Part One: Create a Business Plan
Have you ever experienced a burst of creative genius, fabricated something lovely, and had someone say, “Wow! You should sell that”? It’s a great feeling, to know that something you consider a hobby could become a way to make some extra cash. You start selling a few pieces here and there, and people seem to really enjoy what you create. As demand for your creations starts to grow, you wonder, “What if I opened my own retail shop? Could it be possible?”
The short answer is, yes! If you have something creative to sell and believe there is a market for it in your area, you can absolutely open your own shop. All it takes is some imagination, investment, and a whole lot of hard work.
To help you along the way, we are presenting a four-part blog series on How to Build Your Retail Store from the Ground Up. In this series, we’ll discuss the key pieces you’ll need to get your shop up and running. Let’s start with the foundation for your shop – your business plan.
- Laying the Foundation for a Successful Shop
- Why You Need a Business Plan
- How to Write a Business Plan for Your Retail Store
- Move Forward with Your Retail Shop
In a way, building a retail shop from the ground up is like building a house. Once you have the blueprints together (in this case, the idea and products you are going to sell) you can start work on the foundation.
The foundation for any successful business is a business plan. You may want to jump right in and start looking for a storefront, but it’s important to get all of your ideas down on paper first. If the thought of creating a business plan completely overwhelms you, that’s okay. It’s a big undertaking, but we’re here to lay out the steps to help you through.
Maybe you’re wondering, “Why do I need a business plan? I’m just going to sell my product and make money; do I really need to write that down?” Creating a written business plan is important for a number of reasons, all of which will help your shop succeed. Here are some of them:
- Educate Investors
If you don’t plan on funding your shop completely on your own, a well-crafted business plan will help you convince investors and/or the bank that they should fund your shop.
- Seek Employees and Partnerships
You’ll certainly need employees to help you around the store, and partnerships with other local businesses can drive traffic to your shop. Your well-organized business plan can get these people excited about working with you.
- Set Realistic, Attainable Goals
Laying out your entire plan on paper can help you set clear goals for your new business. It also gives you something to go back to when it’s time to re-assess those goals.
- Create a Timeline
Your business plan can help you create a timeline for getting your shop up and running. Define a target opening date, and work backwards from there.
- Stay Organized
Your business plan will be an important point of reference for you during the process of starting your business. With everything documented, you won’t have to worry about forgetting a step.
Now that you know why you need a business plan, let’s talk about how to write one.
When you’re ready to start writing your business plan, it can be difficult to know where to start. To save you from staring at a blank page for a while, here’s a simple outline to follow when writing your plan:
- Executive Summary
- Company Overview
- Market Analysis
- Products and Services
- Marketing Plan
- Logistics and Operations Plan
- Financial Plan
You can also find free business plan templates with a quick Google search. Keep in mind that there is no right or wrong way to build a business plan. Feel free to do some template research and pull pieces that you like from different sources as inspiration for yours. For this post, we’ll stick to the example outline above. Let’s take a deeper dive into each of those pieces.
The executive summary is a short section of your business plan, designed to give the reader a taste of the information inside. But, don’t judge it by its size. This is possibly the most important part of your business plan. In fact, potential investors may only ask to see your executive summary; so make sure it is readable, concise, and informative. This section of your business plan should inform the reader of what your business does, where it currently stands, where you aspire to be in three to five years, and why you will find success. When constructing your executive summary, be sure to include these points:
- Mission Statement: Explain what your business does and why you are in business.
- General Company Information: This is information about where your business is located and who is involved. You can use this section to briefly share the story of how your hobby became a business.
- Products and Services: Include information on your product – what you sell, and who you sell it to. If you plan to expand to offer additional products, you can share that information as well.
- Financial Information: Especially if you are on the hunt for investors, be sure to include your funding goals and other pertinent financial information at the end of your executive summary.
- Future Plans: Leave your reader with an inspiring statement on where you plan to take the business in the future.
Remember, you don’t have to stick to this format. If you feel there is other information that is important to include in your executive summary, go for it! One last tip – even though the summary comes first, write it last. That way you’ll have an easier time summarizing the information included in your business plan.
