A strong retail business strategy paves the road for financial success for the retailer. This free retail store sample business plan guide is meant to assist an owner-manager in creating a solid business plan.
You should think about the following issues if you want to succeed in business: What industry do I work in? What products do I market? Where is my marketplace? Who will buy? Who are my rivals? What is my approach to selling? Which marketing strategies will I employ? How much money will I need to run my shop? How will I complete the task? What managerial measures are required? How can they be executed? When should I make a plan revision? Where can I find assistance?
You must provide the owner-manager with the answers to these queries in order to create your business strategy. This blog combines text with analysis suggestions to help you organize the knowledge you gain from research to create your strategy. It shows you how to move from a sensible beginning point to a successful conclusion.
Why a retail business plan?
The choices you make will have a significant impact on the success of your retail shop business. A business plan helps you allocate resources, track the outcomes of your actions, and define sensible goals and decisions.
Perhaps you’re asking, “What justifies investing my effort in creating a business plan? Why should I care?” If you’ve never created a strategy, you have every right to be curious about the potential advantages before you put in the effort. Remember first that without planning, you are ill-prepared to foresee future decisions and actions you will need to take or not take in order to successfully run your organization. You are given a path to follow through a business strategy. You may steer your business through difficult, frequently unpredictable economic situations by having a plan with goals and action measures.
A retail strategy gives your banker information about the state and future direction of your company, giving the banker more confidence in considering you for a loan.
A plan can explain your operations and goals to your sales team, suppliers, and other parties.
Making a plan can aid in your managerial growth. It can help you develop your ability to analyze situations to determine whether they are advantageous or disadvantageous for your organization and to think critically. An owner-manager’s capacity for judgment can be improved with experience over time.
What Industry Am I in?
The first thing to think about while drafting your business plan is what industry you actually operate in. At first glance, this query can sound absurd. You tell yourself, “If there is one thing I know, it’s what business I’m in.” Continue and consider. Due to a lack of a detailed definition of their enterprises, some owner-managers have lost everything they have while others have wasted their savings. Actually, they weren’t sure what industry they were in.
Define your business by deciding what it is you are in and writing it down.
Consider the responses to queries like, “What do you buy?” to aid in your decision. What do you sell? Which of your product lines generates the highest profit? What inquiries do you receive? What do you hope to do in comparison to your rivals—better, greater, or otherwise—that sets you apart? Detail it out in writing.
Marketing for Retail Businesses
You are prepared to think about another crucial component of your business strategy once you have chosen the industry you will operate in. Marketing. The owner-manager is the first step in effective marketing. You must be knowledgeable about the goods you sell and the needs and desires of your target market. The goal is to generate revenue by getting the stock off the shelves and display racks at the proper pricing.
Calculating the store’s potential sales
Your retail sales potential is based on where you are. A business, like a tree, must get its food from the environment around it. You should be able to solve the challenge of choosing a profitable location by asking yourself the following questions.
- Which area of the town or city will you be in?
- In the business district of downtown?
- In the vicinity of the downtown commercial district?
- In the town’s residential district?
- Outside the city, on the highway?
- On the outskirts?
- In a mall in the suburbs?
Write your intended destination on a worksheet and explain why you chose that specific spot.
Now take into account these queries that will aid in limiting a location in your location area.
- How fierce is the competition where you chose to live?
- How many of the shops appear to be doing well?
- How many people seem to be struggling to survive?
- How many shops like these closed their doors in this neighborhood last year?
- How many new stores debuted in the previous calendar year?
- Which pricing range does the opposition offer?
- Which local store or stores will be your strongest rivals?
Once more, list the justifications for your views. Also, analyze the region’s economic foundation and explain your point of view. Is there a solid economic foundation in the area where you intend to settle? For instance, are surrounding industries employing full-time employees? only on the side? Have any businesses closed their doors in the last few months? Are any new industries expected to start up soon?
When you locate a retail structure that appears to be what you require, respond to the following inquiries:
- Is the area beginning to deteriorate?
