Retail Store Business Plan
Retail stores are popular business concept for novice and experienced entrepreneurs. Our business plan writers define a retail store as a company selling tangible goods. Up until recently, retail stores were considered to be brick-and-mortar. In other words, retail store would be found in a strip mall or a stand-alone building that is easily accessible for customers. However, thanks to the Internet, retail stores may also be online as well.
Quality Business Plan understand the challenges entrepreneurs face when attempting to write a business plan for a retail store. Because of these challenges, our company has consulted with business plan writers and business plan consultants to help explain various aspects related to the writing process for a business plan for this industry.
Starting a Retail Business
Starting a retail business takes significant planning, capital and research. Because of these challenges, an excellent starting point for embarking on a retail business is with your business plan. In your business plan, a main section will be related to startup cost for your business. It is here that our business plan writers strongly recommend to start.
Startup costs for a retail store often starts with identifying a retail establishment for your proposed business. Costs involved with identifying an establishment may include a credit check fee charged by potential landlords. When tenant seek to rent a commercial establishment, landlords often check credit to ensure credit worthiness of the applicant. This fee may range from $25-$75.
Once you settle on a place for your retail business, the real costs beginning. Costs to transform a shell in a retail establishment to a finished product may range from 50,000 to over $500,000, depending on the type of retail store you envision. These costs are often called buildout fees. Fortunately, sometimes, landlords will often credit tenants with funds towards buildout. In real estate terminology, this is called “TI” or tenant improvement allowance.
Get Ready to Open
After you build out is complete, then the fun begins. This is where retail store owners now need to purchase inventory, hire staff, start advertising and get ready to offer world-class service to your potential customers.
Structuring a Retail Store Business Plan
Retail store business plans should be structured in a specific order to ensure that readers understand the totality of the business concept.
Retail Store Company Description:
A retail store company description should always start with identifying the problem that your company is solving. For example, if your retail store will be selling footwear, then the problem that you are solving is protecting people’s feet from harm. Further, this type of business is also solving problems related to a customer’s need for attention or to better assimilate the other people through fashion statement. Regardless of the problem, identifying the problem of the customer has will help entrepreneurs focus on creating specific marketing campaigns to help consumers understand how this product will solve their problem.
Retail Store Operating Structure:
In the operating structure, entrepreneurs should include a hierarchy diagram showing the different retail positions that will be included in your store. Common positions include CEO, manager, assistant manager and sales associate. By creating this diagram, the reader will be able to see whether the company will have a vertical or horizontal chain of command. This will indicate how much responsibility will be assigned to each position as well.
Retail Store Funding Request:
For most industries, the funding request is a critical component for most business plans. This is especially true for the retail store industry. In the retail store industry, entrepreneurs are often faced with excessive need for capital. These findings may be spent on inventory, buildout, paying employees and other important fees. Because of the multitude of fees and funds being paid out, a bullet pointed list is often the best approach for showing where funds will be spent.
Retail Store Financials:
A final segment that is critical for retail store business plans is the financial section. When our business plan writers create financials for retail stores, we often start with expected daily sales for various product categories. From this, we then estimate cost of goods for each category. This now leads to subtracting the cost of goods from the sales price to determine gross profit. With these calculations, make sure to then use a spreadsheet to tie them into a 24-month profit and loss statement. After this, creating a five-year income statement is achievable. The biggest tip to remember when creating your financials is to try not to itemize each product and cause. This will be extremely burdensome
Retail Store Description
The company description section of a business plan should thoroughly explain, in a nutshell, what the retail store will do, how the firm will do it, where the retail store will do it, and specific strategies that may, or may not, be used through the course of operations.
This sounds like a lot of information for just one section. And yes, it definitely is. This section, just about, is the only one devoted to thoroughly describing the inner workings of the company.
The leadoff batter for this section is the retail store summary. The purpose of a company summary is to give the reader a broad understanding of the organization. To accomplish this feat, make sure to answer the questions: who, what, where, when, and how, in one or two paragraphs.
Business Plan Writing Tip:
When writing the retail store company summary, try to keep the section’s content to a paragraph or two. Keep in mind; a business plan is a tool used for documenting the proposed business. However, due to internal and external forces in a retail store’s environment (new products, competitors, etc.), providing too many details may lead to a plan that needs continuous updating.
A better practice, at least when starting up a retail store, is to leave some wiggle room for changes. The best way to do this is to keep the scope of writing broad. In other words, provide enough details so the reader understands the business, but not so many elements that the plan needs updating more than once every six months.
