In determining the ultimate location for your retail business, take into consideration:
- The amount of daily foot traffic.
- Parking and local transportation.
- Other retail establishments-- those carrying similar products, ancillary items and distinctly different goods are all desirable.
- Average income of potential customers as it relates to your product.
Note: you'll want a storefront that has a solid amount of foot traffic. Parking difficulties or an inability to get to the store using public transportation will dissuade business. If you're opening a clothing store and there's another such store in the vicinity, that can actually help business. People tend to want to go to areas where they have two or three choices in relationship to the same general product. Competition, as long as you clearly define the differences between your offerings and there's, is good.
The building should be attractive and welcoming to the general public. People will judge your goods before they ever get into your establishment by your storefront— a well-maintained, clean façade with a consistency of style in look is important. Here are some essentials:
- Size and potential attractiveness of the space.
- Visibility and accessibility.
- Age and durability of the premises.
- Building code concerns.
Most retailers have visions of their business expanding in terms of clientele and sales. Don't forget that a growth in business usually means a need for more retail and storage space. It may also translate into renovating the space for new services. If you're thinking that somewhere down the road along with selling upscale clothing, you'd like to add custom jewelry, it makes sense to find a space that you can easily convert when you're ready to expand.
- How long is the lease?
- Are you interested in purchasing the space at this time or at a future date?
- Will utilities need to be upgraded if you decide to add a new service?
- Are there any structural problems or concerns relating to renovation or expansion?
Basic monthly running expenses need to be calculated along with the amount of sales you'll need to meet those costs. You must be realistic about all expenditures and income. Account for:
- All utilities.
- Employee costs.
- Expenses related to any equipment rentals.
- Costs for inventory.
- Lease and mortgage payments.
- Insurance costs.
- Shipping, invoice, duty expenditures and other fees or payments.
Potential income should be based on a realistic analysis of foot traffic, potential sales and earning potential of your average customer. It takes time for any business to catch on and even more time for it to turn a profit. Be reasonable in your estimates.
Will there be any expenditures for renovating the premises, buying display equipment or creating the décor for your store? You will probably extend these costs via a business loan, which means the loan payment will be added to your monthly expenses.
You'll need to acquire the proper permits and licenses as they relate to your enterprise. These should be included in your start-up costs.
First and foremost, when it comes to finding the right premises for your retail business, you'll want to consider both the support you'll receive from the city or region and then the specific aspects of the potential store as they relate to your company. Careful planning, which includes a well-delineated business plan, is essential to your success. To understand what goes into a viable business outline read our article entitled, Developing a Solid Business Plan—Details You Won't Want to Forget.
Remember that thinking ahead, detailed research and putting your ideas in written form will allow you to determine your needs, find funding and understand how you'll foster your new enterprise.