The company overview is a high-level explanation of who you are, what you do, and why you do it. This section should show the reader what’s different about you and why you’ll be successful. Here are some ideas of points to include in this section of your business plan:
- Your business structure (i.e. sole proprietorship, general partnership, limited partnership, or incorporated company)
- What you sell
- Your industry/competition
- The vision, mission, and values your business will uphold
- History of your business
- Short and long term S.M.A.R.T (specific, measurable, attainable, realistic, timely) business goals
- Your team, including any key employees and their salaries
Use this section to explain what makes your business unique and why people should be excited about working with you!
Potential investors or partners may not ask to see the market analysis section of your business plan, but it will end up being one of the most helpful sections for you. For this section, you will complete research and gather information on the market for your products. Make sure you thoroughly research and make informed estimations to document the following:
- The size of your potential market
- Your ideal customer profile
- The trends and trajectory of the industry
In this section, you’ll also want to complete a SWOT analysis. This is a documented chart of your businesses strengths, weaknesses, opportunities, and threats. Your SWOT analysis should look something like this:
Strengths (Internal factors)
Weaknesses (Internal factors)
Opportunities (External factors)
Threats (External factors)
Products and Services
In this section, you will also want to complete an analysis of your competitors. Who is selling similar products in your area? Who sells similar products online? Include a list of businesses you would consider direct competitors and how you plan to make your shop stand out from theirs.
It’s obvious what you’ll need to include in this section – your products! If you are going to be selling many different kinds of products, include a brief description of each. You can write more detailed descriptions if you’re only offering a few different products.
Also within this section, it’s a good idea to go into detail about your customers. Consider the following:
- Who is your ideal customer?
- Where do they live?
- Where do they work?
- What is their age range?
- What is their level of education?
- How much do they earn?
- Do they have any common behavior patterns?
- How do they spend their free time?
- What technology do they use?
- What are their values, beliefs, or opinions?
You may not be able to answer all of these questions straight away, so don’t be afraid to make educated guesses based on your experience and research.
Investors may want to know how you plan to market your new business. A good marketing plan will focus on your ideal customer and how to engage them with your business. For example, if you have learned that many of your customers are avid Facebook-users, you should include a budget for Facebook ads in your marketing plan. Here are other items you will need to include:
- The price of your products
- The products you are selling
- Your plan for getting the products in front of customers
- The location where you will sell your products
If you plan to sell your products through different channels, such as a brick and mortar shop and an online store, be sure to include that information here as well.
The logistics and operations plan portion of your business plan details all aspects of your business operation, from gathering supplies to tracking inventory. Answer the following questions in this section:
- Where do you get the materials you need to produce your product?
- Will you create, manufacture, wholesale, or dropship your products?
- How long does it take to produce your products?
- How will you handle a busy season or demand spike?
- What tools and technology do you need to get up and running?
- How much inventory will you keep on hand and where will you store it?
- How will you keep track of inventory?
If you’re not sure how you’ll handle inventory or payments, we can help with that! Electronic Merchant Systems offers complete solutions that can both process payments and help you manage your business.
This will probably be one of the most important sections of your business plan for investors. The amount of detail you need to include in the financial statement portion of your business plan will vary based on your audience and goals. However, investors will typically want to see these three major aspects of your financials:
- Income statement: details your revenue for a specific time period. If you don’t have revenue yet, forecast this information based on your plan for reaching customers.
- Balance sheet: shows how much equity you have in the business. List your assets (what you own) versus your liabilities (what you owe). Assets – Liabilities = Equity
- Cash-flow statement: details when revenue comes in and expenses go out. Again, if you don’t have revenue yet, you can forecast this information. You may also find it helpful to forecast your cash-flow statement as you move forward with your business to plan for gaps and adjust operations as necessary.
We hope that you find this information helpful in building the foundation for your new business. Remember, it’s YOUR business, so adapt the plan however you see fit. At the end of the day, your business plan is a document that represents you and all you hope to achieve. So, take your time, do your research, and put your best foot forward.
Are you eager to learn more? Visit our blog again next week for post number two in the How to Build Your Retail Store from the Ground Up series, where we will discuss building the frame, walls, and roof for your business through choosing a location and planning your shop design.