per square feet in the total amount of $105,600.
- Cost for Shop remodeling (construction of racks and shelves) – $20,000.
- Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
- The cost for Start-up inventory (stocking with a wide range of products) – $100,000
- Storage hardware (bins, rack, shelves, food case) – $3,720
- The cost for counter area equipment (counter top, sink, ice machine, etc.) – $9,500
- Cost for serving area equipment (plates, glasses, flatware) – $3,000
- Cost for store equipment (cash register, security, ventilation, signage) – $13,750
- Cost of purchase and installation of CCTVs: $10,000
- The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al): $4,000.
- The cost of Launching a Website: $600
- The cost for our opening party: $7,000
- Miscellaneous: $10,000
Going by the report from the market research and feasibility studies, you would need an estimate of about $100,000 to successfully set up a small scale retailing business in the United States of America. The amount includes the salary of all employees and the CEO (Owner) for 3 months.
If you want to start a medium scale retailing business in the United States of America, you would need nothing less than a million dollars. And if your intention is to start a large scale retailing business in the United States of America, then you should look towards generating well over 5 million dollars as your start – up capital.
Financing Your Retailing Business
It is often said that money is the life – line of any business. No doubt raising start – up capital is perhaps one of the major concerns for entrepreneurs; it can be challenging raising capital to launch a business idea. Your idea must be workable and promising for you to secure finance from financial institutions or from angel investors.
The first thing to put in place before sourcing for start – up capital for your business is to draft a detailed business plan. With a good business plan, you can easily convince investors to invest in your business. The truth is that no bank can give you a loan if you don’t have a good and workable business plan.
Besides, investors will not take you seriously if you don’t have a business plan on ground before launching out to source for start – up capital. There are several options when it comes to raising money to finance a start – up business. Some of the options are;
- Raising money from personal savings and sale of personal stocks
- Raising money from investors and business partners
- Applying for loan from bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Sourcing for soft loans from family members and friends.
Choosing a Suitable Location for Your Retail Business
The fact that there different sizes and niches of retailing outlets scattered across the United States does not mean that retailing business can thrive in every location. Before choosing a location for your retailing business, ensure that you conduct a thorough feasibility studies and market survey.
There are possibilities of you coming across a retailing business that just closed shop in the location you want to open your retail shop can’t be ruled out. This is why it is very important to gather as much facts and figures before choosing a location to set – up your retailing business.
These are some of the factors that you should consider before choosing a location for your retailing business;
- The demography of the location
- The purchasing power of the residence of the location
- Accessibility of the location
- The numbers of retailing shops in the location (especial retailing shops that retails same products you intend retailing)
- The local laws and regulations in the community / state
- Traffic, parking and security et al
Technical & Manpower Details
The technical details required for a retail store business depends on the type of retailing business / niches that you are into. One thing is certain, if you are into retailing of any products, then you would need a POS, receipt issuing machines, and CCTV cameras in strategic locations all around your store.
You would also need accounting software, CRM software, payroll software and other software applications that are needed in the niche of retailing business that you intend starting et al.
If you have the required finance, it is to your advantage to acquire a property or lease a facility; it usually gives you the freedom to design the facility the way you want to it to be. But if you are low on cash, then you don’t have any option other than to rent a facility.
As regard employees, there are certain roles that must be occupied before you can effectively and successfully run a standard retailing store; you would need a store manager, merchandize manager, cashiers, accountant, sales boys and sales girls. On the average, you would need a minimum of 10 – 15 employees to successfully launch a standard retail shop.
Marketing ideas and strategies for a Retail Business
When it comes to generating a marketing strategy for your retailing business, the first thing you need to do is to ensure that you choose a good location for your store. If your retail store is located in a good location, you would have successfully eliminated close to 50 marketing challenges that you are likely going to be confronted with
These are some of the marketing ideas and strategies that you can adopt for your retailing business;
- Direct Marketing
- Introduce your business to people and organization in the community where your store is located
- List your business in local directories / yellow pages
- Sponsor TV and Radio Programs
- Erect your Billboards in Strategic locations around the city
- Making use of sales Agents and sales reps
- Online Marketing (via your official website, social media platforms and blog et al)
- Referral Marketing / word of mouth
- Public relations during exhibitions and corporate events
Factors That Will Help You Get the Right Product Pricing
It is a fact that any fluctuation in the production cost of any product directly impacts margins. One of the ways to get the right pricing and still make reasonable profit from retailing business is to ensure that you buy your goods directly from the manufacturers.
