Trading in Success with Quality Retail Business PlanAlex, April 14, 2014, 3:00 pm
Answer this question: What is the average sales per square foot for the industry the retail store will participate in once opened? Here is another question: How will the business owner penetrate the target market? These are the kind of questions that are answered in a quality retail business plan. If there are no complete answers, it is an indication that additional research is needed. The level of competition the business startup will face depends on the products or services to be sold, but the entrepreneur must complete an in-depth market analysis to understand the position of the business in the marketplace. It does not matter if the retail enterprise is selling garden plants and supplies or high-end technology.
The term “retail space” usually makes people think of a brick-and-mortar business, but technology has created online retail space also. During business planning, it is important to have a clear path to reaching financial goals whether selling over-the-counter, online, or both. The Retail Industry Leaders Association and National Retail Federation are two good sources of research data and helpful information concerning things like sales forecasts and market research. When ready to develop the retail business plan, the entrepreneur should be able to include information like the following:
• What are the demographics of the target market?
• What specific products will be sold? Will the business buy goods for resell from a wholesaler or direct from a manufacturer. In some cases the business owner personally makes the products for resale. In that case, vendors supplying materials need identification.
• What is the store location, and why was this location selected? Will the commercial operation be in leased or owned commercial space? Is there a need for remodeling to bring the building up to safety codes, provide handicapped access, and accommodate business inventory layout?
• Does the business have the appropriate business licenses, building occupation permits, sales tax permits, etc.?
• How does the market analysis prove the need for this retail store?
• How many people are needed to work in the retail business? They can include clerks, salespeople, managers, technicians, inventory stockers, etc. The type and number of required staff members depends on the type of store and the days and hours of operation.
• What pricing model was developed, including base prices and markup strategy? How will selling prices match fluctuations in costs of goods sold.
• When is the store expected to achieve profitability?
• What marketing strategies will be used? They can include paid television and print advertising, website marketing, promotional pricing, loss leaders, etc.
Cash flow is always an issue with new retail businesses. Without regular cash flow, the business owner is likely to have problems buying inventory and covering ongoing expenses like payroll, lease payments, insurance and utilities. Lack of cash is one of the top reasons new retail stores fail within the first three years of operations. Potential investors will look at proforma financial statements closely to ensure that all expenses are included and that projected sales make sense based on the market analysis.
There are an unlimited number of retail store options in terms of products and services. No matter what the store plans on selling, TSbusinessplan is in the business of helping entrepreneurs bring their ideas to reality. Professional consultants can help with the efficient development of a customized business plan and with locating potential investors. The process begins by completing the online form.
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