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How to Start a Retail Store or a Restaurant. Steps to Starting a Small Business.

How to Start a Retail Business

Steps before opening your business:
  1. Decide what products you would like to sell
    Let's choose Suitcases and Luggage for an example. We're opening a speciality retail shop called "Simply Suitcases Co."
  2. Get Approved by Suppliers/Become an Authorized Dealer
  3. Find the right location
  4. Finance your Retail Venture
  • Security deposit for the rental lease ($1,877 based on 1,609 square feet in a well-established, centrally located strip shopping center)
  • First month's rent in advance, plus Triple Net ($1,877 + $835 for your portion of the center's operating expenses and property taxes)
  • Utilities security deposit ($300)
  • Construction costs to customize the space ($4,000)
  • Store fixtures, including poles, racks, shelves, gondolas, mannequins, a cash counter, sizers, and bookcases ($3,500)
  • Handyman and supplies ($150)
*These prices are for a location in middle America, for California or NY 20x the price.

Simply Suitcases Co.
1234 West 1st Street
Smalltown, TX 102213
IT Expenses:
  • Computer, laser printer, and cordless phones ($900)
  • IT Consultant and tech support ($600)
  • Telecom services: high-speed Internet via cable modem and digital phone ($100)
  • Domain registration ($15)
  • Google services, including the store's e-mail ($50)
  • Website hosting, design, and development ($3,500)
  • Specialized POS software for the resale industry ($1,000)
Marketing:
  • An exterior sign and center pylon signs (2) ($4,500)
  • Interior signage and décor ($600)
  • Trademark registration and legal services ($500)
  • Logo design ($1,500)
  • Business card design and printing ($1,300)
  • Flyer design and printing ($350)
  • Coupon design, printing, and redemption costs ($150)
Public Relations:
  • Grand opening event, including food and beverages, entertainment, and signage ($750)
  • Public relations/media relations around the grand opening ($800)
  • Advertising around the grand opening ($120)
Congratulations on your new retail store!

Inventory:

Oops forgot to mention all of the inventory you had to pre-buy for your store.  Sure you get it at wholesale prices, and you most likely get Net-30 day terms and don't have to pay until next month but unless everything is co-signed, you'll still have to buy thousands of dollars worth of inventory to sell. Best of all, as your store does well and to prepare for busy seasons, you get to sink in even more cash into buying more inventory!

Grand Total of Start-up Costs: $30,834 without inventory

Grand Total of Start-up Costs: $45,834 with inventory


Now the cost to start an online retail store.
Online Luggage and Women's Handbag Store

Starting an online retail store still takes work, and you still have to treat it as a real business.  You can start it as a sole proprietorship to get started, but you'll still need to register for a state tax ID number, Federal EIN (employer identification number) and you'll still have to spend the time researching a good niche product to sell.  

But the good news is, you can eliminate 90% of expenses of starting a brick and mortar store.  You'll still need a website, email, cool catchy name, and spend the time to market your store, but since it's all online, you can do it from anywhere and you don't need to hire employees or pay rent on an expensive storefront.  Remodeling your webpage to look pretty also costs a lot less than remodeling your store.

Total Costs to Start an Online Retail Store:

Dropshipping/eCommerce Course: $247
Domain Name: $10 a year
Website: Using Shopify $29 a month
Logo Design: $5 on Fiverr
Google Ads: $75 in free credit
Amazon Ads: $75 in free credit
Optimize for Sales and Conversions: $147

Costs of an online Boutique are a LOT less than Retail

Total Costs to Start an Online Retail Store: $438

But what about inventory? Well that gets expensive, minimum orders for a container load of inventory from China or you can buy at wholesale from your supplier.  But either way you have to spend money on either a warehouse or fulfilment center.  This could get expensive, which is why I chose to start out by having my suppliers dropship products for me.

If you don't' know what dropshipping is, don't worry 10 months ago, I didn't know what it was either. My idea of opening a business was opening a restaurant, or another brick and mortar store.  Then I met a guy named Anton who showed me his eCommerce model.  I followed his program, learned what dropshipping, how to setup a store using Shopify and how to get approved by suppliers.  

Fast forward 8 months.  

Sales from one of my online stores
Best of all, I managed to do all of this from my laptop while traveling across SE Asia.  I've made sales while I slept, on planes, trains, while getting massages, and even while having tacos in Mexico.  I'm not saying it was easy to get started, as I treated it as a real business and put in the long hours during the first two months of setting it up.  But even if it failed it would have cost me less than $500 versus having your restaurant fail and costing you $50K or more.  

If you want to read more about how I got started with my online business all of the information is on my blog under "Start Here."

Resources:
The program I followed to learn how to start a successful online business: www.AntonMethod.com
The software and website template I use to run and manage my store: www.Shopify.com 

Someone's got some big shoes to fill!

Good luck to everyone out there with your own online store.  If you happen to still think it's a good idea to start a restaurant or a brick and mortar retail store I wish you the best of luck, as it's a huge gamble!

Warm Regards,

Johnny FD

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Post a Comment

  1. Couldn't agree more with this post. And while I don't dropship because I design and manufacture my own brand of items, all the principles are virtually the same...although I've got a little bit more invested into inventory. The ecommerce model, especially using a tool like shopify, has been crucial to me also being able to live in Thailand! Question...I see that you've got 6% reaching checkout on your screenshot of your Shopify dashboard. What's your purchase conversion rate? Keep up the good work.

    ReplyDelete
  2. Good article Johnny

    ReplyDelete
  3. Good post. Of course physical retail businesses have more upfront capex. But one thing you fail to mention you are have guaranteed foot traffic if you own a shop in a mall.

    Ecommerce the trick is traffic and not always super easy it depends on the niche you are in. Just my thoughts.

    ReplyDelete

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