Does your entrepreneurial spirit have you considering opening a retail store? Maybe you’re ready to make a long-time dream a reality, or a new opportunity has presented itself. Starting a retail business is a labor of love that requires a huge investment of time and resources. Before jumping all-in, take a moment to assess the market, potential customers, and competition to determine the viability and set the foundation for a business plan.
Is there a need in the market?
Your business idea may stem from a long-loved area of interest, or from an experience where you were unable to find a product or service to meet your needs. Start by evaluating the market you wish to enter and identifying areas that are underserved with not enough options, or with no options at all. Customers make purchases to solve a problem or fill a need – ask yourself if your business idea will offer customers an option they can’t satisfactorily get elsewhere. If you believe the answer is yes, the next step is to put personal opinions aside, and reach out beyond family and friends to determine if there is a demand in the market to fill this gap. Start by gathering valuable information on market trends and what other businesses have done to solve this problem. There are many great resources available online to better understand industry statistics and consumer trends. Speaking with complementary services or reaching out to similar businesses in non-competing communities can help you determine if others have been successful in this area.
Who is the target customer?
Opening a successful retail store is not possible without customers. Speaking with a variety of people to identify your core customer will help shape your plan and value proposition. Understanding your target customer includes thinking about their daily life and the ways your business will meet their needs. One helpful tool is to write a persona of your ideal customer that includes their age, lifestyle, occupation, hobbies, and goals. Then, connect with potential customers that fit this profile – through informal conversations, structured surveys, or focus groups. Approach their opinions with an open mind, as it will help determine if they perceive your idea to be what they need, and more importantly, if they are willing to pay for the products and services you plan to offer. While the true answer arrives when customers speak with their wallets, listening to what they are saying before opening your retail store can help not only confirm that you are on the right track, but also help tweak your plan to ensure future success.
How will you stand out from the competition?
As you start to formulate your business plan, you may have a clear picture of who your competitors are, but it’s helpful to take a step back and think outside the box. Think of direct competitors who are local or within driving distance. Also consider online competitors, or other complementary services that have found alternative ways to meet the demand in the marketplace. Understanding your competition’s strengths and weaknesses, and what your core customer thinks of them, will help you zone in on how your retail store will stand out to customers. Ways to differentiate your business from the competition can include personalized customer service, competitive pricing, and unique product quality and selection. It is impossible to be everything to every customer, identifying your competitive niche will help determine if you have a feasible business idea and build the foundation as you move forward with a marketing plan.
Starting a retail business can be a big risk but can also be very fulfilling. Determining if your idea can be developed into a viable business plan will help set you in the right direction for success. Consider it the groundwork for a solid business plan and successful retail business.
As you move forward with opening a retail store, the next step is to draw up a formal business financial plan. Learn more in our Opening a Retail Store blog and checklist