Many retail business owners have looked back on the closure of their business with the realization that things could have panned out differently had they known then what they know now.
Hindsight is a wonderful thing.
So, what information could help a retail business avoid closure?
Based on years of helping retailers experiencing difficult times turn around their situation, I have put together a list of questions which would-be retailers ought to ask themselves before they go into business. It is within the answers to these questions where retailers will confront the most common causes of retail business failure.
Is the business plan robust? Has it been tested by people who will challenge the assumptions it contains?
Do you have sufficient funds? Start up retail businesses usually require more cash than forecast, is the contingency in the business plan sufficient?
Is the business in the right location? Location is not something to compromise on. If you cannot get the location you want for your new retail business then do not proceed. Waiting for the best location is time well spent.
Are key costs under control from the get go? Is the lease for the retail store at a good rate? Too often, new retail stores open with a high occupancy cost – this is the percentage of sales revenue spent paying for the retail lease.
Have you compromised on your employees? Hire the best. If you cannot find what you are looking for, keep looking. Getting the right people is crucial to a retail business. The wrong people can shut you down quickly.
Is the product mix right? Make sure that you have a product mix which suits your niche and your location. Obsess about this. Poorly purchased inventory can be hard to move. Consider negotiating terms with suppliers which enable you to return stock which does not work in a specified time period.
Can you measure everything? It is vital to any retail business that you can measure everything you sell. Get a good Point of Sale system which enables you to track, sales, inventory, suppliers and customers, a system which provides multiple views of the performance of the business and a system which enables you to make changes to pricing and other levers easily.
Are you connected to the community? Do you have a plan for connecting the community with your business? If not, why not? Word of mouth is vital to the health of any retail business and a good community connection is an important factor in driving word of mouth.
Is your marketing plan multi layered? Do not rely on a single focus marketing and advertising plan. Develop a strategy which is multi focused and multi faceted, a plan which includes a mixture of traditional and viral, paid and free.
Be honest in answering these questions. Let your mind pose other questions which arise from answering these.
Taking time to seriously question your preparedness for opening a new retail store could save you from making a considerable mistake. Equally, it could lead to improvements in your plan which help you extract even more value from the business.
Post time: 09-22-2017