If you have the financial capacity, you can as well ensure that you purchase goods in large quantities, with that it will be easier for you to get the right pricing and perhaps below the average price in the market. That is how the leading retailers in the globe are able to sell their goods as low as possible.
Possible Competitive Strategies for Winning your Competitors
If you want to win your competitors in the retailing industry then you should ensure that that you have a wide range of quality products from different brands / manufacturers available in your store at all times. With that in place, it will be difficult for customers to visit your store and not see the product that they are looking for.
Another competitive advantage that you should leverage on is to ensure that aside from running brick and mortar retailing shop, you should also open an online retailing store. It will give you the opportunity to leverage on the online community to sell your goods.
Possible Ways to Increase Customer Retention in a Retail Store
No doubt one of the strategies that you would need in order to generate repeated sales from your customers and also to retain them is to ensure that you retail a wide range of quality goods at affordable prices at all times and your customer service delivery should always be on point.
The truth is that if customers are not treated well or if whenever they visit your store they seem not to get what they are looking for, they are more likely to look for alternative store within same location.
Lastly, ensure that you offer your customers incentives; do clearance sales from time to time, sell your goods on discount and give out gifts if you want to retain your customers and of course continue to generate repeated sales from them and also to attract new customers.
Creating Retail Brand Awareness and Corporate Identity
Retailing business just like any other business requires media hype to get people to buy into the brand. Your brand has to do with the way people perceive you to be which is why you should be deliberate when it comes to communicating and promoting your brand.
In promoting your brand and corporate identity, you should leverage on both print and electronic media. As a matter of fact, it is cost effective to use social media platforms to promote your brands, besides it is pretty much effective. Here are the platforms you can leverage on to create brand awareness of your retailing business and to promote your corporate identity in the market place;
- Place adverts on national TV stations, Radio Stations and Newspapers / Magazines
- Run your own special TV program
- Sponsor relevant community programs
- Leverage on the internet and social media platforms like; Instagram, Facebook , Badoo, YouTube, Twitter et al
- Install your Bill Boards on strategic locations
- Engage in road show from time to time
- Distribute your fliers and handbills to targeted areas from time to time
- Send out introductory letters to multinationals, embassies, and Diaspora organizations and networks in and around your location
- Encourage the use of word of mouth especially from loyal customers
- Ensure that all your vehicles are branded with your company’s logo
- Ensure that all your employees wear your branded shirts during work hours
Creating a Suppliers/Distribution Network for your Retail Store
If you are running a retailing business, your ability to have options when it comes to supplier and a robust distribution network will go a long way to determine the level of profitability that you can generate from the business.
The truth is that bigger retailers take advantage of networks to get the right pricing for goods in their stores. So it is important to screen suppliers and build business relationship with ones with the best prices; with that it will be easier for you to sell at a very low price and still make profits.
Tips for Running a Retail Business Successfully
Irrespective of the kind of business you run, your ability to get all the members of your team to be on same page at all times is one of the keys you need to successfully run the organization.
As the chief executive officer or president of a retailing company, it is your responsibility to give direction to the business. Part of what you need to do is to ensure that you create time for office meetings; a time where challenges, feedback, projections and relevant issues are discussed.
The meetings could be daily, once in a week, twice a week or once in a month. The bottom line is that there should be consistent meetings in your organization. Carrying out appraisals on a regular basis and training your employees will help you run your organization effectively.
Encourage your employees to pursue certifications in their various area of specializations; it will help your organization’s profile and of course it will help the individuals. You can choose to fully or partially sponsor some of the certifications exams.
Lastly, you should keep your doors open for suggestions from members of your team and your clients. It is very important to reward excellent performance in your organization; it will go a long way to encourage healthy competition in your organization.
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