How to Set up a Store

Find a niche. Target a specific need or want that is under-served or could be significantly improved. Talk to people in your community and try to understand what they want the most. Take some paper and a pen, and brainstorm all the things you would like to sell in your store.

• The more good items you come up with and get for a low enough price, the bigger profit you will make. For example, if you wanted to own a wine cellar, you wouldn't just say you are going to sell wine. You would say you want to sell Sauvignon Blanc, etc.
• Avoid basing your entire business on a single product; this is what separates the stores of the world from the lemonade stands.

Study the market. Ask questions, keep your eyes peeled for opportunity, and consider making a survey about which products would sell well in a certain area. You can either adapt your business to what the market lacks, or find a specific area that suits your business. Make sure that there is a legitimate need for a given service. For instance, if you find out that there is no DVD or music shop in an area, this doesn't necessarily mean that the market needs such a place—it might just mean that people are getting everyone from the Internet. To run a market study, you can:

• Hang around an area, visit shops, and ask questions about the local market.
• Record statistics: sit in a cafe and take notes. How many people pass by? How old are they? Are they mostly male or female? Do they work, live, and/or shop here? Which times and seasons seem to draw the most shoppers?
• Speak to customers and potential customers. If you ask the right questions, you might get the right answers.
• Trust your intuition. Your hunch is just as important as the results of market research.

Feel out the competition. Find businesses with which your planned business would compete. Research them and learn as much as you can from them. Try to find out their revenue and expenses. This is easier than you think: buy from them one specific day of the week, then wait ten days and buy from them again. Count how many receipts they have issued in a given period of time, imagine a reasonable average price per receipt, and multiply the 10-days-worth of receipts by 3 to estimate the competitor's sales revenue for a 30-day period. Avoid provoking the large established leading player(s) in the area, which might react violently and cost you a lot of money. They are in a better position to bleed money than you are.

• Think of what you would do to improve the product or service offered by your "competitors," and by how much it will increase revenue (and profit). Deduct, say, 15-25% as your margin of error. Review your calculations and try to imagine how your business could be more profitable. Do not expect a favorable prediction from your first analysis, or even from your third.
• Head to the next town, find similar businesses, and speak to the owners. Be frank about your intentions to set up shop in your targeted area. Some will be more than willing to tell you about their experience and their mistakes—some may even tell you about their profits. Consider asking to work for them for free for a few days to learn the ropes. It may help if you offer a confidentiality agreement with a clause promising that you will not set up shop in their area.
• Do not think that your time has no value. It has an "opportunity cost," which is how much you would earn by being employed. Include this in your cost calculations.

Do your research and make sure that your idea is viable. Make sure that:

• What you plan to sell is needed and wanted by the community in which you plan to sell it.
• Your plan is legal. All items and activities related to the store should be compliant with any relevant governmental regulations. Make sure that you have secured a business permit.
• You have planned out all of the financial and organizational details, and that it makes sense for you to own and operate this store.
• You have enough resources (financial capital, manpower, emotional support) to set up your store and make it last.
• The above have been handled—or are being handled—by the time the store opens.

Write up a detailed business plan. Imagine an average profit margin—the total profit from sales, minus how much it will cost you to run the store—and ask yourself if your business will be profitable on this basis. Try to avoid unrealistic assumptions.

• Start with choosing the most visible location within your budget—perhaps next door to an established, popular business. Consider how much traffic you expect for each of the first six months. Which seasonal market factors will come into play, and how will they affect the business? How will you cope during the high and low seasons?
• The business plan should consider the effects of promotion. How much money will you spend on advertisement, and how much money do you expect this advertisement to make you?

Handle the legal logistics. Every country has certain regulations that need to be followed before you can set up your dream store. What may be considered unregulated in one country might require official documentation in another. Be sure to understand the legal framework surrounding your business operation and whatever items you intend to deal with.

• For example: Some countries allow 100% firm ownership, while others don't. Taxes are also different for each country and state.

Get a business permit. As with any regulated activity, businesses require official permits prior to commencing operations. You will need several federal permits, as well as state permits depending on what state you live in, in order to sell goods. Just run a web search for "business licenses" and visit the .gov sites that pop up. Get your information from the relevant government authorities and prepare all documents as directed.

• If you find all this bureaucracy a bit daunting, you can hire a firm that specializes in streamlining the permit process. This route may cost a bit more, but it can ensure that everything goes smoothly and problem-free.

Consider how much capital you have available to start this business. Make sure that you have enough capital to lose money for 6-9 months before your initial financial bleeding stops.

