The Steps to Opening Your Business
If you're a first-time entrepreneur or just starting out in a new industry, these questions may help guide your planning.
Step 1: Will you invest your own money, apply for a loan, or find an investor?
Will you be making and selling your own product, product you purchased from a wholesaler or manufacturer; or will you be providing a service?
Making your own product? Consider the time it will take you to do this, and how much inventory you will need to open your business and stock your shelves.
Planning to buy product from a wholesaler or manufacturer? Consider purchasing a franchise or license.
Providing a service? Consider how much time you will need to perform the service. Will you have enough time to make your business profitable?
Step 2: Choose the type of store based on your retail experience.
New Retailer? Consider unique event venues. These events do not require a lot of product or time. They are typically promoted or advertised to drive consumer foot traffic to the event. Events are held for a day or weekend and are perfect for those just starting off their entrepreneurial ventures.
Beginner Retailer? A Retail Merchandising Unit (RMU), also known as a cart, might be the right fit for you. An RMU gives you the opportunity to start your own mall business by selling the latest product and impulse items in the common area or walkways of high traffic mall areas.
Beginner to Intermediately Experienced Retailer? A kiosk may be the best choice for you. Kiosks are located in the common areas or walkways of high traffic locations and are ideal for showcasing smaller products such as jewelry, mobile phones, engraving and watch repair.
Experienced Retailer? A traditional storefront may be the best option for you. This type of store is perfect for retailers that sell a wide range of products in a variety of sizes including clothing, shoes, or framed art.
STEP 3: Select a business name, mailing address and location.
Choosing a business name is one of the most important things you’ll do during the process of starting a business. The legal name of your business is required on all government forms and applications, including your application for employer tax IDs, licenses and permits. However, if you want to open shop or sell your products under a different name, then you may have to file a "fictitious name" registration form with your government agency.
If you plan to use your home as your mailing address, as many small businesses do, consider using a post office box.. A post office box will separate your personal identity from your business and lend an element of professionalism and credibility. Ideally, you should choose a physical location that best fits your business needs; a location where your target customers can easily get to and visit regularly.
Malls are a logical choice since they are the community hub and have built-in traffic.
STEP 4: Select how your business will be organized legally, then write a business plan.
Will you run the business as an LLC? Sole Proprietorship? Partnership? Corporation? Each option has different tax advantages, so you may want to consult with a professional to help make the best decision.
Once you decide how you will organize your business, it’s time to create a business plan that includes:
- What you plan on selling
- Start-up costs and target budget
- Your target customer
- Your plans to promote and advertise the store
- Cost of construction, fixtures and or equipment
- Product costs
- Any permitting and license costs
- Rent, payroll, insurance and taxes
STEP 5: Negotiate and execute your lease or license agreement.
Know your specific business needs before you start shopping for the future home of your new business. Some things to keep in mind or to do:
- How much space will be needed
- What is your rent budget
- Know your target occupancy costs based on your product (occupancy costs are determined by total rent and fees divided by sales)
- Know your target customer
- Visit the proposed location on different days at different times to get a feel for customer foot traffic
- Study the natural flow of customer traffic
STEP 6: Set up your business record keeping and banking Keep your method of organizing business records simple and easily accessible.
Setting up a system by month is the most common practice. Setting up your business banking does not have to be overwhelming. Many banks have programs to attract small businesses
When choosing a bank, consider:
- Proximity to store location --the closer, the better. This will make nightly deposits quicker and easier.
- Location and general area. Is it a bustling area, well lit and accessible when you need it to be? Choose a bank where you feel safe.
- visiting with large sums of cash.
- Shopping around for the best business services and banking fees.
STEP 7: Get your license and permits.
Ensuring that you have all of the necessary licenses and permits is critical. Failure to do so can delay your opening and cost you money. Check your city office for their license and permitting requirements. If your product or service is a taxable item, you will also need a state sales tax permit.