Opening a retail store is a dream come true for many people, especially if you’re selling products which you’ve designed and developed yourself. Funding is one of the biggest barriers for aspiring retailers and without enough investment behind them most businesses won’t be around for long. The best business idea in the world will fail if you don’t have the tools to make your vision a reality. Budgeting is obviously an absolute must, but there are some costs which get overlooked by entrepreneurs again and again. Here are 9 of the biggest costs you’re going to face when opening a retail store.
Location is everything when it comes to setting up a retail store. Securing the right premises in the right area will have a direct impact on the level of foot traffic you benefit from, but you will pay more for the best locations. You’re likely to be leasing your property if this is your first retail store, but you’ll still need to pay the deposit, and for any decoration or remodelling you want to do.
The monthly rent for your shop is a big expense and is usually calculated based on the square footage of the premises and its location. For example, if an area has high foot traffic, this will mean a higher price tag on rent.
Just as you do at home, you’ll need to pay for the electricity, gas and water for your store. You should compare utility rates from several different suppliers to make sure you’re getting the best possible price.
How are you going to display products in your store? Will you need shelves, mannequins, hangers, clothes rails or display cases? You’ll also need to consider the labelling and pricing system such as stickers and tags and make sure you plenty in supply.
You need to find the best point of sale system, i.e., the technology processes your transactions as well as keep track of your inventory. There are a few different options on the market but be sure to find one which is easy to manage and offers all the functionality you require now and may need in the future. It’s also a smart move to invest in a security system for your store.
Don’t forget the insurance to protect your store and business such as business property, business income, business liability and business crime, and public or product liability insurance. You may also need Worksafe insurance if you are employing staff.
You need to work out what inventory you’ll need to get the store full of stock and ready to trade and what this will cost you in terms of purchasing it and storing it.
- Employee costs
Depending on the size of your store and the type of products you’re selling, you may be planning to employ staff which will obviously mean you’ll need to pay wages and other benefits. There may also be costs involved in training staff or in the administration of payroll.
A commonly overlooked cost is marketing, but you’ll want to allocate some of your budget to advertising your store and products. You may want to create a website, design a logo, business cards or printed marketing materials and if you are selling online, it will need to include an ecommerce platform.