Starting and running a successful retail business begins with a plan. If you want to get your business off the ground, you have to figure out a way to make it happen. What will the business look like? Who are your customers? How will you earn money? You can answer all these questions with a well-thought retail business plan.
In this blog, you will learn how to create a plan for your retail store. Then you’ll learn about the benefits of having it, and we’ll walk you through the various steps required to make one.
Whether you are an aspiring retailer just starting out or an existing trader looking for investment, this post can help you craft the right plan.
What is a Retail Business Plan?
It is a written document that outlines the information required for a retail business strategy. It’s like a roadmap that tells you (or another reader) what the business is about and how it plans to grow.
A business plan doesn’t need to be set in a retail stone. But it must give readers an idea of the inner workings of the company.
Why should you make one?
There’s a significant value in taking immediate action and diving into hustle mode. Still, some businesses, especially those in retail, have a lot of moving parts. You need to work out a range of details, and in some cases, you need serious capital to start and run your company.
If the plan is only in your mind, then you cannot accomplish these things. It is important to formalize it and get it down on paper for the benefit of yourself and your stakeholders.
The major benefits of creating a business plan are as follows:
To make it clear to you what you need to do.
As we mentioned above, your business plan can serve as a roadmap for getting your business off the ground. Your retail journey consists of many stages, and figuring out how to prioritize and implement everything can be overwhelming.
Coming up with a business plan forces you to be clear about what you need to do, so when it comes time to lay out the steps, you already have a good idea of how to take them.
To test your business strategy.
A business plan needs research and highlights obstacles or issues with your business idea.
As an entrepreneur, you want to look into issues as quickly as possible so that you can decide whether it’s a wise idea or not. Nobody wants a business idea that has little chance of succeeding.
To help you attract investors or secure funding.
A retail business plan is important if you plan to secure funding for your venture (whether through investments, loans, or lines of credit. Creditors and investors need a formal document to understand your idea, which then helps them decide whether to provide you with the money you need.
How can you write a business plan for your retail store?
Now that you can figure out what a retail business plan is and why it’s necessary, let’s talk about how to create one for your business. In the first step, start by listing the different business plan components and what each part requires.
- Executive Summary
This gives the readers an overview of your business. It provides a glimpse into why you started the company and your general goals. Details may vary from one retailer to another, but here’s a rundown of what you can do with this section of your biz plan:
It should be a paragraph or two describing what your business is all about. As an example, let’s say you are planning to start a maternity wear boutique. Your business summary might go something like this:
Lux Maternity is a high-end apparel boutique that caters to the needs of affluent moms. As our name suggests, Lux Maternity can sell high-end clothes to the wealthy.
We aim to capture 75% of the market share and become the go-to store for rich moms.
Your mission and vision
Talk about your business objective and the big aspirational goal you want to achieve. Going back to the Lux Maternity example, the mission and vision of the company might be:
Meeting the needs of future moms-to-be through stylish clothing that makes them feel beautiful and confident.
Make a bullet point list of the primary goals you want to achieve. In the case of Lux Maternity, they may have some of the following objectives:
To create a store environment that makes moms feel comfortable, beautiful, and stylish.
To achieve 75% market share by 2020
To get a 50% profit margin after 1 year
2- Business Summary
Here you reveal more specific details about your retail business. In this section, you will talk about:
Company Structure and Ownership
Whether you’re a sole proprietor or have a few partners on the board, this section talks about these things.
It would help if you also mentioned the legal and business structure of your company. Are you a sole proprietor or corporation? Are you an LLC? Whatever it is, you should mention it in your retail business plan.
You might not have secured your official premises at this stage, but you might want to give readers an idea of where you want to set up shop. For example, Lux Maternity may mention that they plan to set up their store in an affluent part of the city.
Take a moment to talk about what you plan to sell. If you’re a purely inventory-based retailer, this is the part where you describe the in-store products, what makes them so special, and how the retail manager plans to source them. Huh. (Are you producing them yourself, or do you want to buy from suppliers?)
