How To Start A Small Retail Business
If you want to know how to start a small retail business, think about it from your customer’s point of view. Even in today’s tough economy, things sell. Whether it’s security services for neighborhoods who are in decline, foreclosure signs marketed to banks or discounted home medical services, there is a market for everything. Question is, what will sell? This is your first dilemma and only one thing to consider when starting a small retail business. Here are a few things to think about:
- Who’s your customer? Are you selling to consumers? Or are you selling to distributors who in turn sell to consumers? Or both? In this case, you’ll need to set another level of pricing—wholesale, vs. retail. Keep in mind the marketing message is different for each audience. For the consumer, it’s “what this product will do for you.” For the wholesaler, it’s “what this product will do for your customers.” Be smart with your pricing. Don’t compete with wholesalers by undercutting them with lower retail prices that they can’t match. Be sure the wholesaler makes money and the consumer gets what they want. It’s a win-win-win all around.
- What are you selling? What’s your product? Your widget must hold some value for the buyer and in today’s tough economy, it must appeal to a buyer who is more price-conscious than ever. It’s up to you to create that value and effectively communicate it to your customer(s). If you’re selling primarily through a distributor (wholesaler), it’s up to them to create that value, but you have to give them the tools to do so! Provide sales sheets, ROI information (i.e. “You’ll make 50 percent off each widget you sell to your customer!”) and marketing tools (advertisements, flyers, etc.) to help them sell the product. No matter the size of your retail business, this is smart marketing.
- How will you deal with inventory? When planning a retail business, you’re usually offering a tangible product for sale. If this tangible product is a greeting card line, it will be pretty simple to inventory it in your home office or apartment. However, if the widget is a large item like a hot air balloon cover, you’ll need to make other arrangements for offsite storage. Regardless of where your widgets are stored, be sure to consider the associated costs of storage and retrieval for each order. Offsite warehousing is an option, but it’s not free.
- How are you distributing? If you’re selling to the consumer, be sure your retail product is offered at a location they frequent. Is a retail storefront downtown required? Or is an online store all that is needed? Is eBay your preferred channel of online distribution? Or should you invest in a unique online storefront that offers secure a buying checkout procedure? Bottom line: evaluate your small retail business from your customers’ point of view. Wherever they buy is where you must sell.
- What’s your price? Retail pricing is the end-all price—the final price a consumer pays for your product. Wholesale pricing is the “middle-man” price, or the price that your distributor buys from you. Be sure that if you are distributing through a wholesaler, their retail price and your retail price match. You don’t want to get caught undercutting your wholesaler (for example, selling your greeting cards at ten dollars when they sell them for twelve dollars). Pricing is one of the most important components of planning your small retail business. Look at all of your costs (inventory, marketing, production, shipping, etc.) and be sure to set a fair and competitive price before launching your line. Spend the time to plan it appropriately.
A retail business can be the most lucrative type of business around. Set aside enough time to plan your product, your pricing, your distribution, your inventory and your marketing. Your small retail business could be the best idea you’ve ever had!