Creating a retail business plan
Tips / 20.12.2022
As much as e-commerce has really picked up over the past couple of years, there still remains a great demand for physical brick-and-mortar stores in our communities.
These stores give customers the opportunity to see, feel and touch products, try them and generally have a comparatively more “real” shopping experience that’s got the human touch.
If you’re an entrepreneur with a vision to start your own retail store, then your very first action point should be creating your business plan for a retail store.
Wondering what a business plan for retail is, why you need it and how to go about creating one? This blog post covers everything you need to know.
Table of Contents
What is a retail business plan?
Although there are many different types of business plans, a retail store business plan is a little bit different from the rest. Why? Because it’s specifically aimed at starting a retail business.
In particular, some aspects that set it apart from many other businesses include inventory, store supplies, sourcing and supply chains, order fulfillment, deliveries and even customer returns.
But what is a retail business plan in the first place? Well, it can be described as a “snapshot of your business”, a “growth plan”, a “forecasting and planning” document, a “strategic blueprint” and many others.
But ultimately this is the document where you transfer all your ideas about your retail store from your head and put them down on paper. This is where you create the roadmap for the journey ahead and it takes special consideration, a lot of your attention and effort as well as time. It is essential to cover as much as you can such as the launch of the business, the market research, the products you’re going to sell, the retail payment systems you’re going to use, and how you plan to keep your retail business steadily growing for years to come.
Why would you need a retail business plan?
Most well-wishers will tell you that creating your business plan for a retail store is primarily aimed at attracting financing from investors or lenders who you will approach for funding your future venture.
However, a retail business plan is much more than that. It should be looked at as a multifaceted document that not only helps you secure funding but which also ensures that you:
- Clearly outline your entire operational strategy from start to finish
- Have a clear and concise course of action
- Gives you a clear direction
- Helps to keep you on track
- Accommodate business growth and change
- Work out what your unique selling proposition is
- Identify threats and challenges and come up with solutions and coping strategies
- Set short and long-term SMART goals
- Benchmark your performance
- And many other reasons.
How to make a business plan for a retail store
In the business landscape, a retail store is a special kind of actor. As such, retail businesses are set apart from other business organisations owing to their nature, customers, operations and much more.
In fact, to create a business plan for a retail store, you would need to consider a range of factors simultaneously in order to create this valuable document.
For example, you’ll not only need to know your target market very well but also your competitors. In addition, you’ll need to have a really well-thought-out marketing strategy alongside a realistic financial forecast.
But if all this seems quite overwhelming, don’t worry. We’ve broken down the various steps and sub-sections to be created for you below to simplify the process and make sure it’s more easily manageable. Let’s take a closer look.
1. Executive summary
The executive summary is the very first page of your retail business plan. It doesn’t go beyond one page because its main aim is, as the name suggests, to summarise all the main points under each separate heading that follows in your business plan.
As such, it’s highly recommended that you use this section while being concise and that you write it last once all the other sub-sections have been prepared.
2. Business/company description
In this part of your retail business plan, you need to set out what sort of business you plan on running. This will include your business’ legal structure. In addition, you will want to create and formulate the business mission, vision and goals.
What do you ultimately want to achieve and where do you see your business in the future?
3. Industry analysis
Next, the more serious prior research comes into play under the industry analysis sub-section.
Here, you’ll need to study your industry as a whole. Factors that you should consider include the size and value of the industry, whether it’s on an upward curve or if it’s experiencing a trough, projections of the industry’s growth in your chosen location(s), what sort of industry players you’re up against, their size and market penetration, etc.
4. Competitive analysis
Once the industry as a whole has been analysed, it’s time to dig deeper and find out who you are competing against. The retail industry is highly diverse but it is also incredibly competitive.
You need to be fully cognizant of your competitors’ unique selling points, who they are targeting and how, whether their targeting efforts are successful, what you plan to offer that they do not (what is your unique selling point or competitive advantage?) and other similar considerations.
5. Market/customer analysis
Of course, once you’ve covered the competition, you also need to segment your audience or prospective customers. While it’s nice to think that everyone is your customer, this is rarely the case.
Customer segmentation happens through the creation of buyer personas or avatars. These are fictional representations of your ideal buyer. Such a representation usually takes into account their genders, ages, socio-economic profiles, income levels, demographics, interests, pain points, hobbies, and more.
You may have a very clear of the products that you plan on offering but have you given any consideration to opportunities where you can cross- and up-sell? For example, if you plan on selling clothing – will you also offer shoes, handbags, belts, bows, accessories, etc.?
You may think that you’ll be a specialty store selling only a handful of items, but you need to make the shopping experience for your customer as simple as possible by offering them as much as possible from one place and not miss out on any opportunities to earn even more from cross- and up-sell opportunities.
7. Sales and marketing strategy
Once you have identified your ideal customer, it’s time to put together a marketing strategy. This can be a complicated process because marketing in today’s day and age is generally done digitally. That’s not to say that you shouldn’t use offline marketing channels, but you shouldn’t ignore them either. Furthermore, having a social media presence is critical.
As is the need to collect customer data and build an email list in order to promote customer loyalty, communicate new offers or discounts and generally use the opportunity to tell your audience about your brand story i.e. why you’re in business.
Other aspects to consider are your local search engine optimisation efforts, developing a website, possibly creating a blog with valuable content, utilising paid ads and using public relations strategically.
8. Financial projections
By far the most difficult sub-section in your retail business plan to create is the financial section. This is because you need to consider both the short- and long-term forecasts and projections of your business’ financial growth.
You’ll need cash flow statements, determine when you anticipate you’ll break even, how much you’ll need to get the business started, how much you’ll need in order to survive for the first couple of months while your business takes off, monthly sales and revenue forecasts and everything else that falls under the finance label.
9. Operational outline
The operational outline details how you plan to conduct your business on a daily basis, as well as on a longer trajectory. Factors to consider here include basics such as your store’s days and hours of operation, who your suppliers are, and how you’ll get stock or inventory to your store.
Other aspects to consider include the equipment you’ll need to keep your business running smoothly. An often overlooked example is the need to cater to an increasingly cashless clientele through the use of technology such as card machines for card payments.
When choosing your POS provider, ensure that you get the best terms from them such as instant settlement of funds and free perks such as a business card that you can immediately use to access the funds you’ve earned through your sales.
10. Management and ownership
In this section of your retail business plan, you need to provide information about yourself (the owner), any partners you may have on board, the management structure of your business, and include information about the staff on the floor.
You may think about providing a copy of your CV here as well and reiterate what prior experience, skills, knowledge or insights you bring to the table that will help position your business competitively in your chosen sector.
As the name suggests, the appendix is the last part of the retail business plan where you provide all supporting documentation. This may include contracts with your suppliers, a detailed marketing plan, human resources and staffing information and everything else that supports your idea.
While you may search for a retail business plan template online, the bottom line is that these 11 sub-sections are the most important ones to include. There are multiple templates online and while some may include new sections while excluding others, these are the ones that you should not ignore.
They form the backbone of your retail business plan and they’re essential to present a comprehensive and well-thought-out business strategy to potential investors while giving you a lot of clarity about your business venture going forward.
Disclaimer: Please be aware that the contents of this article and the myPOS Blog, in general, should not be interpreted as legal, monetary, tax, or any other kind of professional advice. You should always seek to consult with a professional before taking action, since the particulars of your situation may materially differ from other cases.