If you are starting a retail store and require investment, it is likely that you will need a business plan to provide your prospective financiers. The experts at Pro Business Plans have helped hundreds of retail stores to create professional business plans for investment and strategy. This article provides information about what is included in a retail store business plan and how it is typically structured.
The business plan for a retail store depends on a variety of unique factors , including the location, product focus, and positioning strategy. For instance, some retail stores are only offline and located in high traffic areas such as tourist centric locations or shopping malls. Other retails stores are entirely online and will have no offline presence at all. Increasingly, lifestyle retail stores have started to emerge, where they sell select brands and provide a unique shopping experience that targets a niche lifestyle and target demographic.
The business model of a retail store business plan is becoming very complex. In the past, a retail store meant a company that sold things to the community in brick building. Today, there is drop shipping retail, omni-channel retail , and literally dozens of other business models. Investors will want to know the unique aspects of your business that will separate you from the pack and help you to efficiently outperform your competitors by focusing on an untapped market niche or unfulfilled demand. For a modern retail business plan, the business model is why you will outperform other retail stores and your path to profiting from it.
If you have a brick & mortar store, the location can be one of the most distinguishing factors. Having a prestigious location in a major shopping district means that you will likely have many companies that will help to draw in customers, but this may also mean higher rent. In order to select the most appropriate location, you will need to consider many things , and communicate to investors exactly why you selected the location that you did.
The supply chain can actually vary substantially from retailer to retailer. For instance, some retailers implement a dropshipping model, whereby they do not carry any inventory at all. This is only possible with eCommerce stores, where shipping is the exclusive delivery mechanism. Some other retailers have a vertical supply chain, such that they manufacturer the same products they sell. One of the biggest areas that Pro Business Plans sees lacking in plans created directly by entrepreneurs is the absence of an adequate description of the management team. When the plan is presented to investors, this is often one of the most important aspects that are reviewed. If it is lacking substance, largely due to modesty, then you are short-selling the details of your plan.
The marketing section of a retail store business plan is segmented into two separate components. The first section of the marketing strategy outlines the launch of the retail store and what the company will do in order to acquire its first round of users. Retail stores each have a unique marketing strategy to assist in their market entry launch, a period when very few people recognize their brand and a few complaints can form a difficult path. If the retail store is new to an area or has strong positioning, it may appeal to public relations channels.
The second phase of the marketing strategy is to form a way to consistently receive new customers at a low very price. This is accomplished through a combination local focused advertising, pay-per-click marketing, and affiliate marketing. SEO is something that many online stores attempt right away and while important to not delay, one should not to see its positive effects for a period of at least 12 – 18 months.
The launch strategy for a retail store outlines the first three to six weeks since its initial market entry. This period can often be the most challenging to get the company off the ground due to having no reputation and very little brand awareness. These are often aided with a public relations campaign that serves the joint purpose of boosting the search engine presence of digital retail stores.The marketing approach to a retail store can be challenging because many more established retailers will have a larger budget. Your store must determine more creative promotional strategies that are designed to outperform the competition by the exploitation of the latest trends and technologies available on the marketing landscape.
When one thinks of a traditional retail store, branding is not always the first thing that comes to mind, unlike the individual products that they sell. However, the most successful retail stores have managed to establish a brand that reflects their positioning. For instance, Walmart is now a household name that is hardly thwarted by the efforts of lesser known retail brands it may compete against.
If you are presenting your retail store business plan to investors, it is likely that they will request to see at least three to five years of financial projections. These projections typically include an income statement, cash flow forecast, and balance sheet like the samples that we have available for your review. The most effective way to form these projections is to base them on the prior operating history of your company. If you have no prior operating history, you may review the performance of other retail stores.
When performing the comparison, be sure not to use a major company like Amazon , which will leave your company with misguided figures. Do your best to find a company that has a similar model as you and sells similar products. For instance, a clothing retail store that has two locations offline may be compared to another clothing store that has under five locations. If you form the financial forecasts based upon comparable companies, your analysis will be taken more seriously when presented to investors.
When it comes to creating any financial model, the extent of their credibility is correlated with the conservative nature of the underlying assumptions. A very big mistake that new retails stores make is forming wildly optimistic assumptions about the company’s future performance. In our blog post about what a financial model should include , we mention the importance of forming conservative assumptions in greater detail. When preparing the financial model, it may be helpful to use one that has been applied in the past in order to win clients. This means applying stress tests to ensure that your model works under various scenarios and that no functions are broken. If your model lacks this ability, then investors may discover errors in it as they begin to analyze it in greater detail.
Most of the assumptions made in the plan should me associated with a reliable data source. Ideally, the financial performance of similar companies will be used that are of a comparable size and as close to your business model as possible. However, it can be challenging for many smaller companies to acquire this since most comparable companies are private and their financials are confidential. NYU has compiled a reliable database that provides great information to get a start on this.
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