• Do not take shortcuts. Plan for at least 3-4 months before you invest your life savings or borrow money to set up a business. Figure out what the exit costs would be if, for some reason, you needed to dissolve the business a year after starting it.
• Do not mortgage (or re-mortgage) your house for collateral. Your house is your home, and it provides stability to you, your family, and your business.

Pick a location. Consider where your business will be most effective. Location, location, location, as they say. The ideal location varies from business to business. Small and mid-sized retail stores need areas with large footfall and a lot of passing people for maximum sales opportunity. The location should also be reasonable enough to fall within your budget plans. This will probably be the single biggest expense listed in your budget. Your location should be:

• Far enough from other stores selling similar merchandise. It can be more important to isolate supply than to have demand.
• Somewhere that regularly gets a lot of traffic from potential customers. More passerby translates to more revenue. Make sure that it is convenient for people to get to your store.
• Geographically suitable cost-wise. Weigh the pros and cons of a location after you figure out the purchasing/renting logistics, the setup costs (designing, building out, and decorating the store), and the maintenance information (including insurance, taxes, security systems, cleaning, and trash pickup).

Understand your rent/purchase options. You can buy the storefront (a freehold) outright, and own the premises, live upstairs maybe—and all your family can work in the business, taking a living from the store. Or, you can buy a leasehold, in which case you purchase a length of time you can be in the property to sell your goods—paying rent to the landlord a month.

• You may also have to pay a ground rent for the land upon which the building sits. You will have to pay the council tax if you live behind or upstairs on the property. You will have to pay business rates for the portion occupied by the store, as well as any ancillary outside space dedicated to the business.

Work within your means. Try to find a place that is not much bigger than you need, and is not too small. If you're starting a barbershop, for instance, you'll need about 21 square meters for two chairs, a toilet, and a resting area. Unless you have serious plans for expansion in the near future, a bigger space will only cost you money.

• Make sure that any space you rent or buy includes all the fixtures that you need to make your business a success. If you are serving food, you will need gas, plumbing, and a kitchen. If you expect customers to spend a while in your store, you may need a bathroom. If you are running an electronics store, you will need a lot of outlets.

Consider setting up an online store. You can sell your wares using online marketplaces like Etsy, Amazon, Ebay, and Craiglist, or you can sell your wares through your own personal website. If you create your own website, you will need to pay a small monthly fee to reserve a domain name. If you work through another website, you will not have as much control over your business, but you will be able to sell things without designing and paying for a website.

Insure the business. You must ensure you insure the property fully against fire, flood, theft, and damage. If you employ others, you will need to have Employers' Liability, and in all cases, you will require to have Public Liability, to cover your customers, and delivery men coming onto your premises in the course of their work.

Establish your inventory. You will need to find suppliers for the items you intend to sell, and you will need labor with the required skill-set if you go for services. Finding the right supplier can be tricky. Ideally, your supplier should be straight-forward and precise with the terms of payment since this affects how you manage the sales. Decide where you will acquire the goods to sell:

• Buy from a Wholesaler and retail to the customer for a profit.
• Make on the premises and sell direct to the consumer.
• Make, elsewhere, and bring to the premises in order to sell directly to the customer.
• Make on the premises—and use the internet to sell some, the counter to sell more, and salespeople to peddle your goods at other stores.

Prices. Look up the item online and find the appropriate value of the item. Compare your prices with similar stores. Take inventory: list everything salable in the store, along with how much each item costs and how many of it you have in stock. The amount of items you sell depends on your supply, your consumer demand, and the size of the store you want to set up.

Use price tags. Get a few price tags from a local store, buy price tags online in bulk, or cut paper into neat, even pieces. Make sure that you put a price tag onto any item you set out in your store. You can tie the price tags to items with string, stick adhesive tags directly onto items, or set the tags in front of your wares. Make sure that it is clear which tags go with which items.

Design the store space. Think about what key impression you want people to have when entering the store, what functions the store should perform, and make a list of functional areas and items needed to display and/or to use. Plan out how you will use each square foot of floor space.

• Plan for fluid flow. Make sure that workers and customers can easily move about in the space. Make a drawing of the space with precise measurements.

Build out the store. Once you figure the costs of building materials, labor, equipment, supplies, and their maintenance, you can put together the store space according to your plan. Build out the store to cover the basic utilities that keep the store running. This may include water, power, Internet, cable lines, phone lines, security/alarm wiring, water sprinkling system (against fire) carpentry, drywall, and painting. You can hire a contractor, or you can do the work yourself—but be sure that you know what you're doing, and that you can spare the time.

