Starting a retail business or how to a open shop
Tips / 23.12.2022
Dating as far back as the 18th century, retail includes markets, department stores, specialty shops and more.
Aspiring entrepreneurs who are considering opening a retail store will find the opportunity to be financially lucrative and also rewarding by being able to meet their community’s needs.
Whether you’re thinking of boutique clothing, make-up and beauty, accessories, technology, home goods or any other store, there are a few things you need to know in order to open a shop properly.
Table of Contents
How to open a shop in the UK
Those who would like to open a shop in the UK need to follow several steps in order to begin their entrepreneurial journey. Take a look at these steps below.
1. Plan the costs for starting a retail business
Starting a retail business can be a costly endeavour and the financial aspect must be considered from every angle possible in order for you to be as well-prepared for your journey as you can be.
Although you may think of your store’s rent and the cost of your merchandise as your biggest expenses, there are other costs that are associated with opening a retail store in the UK that are often overlooked.
Let’s take a look at some examples of these expenses.
- Costs to set up a store: the costs to set up a retail store include sourcing the right location. However, there are additional expenses that build up and these may include not only the deposit to secure the place but also the costs of remodelling it and making any necessary renovations so that the final result fits in with your ultimate brand identity.
- Ongoing rent/web hosting fees: of course, once you’ve remodelled and secured the place, you’ll need to pay ongoing rent (unless you’ve actually purchased the location). But apart from continued rental payments for your physical brick-and-mortar space, many retail stores today also have an online presence through a website. As such, you’ll need to consider web hosting and server fees to ensure you provide a safe and comfortable online shopping experience, too.
- Utilities: utilities such as electricity, water, gas, internet, telephone bills, etc. also tend to add up. Small businesses can pay anything from £800 to £4,000 for these bills and this is why it’s important to consider these costs as well in addition to your ability to cover these through continuous sales.
- Insurance: insurance in the retail world is a legal necessity. It is not optional and since there are varied forms of insurance you need to have depending on the staff you employ, the products you sell and other factors, it’s another expense to be added to your budget. For more on the different types of insurance, take a look at our discussion below.
- Merchandise: merchandise refers to the actual products that you will be selling. These are the physical goods that customers will buy from you. Here, you will most likely have established relationships with vendors or merchandisers who will supply these goods for you. It’s often possible to purchase greater quantities at a lower price. But you should also factor in shipping and delivery costs, depending on the location from which you are sourcing these.
- Merchandising equipment: this equipment will depend on your store layout and the products that you’ll ultimately sell. Clothing and apparel retailers will need mannequins and hangers. Others may need shelf space and racks where their products will be optimally displayed. Although often overlooked as well, these are important costs that are necessary to be incurred for the layout of your retail store.
- Employees/staffing costs: your retail store may be small and you may be able to run it yourself. In such a case, it’s highly advisable that you set aside a certain amount each month to pay yourself a salary. However, if your store is a bit bigger, you’ll need to recruit, train and pay your staff. Each of these elements comes at a cost. Not to mention that it’s also a time investment.
- Technology: another often overlooked cost is that of the technology that you need to use to provide your customers with a seamless shopping experience. Of course, we are talking about the payment channel and with this comes the need to ensure that you have point-of-sale (POS) devices available for payment at your store. Luckily, depending on the provider you choose, your POS device can be quite affordable and you’ll be able to enjoy things like instant settlement in your free merchant account with a free business card. But for more on this, take a look below.
- Marketing: many small retail business owners often overlook the importance of marketing their business. But in our digital age, this is essential. Having an online presence through a website, ensuring that your store is on social media such as Instagram and Facebook and using Public Relations to bring more awareness to your store are essential elements with associated costs that can build up.
2. Retail business registration and licenses
Of course, once you’ve outlined what budget you’ll need in order to get started, you’ll also need to take the very important decision of what sort of business structure your retail business will follow. There are several options you can choose from, depending on your willingness to take on personal risk and responsibility for your business. These options may include the following:
- Sole tradership: there are both pros and cons to being a sole trader. On the positive side, if your business does well, your profits will be entirely yours to enjoy. However, on the downside, if your business does not perform as well as it could and you have debtors knocking on your door, you’ll be personally held liable for these outstanding amounts. As such, this means that there is no separation between the owner’s personal assets and the business’ assets.
- Limited company: this is a more sophisticated business model in which there is a clear separation of your personal assets and those of your business. Should your business fail, your personal assets will remain untouched and this provides a sort of safety net for you. But what’s also important to consider with this business structure is that your profits will be taxed at a rate of 20%.
- Partnership: when it comes to partnerships, you’re not in business by yourself. Instead, you’ll be working with one or more partners together. As such, profits will be divided according to each partner’s shareholding. In addition, it’s also advisable to have a plan for when issues arise and one of the partners chooses to opt out of the business altogether. For this, you may need the services of a lawyer to draw up your partnership agreement.