- Is the neighborhood young and growing? (Your local Chamber of Commerce might have census information.) The Bureau of Census’s Population Census Tracts may be helpful. Trade groups and business directories are other sources for these marketing statistics.
- Are super motorways or throughways slated to pass through the neighborhood?
- Is daytime street traffic generally heavy?
- How near are bus routes and other forms of mobility to the building?
- Are there enough parking spots close to your business?
- The sidewalks may need to be repaired, but are they in decent condition?
- Is there adequate roadway lighting?
- Is your store facing the street’s sunny side?
What is the building’s history of occupancy? Is the store known for making mistakes? (Have stores recently opened and closed)?
- Why have nearby businesses failed before?
- What state is the store’s exterior in?
- What kind of assistance does the landlord offer?
- What conditions are there in the lease?
- How much monthly rent are you required to pay?
- Calculate the expected gross annual revenues for this retail location.
When you believe you have finally found the answer to the retail site location conundrum, ask your banker for names of individuals who are the most knowledgeable about location in your industry. Contact them, hear their suggestions and viewpoints, consider what they have to say, then make a choice.
Plan for a retail business: Getting CUSTOMERS
Consider another marketing strategy once you have a venue in mind. How would you draw clients into your shop? How are you going to steal customers from your rivals?
Many retailers find competitive benefits by utilizing this marketing component. They create concepts that are on par with and frequently surpass those created by major corporations. You are encouraged to consider image, price, customer service procedures, and promotion as you complete the work blocks that follow.
Image
Whether the owner is aware of it or not, a store has a reputation. You can create an image, for instance, by placing some goods on shelves and display tables in a dingy, dimly lighted store. Customers dread going inside because they perceive it to be a filthy, junky store. Your brand should have enough substance to warrant advertising and other forms of promotion. For instance, the concept of a small restaurant can be “home-cooked” meals.
Pricing
Pricing relies on value provided. A store can only have low prices if it offers low-cost goods. Therefore, your pricing policy will rely on the product lines you buy and sell. It also depends on the prices that your rivals charge for these product lines. The following inquiries should aid in your decision-making on pricing.
- What pricing ranges are your products supplied at?
- Do you prefer high, medium, or low?
- Will you only sell for cash?
- If your prices are greater than those of your competitors, what services will you provide to support them?
- Will your price have to be higher than if all sales were made in cash if you offer credit? Credit costs must be covered somehow. Organize for them.
- How much will using credit card systems cost you? Will you need to raise your charges to cover this expense?
Policies for Customer Service in a Retail Store
Although your customers may not have to pay for the service you offer them, you do. For instance, if you offer free parking, you must pay for your own lot or contribute to the cost of a lot that you share with other businesses.
Make a list of the services provided by your rivals and assign a price to each. How many of these will you need to offer in order to compete? Exist any more services that competitors don’t provide but that might draw clients? If so, how much do you think such services will cost? Now mention every service you intend to provide along with an anticipated price. Compile this cost and determine how to include it in your rates without driving your products out of the market.
Advertising
You need to have something to say before advertising is effective, it was saved for last. You are prepared to explain to potential customers why they should shop at your store once you have a brand, a price range, and customer services.
When your budget for advertising is constrained, it is critical that your advertising is focused. Spend some time deciding what tasks you want to perform for your store before considering how much money you can afford for advertising. Indicate what sets your store apart from the competition. List the details that shoppers and potential customers should learn about your store and its products from your advertising.
When you have these details in writing and at your disposal, you are prepared to consider the format and price of your advertising. Consult the local media (newspapers, radio, television, and direct mail piece printers) for details on the products and outcomes they provide for the money.
However, avoid falling into the same trap that many advertisers who have little to no expertise with advertising copy and media selection fall into. A profession is advertising. Spending a lot of money on advertising without first consulting an expert about the type and volume of advertising your store need is a mistake.
In-store Sales Promotion
You must consider what you want to happen once customers enter your store in order to finish your marketing work. Your objective is to satisfy your clients while satisfactorily moving stock off your shelves and displays. You want recurring business and cash in the till.
