Business Plans for Retailers

Developing a business plan specific for a retail location is somewhat of a difficult undertaking. This is primarily due to the fact that one of the more complicated aspects of developing this type of business plan is determining the number of people that will come into the store every day and make a purchase. One of the other complicated calculations that needs to be made is how much each customer will spend every time they come into the store. As such, developing this type of business plan can be difficult for most new entrepreneurs. On a quick side note, this website has a number of specialized Excel models that can be used to help a entrepreneur determine their anticipated revenues, expenses, and profits.

One of the key things when developing a business plan specific for a retail store is also discussed how the business will focus on online sales as well. These days, almost all people have some level of access to the Internet and can make purchases online. As such, many people now almost exclusively shop online and it is imperative that a retail location have functionality on their websites so that the entire inventory is available to any potential customer. Additionally, many people now go to stores to simply take a look at products and then will return home to make the purchase online. By maintaining an online presence you may actually have customers that come into the location and decide to make the purchase online if they are uncertain at the time of buying something while they are at their store.

As it relates to retail marketing, most entrepreneurs develop a substantial marketing plan that allows for the retail store tree very well known within its local and regional market. This includes the use of online marketing, traditional print marketing, as well as radio and television marketing. As people are bombarded with advertisements these days – it is imperative that the entrepreneur developed a highly focused marketing plan that will effectively target people within the demographics outlined within the business plan. Many entrepreneurs that do not have a complete understanding of marketing will often hire a marketing firm or advertising agency to develop campaigns on their behalf. This can be an expensive undertaking, but the return on investment can be substantial if it is carried out properly. Usually, most advertising agencies and marketing firms charge a fee equal to 10% of the total advertising and marketing budget.

Within the business plan specific for retail business, a substantial amount of local and regional market research needs to be completed. This includes taking an overview of the demographics within the area including population size, population density, annual household income, median family income, median household net worth, age demographics, gender demographics, and related metrics of potential customers within the target market. This section of the business plan should also include a highly in-depth overview of any competitors to the retail location. This discussion should also include big-box stores and online retailers that may carry the exact same products but at a substantially reduced cost. This is one of the key things that any bank or investor is going to want to see when they are reviewing your business plan for potential funding.

As it relates to the financial model that is used within this type of business plan, any potential funding sources going to want to see a full profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, business ratios page, and return on investment metrics that are common to most business plans. One of the key focus is for a retail location should be on the amount of inventory that the business is going to have it any given time. Most financial institutions are only willing to put up a certain amount of capital as it relates to inventory acquisitions. One of the other metrics that is commonly included for a business plan specific for a retail business is inventory turnover rate. This is an important metric to note for a retelling entrepreneur given that they are going to need to estimate how much inventory for each product they are going to need to carry at any given time. This is especially true among slower moving products with smaller amounts of inventory are going to be held. A certified public accountant can assist with the development of this metric given that they usually have a significant amount of experience when working with potential customers that are dealing with retail businesses. Prior to submission to any funding source, a certified public accountant should also review the business plan to make sure that it falls in line with generally accepted accounting principles.

One of the hardest things for most people that are developing a business plan specific for a retail location is determining how much inventory and what products they will carry at the onset of operations. It is imperative that the entrepreneur source products it will be very in demand at the onset of operations given that most retailers do not have the luxury of sitting on large inventories are not moving as quickly. Again, one of the best ways to be able to move inventory that is sitting for a significant period of time is to maintain a broad-based online platform that allows for e-commerce sales.

The retailing industry is facing a number of challenges as online retailers become more prominent. As such, the businesses that do best are those in which the individual wants to actually see the product, test the product, and go home with it that day. Smaller purchases are usually relegated to online businesses these days. However, specialty retailers often do very well given that many big-box stores and large online retailers do not carry highly specialized products. As such, entrepreneur that is looking to establish a unique retail location can still thrive in most economic climates.

Finally, it is important that within the business plan the entrepreneur focus on what they will do in the event of an economic recession or sales slow down. This is going to be one of the key things that most funding sources are going to ask about when they are reviewing the business plan.