How to run a successful retail business
If having a passion and business idea is the first step to starting a company, it might feel like there are a daunting number of steps between you and realising that potential. It’s a pretty competitive world out there with an unlimited amount of good ideas… so how can you make sure your business concept is the exception to break through and become profitable long-term?
This article is to help retail business owners establish and run a successful business in their company’s most volatile stage – the first three years.
Retail Business Fundamentals
Regardless of your type of business, there are some basic principles or factors that will help you benchmark yourself against competitors in your industry and come out on top.
Define Your USP
Your Unique Selling Point (USP) is what sets you apart from the rest. What value can your business offer that others can’t? This could be quality, speed, ethically-sourced material, identifying new trends, sharing information. Whatever you do – you need to do it differently and better than anyone else. If you don’t know what makes you special, neither will your customers. That’s why it’s important to be able to articulate what makes you unique.
If you sell women’s handbags, your USP could be that all handbags made from leather are not sourced from animals and products are manufactured locally.
Retail stores that curate goods from small businesses should make sure their customers know about their commitment to supporting these organic, Fairtrade and handmade products.
Actions speak louder than words – a fitness store that collects used equipment and fixes them up before donating to local charities tells their customers about their belief that everyone should have access to quality equipment.
Identify the Ideal Customer
Once you know who you are – you need to know who you’re targeting. Who’re your customers? What’s their gender, age, interests, demographic, location, wants and needs, etc. Knowing who you’re trying to target will make it possible to cater to them individually. Personalising ads and speaking directly to people in their language (addressing their pain points and speaking like they do) is an important part of today’s business strategy. You can’t be everything to everyone, so you need to know exactly what problem you’re going to solve and get in front of the right person to do so.
Determine your channels
If you’re overwhelmed at the thought of building your brand and marketing strategies, break it down to manageable chunks. You’re already off to a good start if you know what makes you different and who you want to sell to. The next thing to figure out is where those potential customers are. Can you market to them offline in ads, radio segments, posters or events? What social media channels are they on – Pinterest, Facebook, Instagram, Snapchat or TikTok? Some of these platforms let you drive customers directly to your website to complete the purchase funnel. On Facebook, you can add a “buy now” button, on Snapchat, you can swipe up to visit a website, and Instagram lets you tag products so clicking on them takes the viewer directly to that product page on your website.
No matter where your customers see your ads, your message and brand should be consistent throughout. Consider it an omnichannel strategy in the sense that people should be able to recognise you no matter where they see you. Putting the time into creating a strong brand will also help you establish a core identity that you can develop long-term.
Obtain a Retail License & Permit
The type of retail license and permits you need to legally set up a business varies per state. Look into the location of where you want to do business to determine what’s needed for your type of retail store. Local government and council sites will provide a list of the details you need to apply.
If you wanted to open a retail store in Cairns, the Australian Business License and Information Service (ABLIS) can help you determine what is needed. It’ll walk you through each component of your business that will influence your requirements such as business type, location, council, business operations and tax requirements.
Choose a Location
Physically creating your store is an exciting point in a start-up. While there might seem like a million things to be thinking about, here are a handful of key factors to consider when picking a store location:
• How visible is it from the street? Is it easy for people to find it or do they need to go down some side roads or poorly marked streets?
• How much room do you need for your inventory and how will you lay out the products or services?
• Are there similar businesses in the area that you’ll be competing with?
• Is it a high foot traffic location that will bring in impromptu or curious shoppers?
• What is the crime rate for the area and what kind of security system will you need?
• What is the rental cost? Try asking nearby stores and consult with other property agents to grasp the market rate.
• Is it close to your ideal customer? E.g. if you are targeting students with promotions are you near a high school or university campus? What about the businesses next to you, do they cater to the same demographics so they might be bringing in the right type of customers for you too?
Invest in your equipment
The more sales you make – the more important it is to have efficient and user-friendly equipment. For you and your staff’s sanity, make sure you have the right POS system for your business that can easily perform the functions you need. Having a reliable cash register and computer that doesn’t crash or take 15+ minutes to boot up in the morning is one way to eliminate unnecessary stress. Another way is to make sure your systems and programs can simultaneously manage your online and in-store inventory; this will make sure you’re always aware of what’s available so you can restock before you run out. Speaking of running out, the only thing worse than finding out your store doesn’t have what you want is waiting to figure that out on an uncomfortable chair. Keep these aspects of your customer experience in mind as pieces of equipment like furniture for your customers and staff should be high-quality and comfortable.
The total cost of furnishing a retail store before you even get your first customer can seem impossible, but there are equipment finance loans to help manage the huge upfront cost of starting a business. This can help ensure you can invest in the right equipment and not sacrificing quality for price on key aspects of your store.
