Chapter OneRetailing: How It Really Works and How It Can Work for You.
In This Chapter
* Exploring the dynamic nature of retail
* Getting started in the retail business
* Assessing your "retail readiness"
* Introducing strategies to guide your retail decisions
From the challenge of finding the right merchandise, to the thrill of buying it, to the excitement of unpacking it and showing everyone (especially the customers) what you bought, retailing can be one of the most exciting and exhilarating experiences you ever have.
Nevertheless, between 12 and 17 percent of all new businesses fail within the first two years. Why? Because people don't spend enough time learning about the business to find out whether it's right for them. This doesn't have to happen to you. The retail business is a wonderful business - if you're the right person for it. In this chapter, I give you an idea of what the retail business is all about so that you can decide whether retail is right for you.
Looking at Some Advantages of Starting a Retail Business Now
Is this the golden age of retail? You bet it is! Society is more accepting of change and innovation today than ever before - there are no limits to creativity where retailing is concerned. This is the greatest and most lucrative time for independent retailers to succeed than any other period in our history. That is due to the power and potential of e-commerce. The retailer's marketplace and the way we communicate with that marketplace have changed dramatically in favor of the creative merchant. No more of the "that's-the-way-we-always-do-it" mentality! In fact, this generation is used to change - it accepts it, expects it, and wants it.
Retailing is a way of life with boundless opportunities:
The newest retail battle cry is "making money from the front door and back door." That means retailers today are no longer solely dependent on the traditional ways to market their businesses. We can truly create customers for life wherever they might move, so we can become less dependent on people walking through the front door.
Today's retailing world is made up of people with many different talents, skills, and approaches. The new kids on the block don't always have the finest college education, nor do they always come from major cities of the world. (After all, even the now-mighty Wal-Mart originated in Bentonville, Arkansas.) But in the retailing world, ordinary men and women can become extraordinary. The new kids can either push the established and already successful stores to become better, or they can put those old stores out of business. Great stores (big or small) thrive, and there's plenty of room for great stores. The time is ripe for new success stories!
Setting Up a Retail Business
The essence of retailing is buying something and reselling it for a profit. What you sell, where you sell it, how you price and display it, and who you sell it to are all factors that help make retailing an extremely interesting challenge. The old retail business expression "Retail is detail" is as true today (or more so) as it was 50 years ago. And as bright new entrepreneurs enter the retail arena, each one brings a new detail to retail - a new wrinkle in the way to do business. Retailing is about creativity, and if you like change, you will love the retail business. In fact, creativity is the giant-slayer of businesses that are too set in their ways to change.
But while retailing can be a lot of fun, if you want your business to succeed, you need to make sure that you've tightened a few serious nuts and bolts. To help you do this, here's a handy to-do list of the basic steps you must take to create a successful retail business:
1. Plan your business. First, develop a business plan that forces you to document every aspect of your business. (I show you how to do this in Chapter 9.) Early in the planning stage, define what kind of business you wan t to open and what's going to make you special (as I discuss in Chapter 2), what kind of merchandise you want to carry (see Chapter 7), and what type of customers you want to attract (see Chapter 4).
You must also decide where to locate your business for optimal success (see Chapter 5) and how to design your store to make it attractive to customers (see Chapter 6). And before you get too far in your planning, make sure that you determine the structure of your business (see Chapter 9) and obtain the necessary permits and registrations (see Chapter 10).
2. Validate your ideas. Ask everyone you know what he or she thinks about your idea for a new retail business. Show these people your business plan, but be prepared for negative feedback - even your family members or closest friends will often give you the classic, "It will never work." (Perhaps they're jealous that you're trying something they wish they could do.) No matter. You must ask their opinions - they may bring up some important points that you've overlooked.
If anyone succeeds in talking you out of your new venture, your conviction wasn't strong enough to make it work in the first place.
Now is the time to talk to as many professionals as possible. Contact your local state retail association and the trade show or association that services your industry. Many of these groups can refer you to people who will give you an honest opinion. Obviously, now is also the time to share your business plans with your friendly banker. Even if you don't need to borrow money, showing her your plans won't hurt. After your plans have been validated by the appropriate authorities, it's time to execute them (the plans, not the authorities!).
3. Execute your plan. Being successful requires more than just having a great idea. Lots of people have great ideas, but not many of them know how to market and execute their plans. As the ad copy said, "It's NOT how many ideas you have, it's how many ideas you can make happen."
4. Orchestrate your grand opening. Your next goal is to open the store. You must set two dates: one for the "soft" opening and the other for the big splash. For the soft opening, simply open the doors to your business, and whoever comes in, comes in. Taking this step gives you a chance to work out the bugs before your grand opening event that includes the ribbon-cutting, the opening party, and the grand opening sale. No matter how hard you try, preparations usually aren't complete by opening day, and opening a store that is so unready that it looks unprofessional is the kiss of death for any new business. Your grand opening may be short term in duration, but its effect can last forever. (For information on managing grand openings, promotions, and sales, see Part V.)
5. Create your routine. During your first year, you will establish the way your business does things - your policies and procedures. Are they working in practice? Keep a pad of paper by your cash register, and every time you think about a better way to do something, document it. As your business grows, this habit (which requires little effort to create but years to duplicate if you don't start early) will become an invaluable tool. (For tips on how to run your business from day to day, see Part III.) 6. Grow your business. When the newness of the experience starts to wear off and the startup phase is complete, it's time to focus on growing your business. You must now concentrate on advertising (see Chapters 14 and 15), building your brand (see Chapter 3), buying the right merchandise (see Chapters 7 and 8), and attracting the right personnel (see Chapter 12). To maintain your success, you must master the art of selling (see Part V). And in order for your business to stay afloat, you must keep on top of its finances (see Chapter 13). As you've probably already figured out, this is the step that never ends!
Deciding If Retail Is Right for You
So, is the retail business right for you? Or should I say, are excitement, change, and constant improvement right for you? If the answer is "yes," retail is right up your alley. The following questions can help you think more deeply about whether or not retail is for you:
If most of these questions excited you, you will make a great retailer. If, as you read them, you thought, "I can do that," you have retail in your blood.
But if you're thinking, "I just want to open a small gift shop and sell souvenirs - all of this can't apply to me," you need this book more than you think you do. If you think that having some old fixtures from a store that closed and knowing a company that can supply you with some merchandise are good enough reasons to go into the retail business, think again.
Rick's Random Rule #691: Good enough isn't good enough!
Reviewing some reasons for opening a store
Often, people open stores for the wrong reasons. What are your reasons? Are they valid? And just what is a valid reason, anyway? After all, what's right for one person may not be right for another. The following list gives some common reasons for opening a store: