How Does LendingTree Get Paid? LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How to Start a Retail Business

Starting a retail business takes a lot of planning, money, resources and commitment — there’s no one-size-fits-all way to make it happen. The exact path you take will depend on your business idea, your budget and your location. But following these steps can help you put together a roadmap for your business and learn what gaps you’ll need to fill in.

1. Narrow down your niche

Deciding to start a business can be exciting and overwhelming. Your first step should be to brainstorm about your retail business idea to get a better idea of what type of market you plan to serve.

Ask yourself the following questions to fine-tune your niche:

If you have too many ideas, try narrowing them down based on the following:

2. Write a business plan

Your business plan provides a roadmap for how you plan to turn your idea into a thriving, profitable retail business. Partners, investors and lenders can review your plan to understand the specific steps you’ll take to get your business up and running.

As a starting point, your business plan should answer many of the questions that you tackled while defining your niche, including: 

However, your business plan should also get into the finer details of how you plan to execute your vision for your retail business. It should also provide answers to questions, such as:

Keep in mind that your business plan should be a living document. You’ll need to come back to it frequently and make tweaks as your business grows and changes.

Create a business budget

Alongside creating a business plan, you should also put together an initial business budget. Unfortunately, starting a business with no money is close to impossible. Even if you opt for an online retail business instead of a physical location, you’re still going to have some initial expenses, such as the cost of purchasing or creating your inventory and designing a website.

On the other hand, if you want to open a brick-and-mortar storefront, you’ll need to plan for a wide variety of startup costs in addition to inventory and marketing, including rent and utilities, as well as any necessary renovations, insurance, equipment, shipping and payroll.

3. Build your brand identity

Once you have your plan for your retail business fleshed out, the next step is to consider your brand. Make sure that you’re clear on your retail business’s story, what it offers and how your company is uniquely positioned to solve your customers’ needs. 

You’ll use this information to make decisions about every aspect of your business, including the company name, aesthetic and marketing strategy. Across all those areas, you’ll want to create a brand that feels consistent with your positioning, will appeal to your target consumer and is authentic to your vision for the business.

When in doubt, research your competition to get a sense of their brand identity or hire a branding consultant to help you do the job.

4. Register your business

You’ll need to make your idea official by legally registering your business and getting any necessary licenses, permits and insurance.

5. Organize your business finances

It’s generally considered a good idea to keep your business and personal finances separate. This separation can offer you personal protection in the event that your business ever faces legal trouble. Once you’ve registered your business, you can get started.

Open the right accounts

At minimum, you’ll need a business bank account. Specifically, you’ll want to look into a business checking account, which will allow you to deposit money from any sales you make and withdraw money to cover your business expenses. If you’re already familiar with a bank or credit union, investigate whether they offer business accounts to make it easy for you to transfer money when needed.

Unless you plan on bootstrapping your business with cash from your personal savings, you’ll likely need to consider opening a business credit card. This funding option is best used for smaller, ongoing expenses that you’re likely to pay in full each month without accruing interest. Plus, many business credit cards offer tools that make it simple to keep track of your expenses for tax purposes. 

If you’re running a brick-and-mortar retail location, you’ll also want to open your utility accounts in your business’s name.

Consider additional funding options

While business credit cards are ideal for smaller expenses, like office supplies or inventory, you may also need a small business loan to get your retail business up and running. Many lenders require your business to operate for at least a year or two to receive funding, although startup business loans are an option for newly established businesses.

If you don’t qualify for traditional business financing, you can raise funds through a crowdfunding platform, apply for small business grants or get a personal loan for business use to cover your expenses.

6. Find the ideal location

After you’ve settled your funding, you can begin the fun part — bringing your retail business to life. The first step is choosing the right location.

Choosing a physical storefront

If you have a brick-and-mortar store, choosing the right location can help your business succeed. Even if you find cheaper rent in a less-suitable location, it might be worth selecting somewhere more highly trafficked if you’re confident that you’ll be able to attract enough clientele.

Think about the areas your target customers frequent. For example, opening a toy store next to a daycare center could boost your brand’s visibility and awareness. By the same token, starting your own clothing line with an upscale boutique in a rural farming area might not be the best match.

Here are some questions to ask as you search for your perfect space:

Ultimately, your budget will determine the size of a place you can afford. If funds are limited, it’s best to start small — you can always open a second or third location if and when the business takes off.

Opening an e-commerce store

Even with a thriving storefront, having an online presence can help reach a wider audience and potentially increase sales. The e-commerce and in-person retail combo is often called “bricks and clicks.”

Fortunately, opening and maintaining an online store is relatively easy with platforms like Shopify, Squarespace or Wix. You can also consider starting an eBay business, selling on Amazon or creating an Etsy shop.

7. Establish vendor and supplier relationships

Finding the right team of vendors and suppliers is essential to the success of your business. Working with the right companies can save you money, assist with purchasing decisions and clue you in on new merchandise that your customers might love. 

Here are some factors to consider when selecting vendors and suppliers:

Don’t stop at just one vendor to supply your store. Life happens, and sometimes your A-list vendors or suppliers will not be available to meet your needs. Having a backup vendor in place for emergencies could make all the difference in your ability to conduct business smoothly.

8. Hire and train employees

Good employees are an essential component of a successful retail business. However, finding employees for your business (and keeping them) can take time and effort.

Before hiring, decide how many staff you will need and whether they should be classified as 1099 or W-2 employees (you may find you need both). Then, check with your state labor office to learn about employer requirements, such as offering insurance, workers’ compensation, unemployment insurance and more. Many states list these requirements online.

After figuring out the legal requirements, you can create and share job postings. To attract and keep the best talent, consider offering some of the following fringe benefits:

Lastly, draft a training manual and employee handbook to cover all bases during the onboarding process.

9. Explore marketing strategies

As soon as you’re ready to start operating, it’s time to start marketing your retail business. You can use a combination of online and offline marketing strategies to spread the word. To avoid overspending, set a marketing budget before getting started.

Online marketing strategies

Creating an online marketing strategy can generate buzz before your grand opening. You can use a combination of search engine optimization (SEO), email marketing, online advertising and social media accounts to spread the word about your new retail store.

In this day and age, social media should be a critical part of your advertising strategy. Be sure to post meaningful content to engage your audience authentically. For example, if your brick-and-mortar store sells gardening supplies, consider starting a weekly blog sharing insightful gardening tips. You can also offer regular giveaways or discounted coupons to gain more followers.

Your website is another way to spread awareness of your retail business. Make sure it is easy to navigate and has all relevant information on the home page, such as what your business offers, business hours and how to get in touch.

Local marketing strategies

If you have a physical storefront, you can also engage in more localized marketing strategies. For example, consider getting involved in your community by sponsoring a children’s baseball or soccer team, donating items to a charity event or hosting a pop-up shop at the next neighborhood craft fair. 

Consider advertising your business locally by putting up flyers in the neighborhood where your business is located, leaving your brochures with other local businesses or advertising in your local newspaper.

10. Organize a grand opening

Hosting a grand opening can help win over the local community and jumpstart sales. Consider contacting local media outlets to spread the word. Offer special discounts or prizes for the big day, such as free goodie bags, stickers, balloons, snacks or giveaways.

Think about the ideal day and time for your grand opening — you want to make the biggest splash possible. Weekends are generally best, especially if kids are welcome to attend.