Having the right security systems in place to protect your store and inventory is an important part of minimising risk; however, it is possible to overdo it. Look into your security system options so you pick the right one for your location and store needs. It’s important to keep in mind that if you’re going to install cameras in your store that too many can make your customers feel uncomfortable, so strategically place them in important locations that don’t draw too much unnecessary attention to them. While having a security system is important to keep your store safe from vandalism or theft, insurance is always recommended to cover any unfortunate incidents. Determine the best coverage for you based on factors such as cost to repurchase equipment, inventory, and costs associated with lost income and fixing broken or stolen items.
Implement a Marketing Strategy
No matter if you’re just starting out or a few years in with regular customers, you should have a marketing strategy. But there isn’t a one-size-fits-all or perfect plan, which means your campaigns should be fluid and regularly re-evaluated based on what’s working and what isn’t.
In store marketing could mean focusing on your displays both at the counter, on the floor and in the window. What products are you promoting and what experience do you want your customers to have when they walk into your store? Remember that customer experience is a critical way to differentiate yourself from your competitors and the devil is in the details. Is your counter at the same level as the customers or higher? Are you going to display your inventory via racks or shelves? How regularly are you updating your window displays?
Sales are an age-old business strategy that bring in new customers and make returning ones more loyal. Incentivise your customers with in-store promotions or online discounts. You can also set up promo codes for first-time customers as well as loyalty programs when they sign up to your email list. Using promotions as part of your marketing strategy to build up an email list can be a worthy investment in your efforts to stay in regular contact with your customer base.
Word of Mouth
People trust other people, which is why you should encourage word-of-mouth referrals. Whether that’s through ‘refer a friend’ discounts where both people are rewarded or via online campaigns such as tagging people to enter a giveaway… friends referring friends is a sure-fire way to break through that barrier of scepticism and widen your audience. This can also translate into testimonials and reviews. In today’s research-savvy population, having a positive online presence will go a long way in your credibility.
Developing online marketing strategies to promote
To complement your angel advocates who are telling people about your business, make sure you have a strong online presence. More often than not, people will search for you before buying from you. Whether you have an online store or not, make sure you have a current Google My Business account. This covers the quick basics such as:
• Your website URL
• NAP (name, address, and phone number)
• Highlighting your service offerings
o Clearly articulating your USP
• Linking to your social media accounts
Recruit High Quality Staff
Recruitment is one hat small business owners wear that can be daunting, time-consuming and stressful. Put in the effort to find the right workers that exemplify your company values and work ethic right from the beginning. This includes looking for ‘soft’ skills such as respect for leaders and co-workers, communication skills, customer service and problem solving.
High Quality Employees
Good employees make your life easier as a business owner while bad employees can be a constant source of stress and headache. The right people are reliably, accurate and helpful both to you and your customers. Attention to detail and being organised will minimise human error in inventory count, sales, etc. which will minimise time spent double-checking numbers unnecessarily. It can be difficult to find reliable and dependable staff, making it important to offer competitive wages and a good working environment so you don’t have a high turn-over rate.
Hiring people that already have the right qualities is vital. Having a comprehensive onboarding process and regular training programs is the crucial other half to creating your business’ dream team. Efficient onboarding processes and opening/closing procedures set clear expectations and establish a high-functioning staff that gives your customers the same experience no matter who’s on shift.
If being the business developer, campaign manager, and recruiter weren’t enough to keep you busy, you can add financer to the list of small business owners. Managing P&L reports and budgets allows you to keep a handle on your cash flow and strategically spend your revenue where it matters most.
Managing cash flow and stock levels can be a juggling act during your first few years in business because there are various factors that can influence your sale numbers such as seasons, promotions and growth. Finding the right balance between supply and demand should get easier with time. Once you’ve established stock expectations, you can try negotiating with your suppliers for bulk deals and discounts.
Budgeting can seem a bit like hedging your bets at first as you try to forecast future business expenses and spread costs effectively when factoring in busy or slow seasons. Look back over past expenses to help determine future ones while also considering the unexpected (both good and bad).
To eliminate sneaky bills or unexpected invoices, consider creating an expense checklist to help you determine how much income you need to build a sustainable business. An example checklist might include:
• Store Insurance
• Donations (it’s hard to say no to a good cause)
• Payroll & accounting costs
• Water Bills
• Credit Card Fees
• Bank fees
OnDeck offers flexible business loans that solve a need for extra funding. Whether it’s the cost of materials, covering a cash flow shortfall or getting some new equipment for a project, OnDeck can help you.
With an easy online application process, loans of between $10k and $250k, and terms of 6 to 24 months, we make it simple for businesses to get the extra funding they need.
Apply online in minutes at www.ondeck.com.au or call our helpful team on 1800 676 652 today.
Prepared by OnDeck Capital Australia Pty Ltd ABN 28 603 753 215 (“OnDeck”) for general information purposes only. Content may belong or have originated from third parties and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information. Information current as at January 2020. You should not rely upon the material or information as a basis for making any business, financial or any other decisions. Loans issued in Australia are subject to the terms of a loan agreement issued by OnDeck. Loans are subject to lender approval. OnDeck® is a Registered Trademark. All rights reserved.