Should You Start a Retail Business?
All new ventures, regardless of industry, come with reward and risk. This is especially true for retail businesses in the current global economy. From budgets and suppliers to location and staff, there are countless things to consider when it comes to making a living in retail. If you’re thinking about starting your very own retail business, be sure to read this article first.
The Benefits of Starting a Retail Business
The retail industry in Australia has seen continued growth since 2004, bringing in approximately $329.6 billion in 2019 - an increase of about $9 billion from the previous year. As well as benefiting from the industry’s burgeoning growth, the skills you’ll develop in retail are transferable across many aspects of your life and other sectors. These skills include but are not limited to leadership, customer service, problem solving, time-management and resourcefulness.
This is all sounding pretty good, right? But success isn’t guaranteed in retail. Below you’ll find a checklist of non-negotiable elements you’ll need to work through when starting your own retail business.
How to Start a Retail Business
1. Perform Extensive Market Research
Before finding a location for your store and refining your products and services, we highly recommend performing extensive market research into your desired industry and competitors. For example, do you want to sell sustainable macramé wine totes? Investigate if other eco-friendly brands are selling similar products in your local market.
2. Define Your Target Market
After you’ve done market research, an ideal next step would be to define your target market. Who is your ideal customer? How old are they? What are their interests? All these demographic and psychological factors will create what is commonly known as your buyer persona, or your target customer.
With this information, you’ll be in a better position to create a strategic marketing plan that talks to their needs, wants and desires – all things which ultimately influence their buying behaviour and impact your bottom line.
3. Choose Your Products
With your target market and industry defined, you’ll be primed to select products to sell to your customers. The wholesale costs of making or sourcing these products is often top of mind when people ask, ‘how do I start a retail business?’ So, make sure you do your research.
4. Find A Location and Estimate Start-Up Costs
Now that you have your product and target market identified, you can shortlist ideal locations for your store and estimate the associated start-up costs. Renting a physical space can add significant overhead costs, which is why many business owners opt to start an online store instead. Global e-commerce industry sales are predicted to reach $4.5 trillion by 2021, indicating the strong potential of online stores. If you’re not sure how to start an online store, employ the services of a professional web developer.
5. Choose Your Distribution Model
Your distribution channels will largely depend on your location and the types of products you’re selling. For example, if you have a physical store location you may opt to keep all your inventory there to sell in person and via your online store.
There are also ways to minimise the amount of storage you’ll need for stock. For instance, e-commerce giant Shopify gives online store owners the functionality to use drop-shipping, which is when customers are sent items directly from the wholesaler.
6. Calculate Your Risk and Return
Your decision to start a retail business will ultimately depend on the risk and return. After working through steps 1 to 5 in this checklist, you’ll have an overview of the costs associated with opening a business in the retail industry in Australia. Compare these costs with your available capital and current cash flow (money that isn’t tied up in a mortgage or investments), and you’ll have a clearer idea if this is feasible for you and your lifestyle.
If you’re ready to take the next step, you may want to set yourself up for success with further training and an accredited qualification in retail. Read all about our SIR30216 Certificate III in Retail Operations.