Build the basic functional areas that your store needs. Essential areas might include shelves to display your wares; surfaces to list prices; a counter for taking orders; space behind the counter for preparing, delivering, and packaging orders; space for a cashier; storage for extra items; a quiet office/administrative area; cleaning closets; benches and floor space for customers to wait; changing rooms to try on clothes; tables to consume food; restrooms.

• Keep in mind you are going to need things to put your items on depending on the type of store. If you are a clothing company, you will need garment racks, price tags, hangers, etc.
• Consider adding extra features to keep customers entertained while they're in the store. Play music to set the mood (relaxed or upbeat); paint the walls with unique designs; display unique items near the entrance of the store to pull in customers.

Design your layout with the customer in mind. Imagine that you are one of your future customers, and consider what you would make you more comfortable shopping in this store. Ask yourself what made you try your favorite little pizza place or coffee shop. Was the location convenient? Did you read positive reviews about it? Were you simply curious? Did the hours suit your schedule?

• Consider every tiny detail of your store. You can affect a client with even the smallest gestures, like writing "See you again!" on the door instead of "Push" or "Pull".
• If you have a sausage shop, for example, arrange a window display so that potential costumers can see what you're doing inside. Make sure that the meat fridges are visibly well-cleaned. Hygiene is extremely important for such places, so try to highlight this with your design.

Staff the store. Pick the right people to help you. If you're starting small, you may be able to run a business under your own steam, but you will probably need to hire employees as business picks up. Choose smart, useful people, and train them to help your store succeed. Eventually, you may be able to set up your business so that it runs on your rules whether or not you're in the shop.

• Staff the store with pre-trained people who know how to be honest, courteous, and trustworthy; who know what you are selling, and how to sell it; who can come to work neat, clean, and with a positive attitude. Pick responsible employees who can help you prevent shoplifters, avoid disturbances, and handle emergencies.
• Ask your family and friends to help out at first, whether your son is manning the register or your friend is helping you organize the shop the weekend before it opens. Tap into your resources, and make it exciting for people to help you out. Find a way to compensate these people for their time, even if you don't yet have the funds to pay them outright.

Set the operational logistics. Decide when the store will be open each day; display the hours prominently on the storefront and the store website. Develop consistent practices for how you will treat your customers, how you will log profits and spending, how you will hire employees, and how the everyday function of the store will work.

Create a brand. Choose an engaging and relevant name for the shop. Have your shop name copyrighted, and make sure that everyone learns to recognize it. Design a compelling logo; if you don't feel comfortable doing it yourself, hire a graphic designer. Do not hesitate to print branded bags, towels, or t-shirts. Put a sign up on the front of your shop—customers should be able to recognize your store from at least 20 meters (65 ft) away. Bring up your store in conversation, and be sure to name-drop your brand.

Advertise. This is essential. Begin with low-cost, small-scale promotional campaigns, and scale your promotion as your business expands. Advertisement does not necessarily mean paying for a billboard and a TV infomercial; it's more about knowing your target audience. It can be very expensive to jump straight to full-scale media ads.

• Small-scale promotion might entail free samples, or leaflets offering a discount for the second purchase; you can hand these leaflets out in front of your store, slip them under the windshield wipers of parked cars, or leave them at peoples' front doors.
• Use direct advertising—it is both cheaper and more effective for fledgling businesses. For example: if you start a clothing shop, ask new customers to fill out their phone number and email address. Ask customers if they would like to receive emails about deals and special offers, then actually follow up by sending out discount information.

Consider holding a grand opening event to attract prospective customers. Plan a big event or party in the store space. Invite everyone you know, and have your friends invite their friends. If you're opening a music store, hire a band. If you're opening a bookstore, have a well-known author come to speak or sign books. No matter what you're selling, you will likely attract people with free food, coffee, and music.

• Welcome the attendees with smiles, greetings, food, and drinks. Consider providing demonstrations or samples of what you are selling. Consider handing out small "party favor" items for people to take home. This may make potential customers feel good about having been at your store.
• Make sure that the whole team of staff and/or partners is present, ready to greet attendees.
• Print and distribute business cards, brochures, and pamphlets to help people remember what you sell and where you are located.

Make sure that you have plenty of social and emotional support. You will be working long, hard hours for at least the first 18 months, and your path will include many ups and downs. When the going gets rough, you will need your support system more than ever. Even when you are at home, you will be thinking business—so it is especially important that the members of your household understand what you are trying to accomplish.