If you’ve made the decision to sell for cash only at this stage, reconsider your choice. Don’t forget that Americans prefer to purchase on credit. A credit card or other form of credit and collections is frequently required to draw in and keep clients. If customers are confident they can afford to make a purchase, they will be more likely to do so and will feel more at ease in your store. This is made possible via credit.
Self-service shops rely on layout, appealing displays, signs, and clearly stated prices on the goods they are selling to entice customers to make a purchase. In other stores, personal selling is combined with these strategies.
Buying
You must respond to inquiries like these while purchasing goods to resell:
- Who offers the line to shops? Is it distributed and sold directly by the manufacturer or through wholesalers and retailers?
- What kind of delivery services are available, and are there any shipping costs?
- What are the purchase conditions?
- Do you have credit?
- How soon can the supplier fulfill fill-in orders?
- For each line of products, you should identify a source of supply with reasonable terms, and you should project the following purchasing strategy:
- Name of Item, Supplier Name, Supplier Address, Discount Offered, Delivery Date, Freight Charges, and Fill-in Policy
- How long does it take the supplier to deliver the goods to your business, in days or weeks?
- Who pays, second? You the purchaser? the vendor? The cost of shipping or transportation is a significant expenditure.
- What are the fill-in order policies for the supplier? That is, must you purchase a dozen goods in total, or will the seller ship just two or three? How long does it typically take for a delivery to arrive at your business?
Stock Management
Customers frequently leave stores without making purchases because the things they desired were unavailable or the sizes and colors were off. Stock management offers a technique to lessen “walkouts,” together with suppliers who have helpful fill-in order procedures.
The kind of system you employ to maintain track of your inventory, or stock, relies on your product line and the supply schedules offered by your suppliers.
You should be able to decide what needs to be ordered using your stock control system based on (1) what is in stock, (2) what is on order, and (3) what has been sold. If not, your accountant can put up a system that is ideal for your firm. Some trade associations and suppliers offer systems to members and clients. Stock control and cost considerations are both a part of inventory control, which is based on either a perpetual or a periodic system of accounting. Once you’ve chosen the stock-control system you’ll employ, calculate the system’s cost. Because you may not require the intricate information that such a system gathers, you might not require a comprehensive (and expensive) control system. The system’s costs must be justified, else you will be wasting your time and money.
Stock Change
You can anticipate stock turnover numerous times a year if an owner-manager buys reasonably effectively. For instance, a modest photography shop’s inventory should change four to four and a half times every year. What is the typical stock turnover for your product line annually? How frequently do you anticipate stock turning over? Give a justification for your estimate.
Back-end work
Receiving merchandise, setting it up for exhibit, maintaining display shelves and counters, and maintaining the store’s cleanliness are all examples of behind-the-scenes work in a retail setting. You can select what to accomplish and the associated costs by using the analytical list below.
First, make a list of the tools you will need for receiving merchandise, preparing it for show, maintaining display counters and shelves, and keeping the business clean. Some examples of these tools are shelving, a cash register, and a marking machine for pricing. Next, make a list of all the goods you’ll need over the course of a year, such as brooms, price tags, and company forms.
Who will handle the necessary cleaning and back-room labor to ensure the store runs smoothly? How many hours a week will it take you to do it yourself? Will you complete these tasks following closing? How much will staff cost you if you use them? Describe your strategy for handling these jobs on a worksheet. For instance:
During the day’s slow sales periods, one employee will handle back-room duties. According to my calculations, the employee will work hours per week on these activities, devoting (hours multiplied by hourly pay) per week, and per year. For the back-room operation, I will require square feet of area. Per square foot, or a total of per month, this space will cost. In the same way, make a list of and assess each spending item. Examples include utility bills, office assistance, insurance, telephone, postage, payroll taxes, accountant, licenses, and other municipal taxes. Analyze these salaries if you intend to engage more management assistance.
Make Your Plan Financial
Consider for a moment what your business plan means financially at this point. This section is intended to assist you in translating your budget into dollars.
The origin of the money is the first query. Sales are the primary source of income for a retail store after your first capital investments. What sales volume do you anticipate making in the initial 12 months?