3- Market Research
This section of your retail business plan outlines your target market and ideal customers. It should describe the size of the market as well as the demographic and psychological profile of the people who will buy your products. Consider including the following information:
Focus on researching how big the market is. Lux Maternity, for example, might look at the number of pregnant women in Neptune, CA, each year, then estimate the size of the market from there.
It is also essential to look for companies that sell similar products and cater to a similar market. Who are they? Where are they located? This part of your plan should answer those questions.
Market trends and forecasts
Based on your market and competitor research, you need to predict where the market is going. What will be the market price one year from now? What will happen in 5 to 10 years? What are some notable news or movements in the industry that you can take advantage of?
The Demographic of your Target market
Be sure to have the following information on hand:
- where they live and work
Psychological information of your target customers
You’ll also want to dig into the psychological profile of your customers. What teases them? Will they have to look for your shop? What are their burning needs? Answering these questions will not only strengthen your business plan but can help you determine the right position and strategy for your retail business.
4- Marketing Plan
Now it’s time to talk about how you are going to engage and sell in your target market. This part of your plan should outline:
Your position in the market
Discuss the niche you plan to create. It can be helpful to create a graph that shows your exact position in the market relative to your competitors. Here’s a sample graph of what the Lux Maternity status might look like:
Your competitive edge
Talk about the unique qualities of your store. Make it clear what sets you apart from your competitors and how you plan to take on them.
This section should specify the branding strategy you will be implementing, as well as the style and tone of voice you plan to use in your message.
Discuss your pricing structure. The readers want to know what price range you plan to offer and the margins you want to determine. Your pricing structure should also be mentioned. For example, do you intend to sell the item at the suggested retail price? Do you want to implement Keystone pricing? Whatever it is, now is the time to discuss it.
This section should give the readers an idea of how you plan to set up your business there. Which advertising and marketing channels do you want to use? How do you get people coming to your store?
Sales process and retail experience
Clearly outline the retail experience and sales process you want in your retail store. What will the potential customers notice and do when they enter your store? How do you convert them from watchers to buyers?
5- Management plan
It would help if you also talked about how you want to run your business. This should give readers an overview of the people you will be hiring and what your management structure will look like. You should discuss:
This section should outline your organization’s hierarchy. Consider adding a flowchart that shows what your organization structure will look like, for example, who sits at the top, who answers to whom, etc.
Suppose you already have an executive or management team. In that case, you can use this section to discuss who the team members are and their backgrounds. If you don’t have a sales team yet, you can still outline the roles you want to bring on.
Discuss the various positions you need to fill. If you want to hire managers and associates, mention how many people you need to bring in, their job description, and the qualifications you are looking for.
It would be best to discuss the compensation and benefits you plan to offer, plus the staffing policies and procedures you will implement.
This is one of the most critical parts of your retail business plan. You should describe how your retail store will make money and how much you will make over a given time. This should include:
Capital and startup required.
This section should also detail where you want to spend the capital. In the case of our hypothetical example, Lux Maternity might say they need X amount of capital and plan to spend it on leasing, hiring, inventory, etc.
The numbers don’t have to be exact. Still, they need to make financial sense, especially as you go into their more detailed sections like your break-even analysis and forecasts.
The break-even analysis should show the point at which your company will break even. Keep your costs and sales in mind and plot when you start breaking even. This section helps you create a chart showing your break-even analysis. Consider the following example:
You should also estimate your profit and loss over specific periods. How Much Revenue Will You Make in the First Year of Your Business? What about 2, 3, 4, and 5 years?
Cash flow estimation
Cash flow is vital to any retail business, so be sure to predict how cash will flow into your company. Create a table describing how much cash balance you’ll have for your business’s Months 1, 2, 3, then use your projected sales to calculate cash flow.
Building a business takes work. There’s so much research involved and much more calculations and guesses to make. But when done correctly, your retail business plan can set you up for success. A well-developed plan brings clarity over the months your business is built and can attract the money you need to get started.
So don’t shy away from work. Get down to business and start mapping out your plan for success.