5 pillars of building a successful retail business

Starting a new retail business can be exciting and challenging at the same time; it’s difficult to know where to focus your efforts first. As you prioritize what steps to take action on, remember these five pillars of building a successful retail business.

1. Choosing the right kind of business

   Whether you’re considering building a retail business from the ground up, opening a franchise or buying an existing business, choosing a business will impact the rest of your entrepreneurial career. Spend some time discussing your options with friends and family to identify what kind of venture makes the most sense for your personality. Does it thrill you to think about starting something from scratch? Would you have more fun taking over an established business and working to improve it? There is no wrong answer if it’s right for you.

2. Landing the perfect location

   Finding a forever-home for your retail business is a personal decision with a large impact to the success of your company. Many factors impact your decision for the ideal business location: foot traffic, accessibility, parking and the demographics of the neighborhood. Further location-related considerations, such as what areas house the best employees and where the best tax rates are, also play a role in your company’s ability to thrive.

3. Securing financing

   Having access to capital is crucial to your business plan and long-term success as an entrepreneur. If you have good credit, cash on hand and a solid background in business, you may have several financing options available to you. It’s important to research your options and pick the best funding method for both you and your business.An increasingly popular method of funding is equity financing. For example, the Rollover for Business Start-up arrangement allows you to use your retirement funds to launch your business debt-free. This means no payments to lenders, and the revenue your business earns can be invested back into your company rather than put toward paying back loans.

4. Managing cash flow

   In every stage of your business, it’s important to be strategic about how you manage money. Poor cash-flow management is one of the top reasons many retail businesses fail, but by creating a cash-flow forecast early, it can help you be better prepared for dips in revenue. Use the 80:20 rule to project your monthly revenue (80 percent of your margins will come from 20 percent of your product), and compare that to the monthly cost of running your business. If you’re in the red, take a closer look at inventory and make necessary adjustments so you’re not buying products that aren’t selling.

5. Hiring amazing talent

   The time and resources required to recruit and train new employees can have a significant financial impact on your business. Be sure your first hires are in sync with the company culture you want your organization to reflect, and then work to retain your best employees long term. After all, their referrals will likely become your next generation of employees.