Your new firm will have to pay back start-up expenses whether you have the money (for example, in savings) or borrow the money. As you work on your plan’s finances and expense estimation, keep this reality in mind.
Expenses
In relation to annual sales volume, expenses must be considered. What would it cost you to conduct this amount of business, for instance, if you aim to make sales of $100,000? What kind of profit can you expect? A company must turn a profit in order to stay open.
You can estimate your costs with the help of the next exercise. You must be aware of the entire cost of goods sold for your product line during the time period (month or year) you are investigating in order to complete this task. An operating ratio is the percentage of sales that represents the cost of goods sold. To find out your company’s operating ratios, contact your trade association. The structure for an income statement that replaces dollar values with operational ratios is as follows.
- You may now break down your expenses by inserting your ratios and dollar amounts in the Income Statement using your operating ratio for cost of goods sold and your expected Sales Revenue.
- Keep in mind that your gross margin must be sufficient to cover your costs and generate a profit.
- Now proceed to complete the Income Statement in its entirety. Prepare monthly or annual statements.
Money Forecast
A budget enables you to view the monthly dollar amounts of your anticipated income and expenses. Then, from month to month, the concern is whether sales will generate enough revenue to cover the store’s expenses. The owner-manager needs to be ready for the ups and downs of the business cycle financially. If your sales have slow months, a cash projection is a management tool that can relieve a lot of your tension.
You may now break down your expenses by inserting your ratios and dollar amounts in the Income Statement using your operating ratio for cost of goods sold and your expected Sales Revenue.
Keep in mind that your gross margin must be sufficient to cover your costs and generate a profit.
Money Forecast
A budget enables you to view the monthly dollar amounts of your anticipated income and expenses. Then, from month to month, the concern is whether sales will generate enough revenue to cover the store’s expenses. The owner-manager needs to be ready for the ups and downs of the business cycle financially. If your sales have slow months, a cash projection is a management tool that can relieve a lot of your tension.
Is more money required? Let’s say that at this moment your company need more funding than it can get from current sales. How do you behave? You will likely borrow money (most likely from a bank) if your company has strong potential or is in good financial shape, as seen by the balance sheet, in order to maintain operations during start-up and slow sales periods. When revenues outpace expenses (during “fat sales” months), the loan can be repaid. For a business to succeed and survive, it must have enough working capital on hand. However, having little or no cash on hand does not automatically mean that the company is in trouble financially. Your balance sheet will be analyzed by a lender to determine your company’s net worth, of which cash and cash flow are only a small portion. The balance sheet statement displays a company’s net worth (financial position) at a specific point in time, such as at the month’s or year’s end business close. How to Write a Free Retail Business Plan.
You might wish to show your plan and balance sheet to your lender even if you don’t need to borrow any money. Building strong ties and credibility (trust) with your banker is never too early. Tell your banker that you are a manager who has a clear vision for the future rather than someone who is only hoping to be successful.
Feedback and control
You need input if you want your plan to succeed. The year-end profit and loss (income) statement, for instance, reveals whether your company was profitable or experiencing a loss for the previous twelve months.
Don’t wait a year to get the result. Readings at regular intervals are necessary to keep your plan on track. One sort of frequent feedback is an income statement that is created at the end of each month or quarter. Additionally, you need to put in place management controls to ensure that the appropriate things are done every day and every week. Because you, the owner-manager, are unable to complete all the job, organization is necessary. You must assign tasks, assign power, and assign accountability. Before the store opens, the record-keeping systems should be installed. It is too late once your business is established.
You should receive information about stock, sales, receipts, and disbursements from the control system you put up. The accounting control system should be as basic as possible. Its goal is to provide you with relevant, up-to-date information. You require information that reveals problem areas. External consultants, like accountants, can be useful.
Stock Management
To give your customers the best possible service, stock should be managed. Having a high inventory turnover rate should be your goal. The better option is to invest less money in shares.
In a store, stock control lets you to decide what needs ordering based on (1) what is in stock, (2) what is on order, and (3) what has been sold. It also enables the owner-manager to provide customers with a balanced assortment.
