Starting a business has never been an easy task. Be prepared to work harder for the first two years as people may not realize the value of your products or services as much as you do. However it isn’t impossible with the right amount of knowledge and planning.
Opening a retail showroom has its own set of advantages. You are your own boss. An ultimate decision maker. You have the power to create a work atmosphere you prefer working in. If you love socializing and meeting people, this business is probably meant for you.
Here are some snippets of information you should keep in mind for starting a retail showroom business.
Retail Showroom Business plan
The foremost thing to do while starting any business is to create a business plan in writing. The success of your business and the efforts and time you devote to creating a business plan is correlated to each other. A well- defined business plan can go a long way to achieve desired success for your business.
Take the following things into consideration while creating a business plan
- Self-owned or lease.
- Products or services you wish to sell to the customers.
- Complete cost estimation for your proposed business, including location, investment, profit margins.
- Competition analysis. People who are already into this business. This will give you a brief idea about the demand and supply ratio.
- Marketing Plan. How are going to market your products? Hoardings, pamphlets, brochures. Will you consider going online through websites and apps to reach large number of audience.
- Recruitment strategies. Whom to recruit? Mentorship and training to the staff.
- Future planning. Where you want to be five years down the line? A profit and loss statement can give you an estimate of how well you are doing.
Retail Showroom Business ideas
You can consider opening up a designer garments showroom, food products, stationary, a bakery, grocery store, ice-cream shop, gift store. You can also think about a travel agency which provides travel and tourism related services from booking tickets to planning an itinerary.
The success of a retail showroom lies with a rock solid business plan and good capital for initial investment.
Deciding a proper location has a great impact on the success of your business. Choosing a right location for your retail business is mandatory for you to achieve the best results. Go for a location which seems to be viable for the products or services you offer.
For example: If you want to open a retail showroom for designer outfits, decide a location in the vicinity of hostels or colleges. The place where the youngsters throng, is an apt location for a designer showroom.
Contact vendors or a manufacturing company
Making the right products available at the right time at reasonable prices to a consumer is a key to profitable business. Contact best vendors or wholesale distributors in your town or approach a manufacturing company to make their products available to you at wholesale prices.
Define your store policies at the outset, that is, when you define your business plan. Policies define the day to day operations of the business, from acquisition, warehousing, accounts maintenance to final supply to the consumers. This will help you stay organized and confident when you finally face the customer.
Marketing Policies and Channels
Again, formulating the marketing strategies is done at the very beginning of starting a business venture. How should a customer know about your business? Distributing flyers, pamphlets, advertisements in newspaper, magazines or television broadcasting are some of the means of propagating your business. You can also promote your business through online medium such as a website or app.
Channels are the medium through which the customer can obtain your products or services. You have unlimited means to channel your customer, whether you want to start a physical store as well as an online store to reach maximum people. Make sure you are consistent through all your channels.
Search for the best talent for your business. After all, customer satisfaction is the main purpose of a business. A staff should be courteous and patient to handle all kinds of customers who visit your store. Keeping a smiling face while dealing with the customer is important.
If you are starting a small retail showroom, you may need a cashier to take care of your accounts and ledger, a store manager and few salespeople to guide the customers.
Train your staff about the sales process and what is expected from them, define the goals of the organization clearly so as to gain their can co-operation in achieving the final objective. However start with small. Don’t overwhelm them with information at one go. Provide unbiased feedback for their work. Conduct regular meetings to educate them about the amendments in the store policies.
Obtain a retail showroom business license
If you are starting a limited liability company (LLC) or a limited partnership, you need to register your business with the state authorities either state’s department of corporations or secretary of state. You also need to obtain a Federal Employer Identification Number (EID), a number used to identify a business entity, which will be eventually used as a taxpayer identification number.
In case of sole proprietorship, you need not register with the state authorities. It is handled by the state and city permits. An SSN (Social Security Number) can serve as taxpayer identification number.
Estimate business startup cost
The startup cost of the business depends upon the type of retail business you want to start and the size of your store. If you are starting a small retail showroom, an initial investment of 10-15 lakhs is required leaving the monthly operation expenditures.
However if you aim for big, an initial set up cost of approximately 25-30 lakhs is required.
Choosing a name
Selecting a right name for your business is essential. A customer should know what exactly you sell. An appropriate name also helps in acquiring an appropriate domain name if you wish to conduct your business on digital platform. Do check if any other business is operating under the same name selected by you to avoid confusion.
GST (Good and Services Tax)
GST is applied at a rate of 18% to 28% depending upon the goods or services you provide. GST registration is a must in case of any retail business whether it’s conducted within the state or interstate.
Profit margin of a retail business
While calculating a profit margin of a retail business, two important terms should be taken into account: Gross profit margin and net profit margin.
Gross profit margin is calculated in terms of the profits made before deducting taxes and operational costs while a net profit margin is calculated after deducting taxes and operational costs.
A retail grocery store operates at a gross profit margin of 25% while a small jewelry store operates at a gross profit margin of 50%
Future of a retail business
Just opening a brick and mortar store isn’t enough for a retail business. You have to cater to the urgent requirement of a consumer through technology driven medium. That is, through a website or an app.
The advancement in technology has fostered easy and fastest means of delivering the products to the consumers. Amazon has already taken the 30 minutes delivery challenge through its featured prime app.
As it is rightly said, ‘Customer is the King’. Keeping is mind the needs of the customer and fostering customer relationship for a long term is a key element in increasing your business profits.
Determine policies for customer satisfaction. These policies should be well defined in terms of creating an altogether different experience for a customer which he may not find anywhere else. In short, create your USP for a pleasant customer experience.
On a final note, let’s look at the advantages of starting a retail business
Pros of a retail business
- The onus of your business lies in your hands completely. You are a final decision maker.
- You have the power to create a working atmosphere and work culture you like.
- You get to learn a lot about business ethics and social skills from your customers, competitors and employees.
- You can benefit yourself as well as your customers through your business.
- You generate employment for the people thus you are contributing in increasing per capita income.
- You can create a great customer rapport through your efficient services.
- Starting something of your own and getting people to believe in your concept is all the more exciting and challenging. Challenges ultimate brings rewards.
Retail business has a great scope in future. The advancement in technology has fostered the retail business in the last few years. The ecommerce has especially played an important role in the growth of the retail business by facilitating effective channels for your business.
However with the right planning, dedication and hard work you will find yourself climbing a corporate ladder within a matter of few years.