3. Create a business plan and a marketing strategy
You’ve now chosen your business structure and you’re ready to proceed to the next step as to how to open a shop. This step involves creating your retail business plan, which will also ultimately include your marketing strategy. The key elements of a retail business plan include:
- Executive summary
- Business description
- Industry analysis
- Competitive analysis
- Market/customer analysis
- Sales and marketing strategy
- Financial projections
- Operational outline
- Management and ownership
Although your retail business plan will not be set in stone once created and will rather be considered a flexible document that you can continuously adjust with the growth of your business, it’s essential that you pay careful attention to two of its elements. These are the sales and marketing strategy and the financial projections.
With regard to the sales and marketing strategy, it’s crucial that your physical store is supplemented with an online store that has its own secure webpage and where you can showcase your products and create a smooth checkout process for your customers to make online sales. Luckily, you can use myPOS’ online shop offerings to help you do this easily, quickly and for free.
Remember that you also need to think of a shop name that hasn’t been used by anyone before, create your brand story, work on your business’ mission and vision, create digital elements such as your logo (which must be used consistently) and continuously update your social media channels and website with new store developments.
Hence, your marketing strategy needs to be an integrated process to supplement your in-store product offering and to ensure consistency and congruence between the two for a more streamlined shopping experience.
4. Find a location
The very next step will be finding a location for your store. In this step, you’ll need to undertake thorough research to ensure that you optimise your sales opportunities.
With this in mind, you need to spend some time carefully exploring areas where there is high foot traffic as well as locations where your products will be in demand. This will tie back to the industry and competitor analysis mentioned in your business plan.
Why? Because studying your industry and knowing where the demand lies for your product is crucial to ensuring you are perfectly positioned to meet that demand. Furthermore, you need to ensure that there is limited competition for your products in your area.
Alternatively, if there is competition, you need to be sure that you position your products by emphasising their unique selling points and features and stand out from the competition.
Areas that you might consider when looking for a location are high street stores, malls or somewhere convenient for shoppers to stop by your store in a local community. Other factors to consider are available parking space, ease of access, signage and branding, etc.
5. Setting up a shop
After you’ve spotted the perfect location, it’s time to set up your retail shop. This is where all the factors mentioned above come into play. Start by focusing on the outside.
Is there sufficient lighting outside your store to make it warm and inviting? How big, prominent and clear is your signage? Do you use scents in your store? Will you hand out freebies to every customer that walks in? These are small touches that can play a big role in a customer making a purchasing decision.
Once the outside and the entrance are covered, look at your interior. Of course, you’ll need a back room or a place for storing your merchandise. But what about the physical layout of the store? This is where careful consideration comes to the fore. You need to consider positioning similar items together to encourage up-sell and cross-sell opportunities.
It’s also worth exploring your retail store’s “hot” and “cold” zones where you either get a lot of traffic or very little traffic, respectively. Re-arranging your products so that your entire store becomes a “hot” zone will be a highly effective sales tactic.
Furthermore, consider your customers’ payment experience. Think about using a POS system or card reader in your store. It’s not only great for keeping track of your sales. It’s also an excellent way of reducing queues and time spent waiting to be served.
6. Consider insurance for your small business
- Public liability insurance: this refers to visitors to your store who may experience an injury or who suffers damage while inside your premises during business operating hours.
- Professional indemnity insurance: this type of insurance is not always compulsory but it’s a good way of covering yourself if your product causes harm or injury to someone outside your shop.
- Employer’s liability insurance: this refers to protecting yourself against claims from employees who may be hurt or injured while on the job.
7. Create a merchant account and buy a payment terminal from myPOS
And now, as promised, we delve a bit deeper into the importance of purchasing a POS terminal. There are many reasons why this is an essential element of your business.
In fact, some sources indicate that there will be a 46% increase in contactless payments by 2027. This is a staggering figure and it means that you need to be prepared to take these payments or risk losing out on sales.
Luckily, with myPOS, we’ve got you covered all the way. With our variety of card payment devices, you’ll be able to take all forms of payments – chip & PIN, contactless, mobile, etc. All this with an instant settlement of funds.
What does this mean? It means that as soon as the card reader has read the customer’s card and the cash is transferred, you will have immediate access to it through your free merchant account, which you can access with your free business card.
All our POS terminals and even myPOS Glass (enabling you to take payments through your smartphone) are PCI compliant and safe, both for you and for your customers.
Offering convenient payment options means you can quickly process payments to minmise checkout times.
It’s also a great way of keeping track of the products you’ve sold, enjoy access to reports and analytics, which will ultimately help you with forecasts and customer insights.
Setting up a shop in the retail industry can be a very exciting time for you, indeed. With the pandemic behind us, more and more people are returning to physical brick-and-mortar stores and enjoy the ability to help support businesses in their local communities which offer unique products that give them a competitive edge.
To be able to effectively cater to this clientele, you need to ensure that your shop is optimised for sales. This necessarily means that you’ll need to invest in a POS terminal that takes your business to the next level. With myPOS, this decision becomes a breeze not only because of all the options we have on offer but also all of the many perks that come with being a myPOS merchant.
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.