Remember that there are other costs to consider while putting up inventory controls. There are expenses related to inventory, such as those related to buying, maintaining stock management records, and receiving and storing stock.
Sales
At the conclusion of each day, the owner-manager of a store receives feedback through sales slips and cash register cassettes. You need answers to inquiries like: How many sales were made in order to stay on top of sales. What was the monetary value? What items sold the most well? What is the cost? What terms of credit were extended to customers?
Receipts
Sort your receipts into cash and receivables (amounts that you still possess, as from a charge sale). You are aware of how much credit you have extended, how much more you can extend, and how much money you have available for use.
Disbursement
You should be able to find out about the money your business spends thanks to your management controls. You don’t want to be penny-wise and pound-foolish while checking on your bills. To benefit from supplier discounts, you must make timely payments on your invoices. You should have the chance to evaluate how the money were used thanks to your review systems. You may manage both ordinary issues and emergencies in this way. Additionally, your system must to remind you that tax funds, such as payroll income tax deductions, need to be held aside and distributed at the appropriate intervals.
Break-Even
The break-even analysis is a management control tool that estimates the amount of sales required to cover costs without making a profit or incurring a loss. Profit follows break-even.
Sales volume, selling price, and expenses all affect profit. You can estimate the impact of changing one or more of these factories on your profit using break-even analysis. Fixed costs (like rent) and variable costs must be distinguished in order to calculate a break-even point.
Is Your Plan Practical?
Once you have calculated your break-even point, stop. It is time to confirm that your plan is workable, regardless of whether the break-even point appears to be realistic or wildly off base. Before you invest money in your plan, take some time to review it. If the idea is unworkable, it is better to find out now than to find out six months from now that you are investing money in a lost endeavor. Look at the cost estimates you created when you segmented your costs for the year when you are assessing your plan. Change any cost items that are either too high or too cheap. Changes can be made either above or below the worksheet’s initial entries. You’ll get an updated anticipated statement of sales and expenses once you’ve finished making your modifications. Make a revised break-even analysis using your updated figures. Whether the new break-even point appears favorable or unfavorable, exercise one more care. Someone who hasn’t helped you sort out the intricacies of your plan should see it. Hire an objective. a second, knowledgeable opinion Your banker or another expert might spot flaws that you missed while reviewing the plan’s specifics. These specialists could identify strengths in your strategy that you should promote.
Execute your strategy
You are prepared to execute your plan once it is as complete and precise as it can be. Remember that the difference between a plan and a dream is action. A plan has no more significance than a hopeful dream if it is not carried out. After gathering data and creating a company strategy, as you have done while working through this guide, a successful owner-manager does not stop there. employ the plan.
Review your strategy once again at this time. Find the things you need to undertake to implement your plan. Your situation and goals will determine what needs to be done. For instance, you might need to allocate extra money for this expansion if your business strategy calls for a rise in sales. Do you have additional funds to invest in this company? Do you borrow money from family and friends? via your bank? If you are launching a new business, one action you may take is to obtain a loan for fixtures, stock, employee pay, and other expenses from your suppliers (maybe through credit terms?) Finding and hiring qualified staff will be another action.
Keep Your Plan Up to Date
Watch for changes after implementing your plan. No matter how well they are designed, they can ruin even the best business. Keep track of evolving circumstances and make any adjustments to your business plan. Change can occur inside your firm at times. For instance, numerous of your sales representatives might leave. Customers occasionally demand and/or prefer changes while occasionally refusing to accept them. Technology can evolve, for example, when items are developed and promoted.
- Keep an eye out for changes that occur in your industry, your market, and your clientele.
- Compare your plan to these modifications.
- Find out if the company plan needs any adjustments at all.
It is up to you how you maintain your plan up to date so that your company can withstand the shifting market conditions. Read business-related newspapers and magazines, and occasionally check your plan. Review your plan once a month or every other month to see if it needs to be adjusted. After you have been in business for a while, you will undoubtedly have more precise dollar figures to work with. Make changes, then implement them. You need to update and get better all the time. Experience and the best available knowledge must be the foundation of a successful business plan. Having a strong business plan is wise.