Retail Store Summary
ABC Retail store will be a limited liability corporation located at 123 Broadway St. in Orlando, FL. Our business owner(s) will be John Smith. Our retail store's main product line will be clothing. To complement our clothing lines, we will also offer jewelry, shoes, hats, and gloves. Our hours of operation will be from 8 AM To 8:30 PM, seven days a week.
The structure above succinctly shows the name of the company, the type of legal structure for the business, products offered, location, and hours of operation. In other words, who, what, where, when, and how. Further, the information is kept to a paragraph. Short and sweet.
The competitive advantage for a company is what the firm will do better than other competitors. As with most sections of the business plan, this concept may be interpreted in a multitude of ways. To illustrate, a competitive advantage may include differentiated retail product offerings, a prime location, or even an exceptional customer service staff.
Business Plan Writing Tip:
Think about how the firm will be different from local competitors. Once you identify and state the differentiating factor, or factors, then explain why this is important for the business or to the customers.
ABC company will have specific competitive advantages once our firm starts operations. First, our retail store will sell high-quality, name-branded products from companies that have pledged to embrace eco-friendly practices. No other retail store in the area has committed to this business model. Further, our firm will adopt the “full-attire” concept in our product offerings. For our full-attire idea, we will employ knowledgeable associates that can help customers match clothing with accessories to create unique looks based on our customer’s tastes.
The first competitive advantage should always be the most critical competitive advantage for the organization. When discussing this competitive advantage, make sure to explain, in detail, what the competitive advantage is and why it’s essential. Also, be detailed but concise.
Also, touch on one or two competitive advantages, but no more. The business plan should show some differentiation, but the distinction should not seem too far outside of the norm. In other words, there are proven business models out there, use them and differentiate, but don’t differentiate too much.
One of my favorite sections to write in any business plan is the business model section. This is because a business model can be just about any action or process that makes retail store money. From this, business model sections vary significantly between retail stores.
Popular sections in my retail store business model category may include discussions about clothes line quality, hours of operation, number of workers, customer experience, or even the business owner’s philosophy with treating employees and suppliers.
Business Plan Writing Tip:
When writing about business models, make sure to first identify the business model. Then discuss how the business model will operate. By doing this, retail store owners can show how different aspects of their operation will impact their profits and or benefit customers.
Our operational structure will seek to achieve a high-end retail store’s breadth of product selections while offering access to knowledgeable attendants. As a customer approaches our retail store, they will be met with advertising decals on the door and smiling attendants at the entrance. This will allow visitors to feel at home while they shop for their clothing needs. At the counter, our visitors will be offered complimentary products and accessories to their purchases. This will ensure a complete wardrobe makeover after each visit.
Hours of Operations:
Our hours of operations business model will be structured to ensure our retail store customers’ needs are met at a convenient time. From this, our organization will be open from 8 AM to 8:30 PM, seven days a week.
The example above is based on a general retail store operation. Specifically, the perspective used in the business model example was from the customer. By including the customer’s perspective of operations, an owner can describe the customer’s experience and show why the operational structure has been created and the desired experience anticipated.
As for hours of operation, personally, I like to address this segment in the business model section, as well. The strategy is used to keep operational business components in one section.
The future plan section should contain a discussion about the retail store owner’s thoughts and ideas for the future. The views may include expanding operations to new locations or adding new product items. A popular discussion topic in this section is about opening a second or third location in the region. Regardless of the firm’s future plans, make sure to show a conceptual strategy for growth.
Business Plan Writing Tip:
My preference is to be somewhat ambiguous with future growth plans. For example, a retail store owner may plan to open 4 or 5 new locations within the next five years. In this situation, explain in your plan that the retail store will expand to several new locations within this timeframe. This shows that there are growth expectations. However, a specific number of new operations are held back.
Within the next 24 months, our firm will open new locations in the Orlando / Central Florida area. The new sites and timeframe will be based on funding, leadership availability, and other factors. Further, our management team will introduce new product items within the next 12 months. These items will be selected based on customer demand, how well the items complement our current offering and the availability of the products.
Notice that a specific timeframe is stated. This allows the business owner to set a deadline for when the expansion should be completed. Next, if the future plans include expansion, identify the general area in which the retail store may grow. This helps to set specific parameters for geographic development. In this case, growing in the Central Florida area shows the business owner is seeking to exploit brand recognition in one particular centralized location.