Feasibility Analysis for Pet Store
Your love of your own pets may have been the inspiration for your idea to open a pet store, but you have to test your idea versus the reality of how challenging it is to succeed in any retail business. All small-business people need to create an annual business plan for their companies. For your start-up pet store, your plan will be combined with a feasibility study, the objective of which is to determine the likelihood your venture will succeed.
Businesses differ regarding the elements that must be in place in order to grow and be profitable. Talk to other pet store owners about their experiences and views on what it takes to succeed. Pay particular attention to the skills and personality traits that are required to succeed as an entrepreneur, and especially in the pet store business. As an owner, you will play a sales and customer service role in your small business. Assess whether you have the gregarious personality and patience required. You will learn in your research that operating a store requires a large time commitment -- your job doesn't end when the store closes for the day. Decide whether you and your family can deal with these long hours.
Collect local demographic data including population, age and income level. You need to be confident that the potential market is large enough to support another pet store. The American Pet Products Association has a wealth of data about trends in pet owners' product preferences, buying habits and the demographic characteristics of pet owners that you can use to determine the products you will sell.
Whether your business is feasible or not depends on whether there is an unmet need in the marketplace of pet owners that you could fill. Visit all of your competitors within a 20 mile radius of your proposed location. Study the types of products and services they offer. Focus on what they are doing well -- and where they fall short -- which can be the basis of your competitive advantage.
Decide what you can do to differentiate your store from established competitors. You could, for example, promote your expertise regarding pet nutrition and help your customers choose the best food for their pets' health and longevity. This immediately elevates your store above the pet food aisle at the large grocery stores, where the customer receives little or no assistance. Because of your limited buying power, it will be difficult for you to compete on a price basis with large stores. The value you provide customers must extend beyond lower prices.
One of the most critical decisions you make is where to locate your store. A mall location might be ideal in terms of customer traffic, but could be more expensive than your start-up venture could afford. In addition, you will need to check into your prospective landlord's rules regarding noise and odors, if you intend to sell pets as well as pet products.
The end result of the research you put into your feasibility study is the forecast profit and loss statement. Preparing this forecast helps you decide whether the potential earnings from the store are sufficient to meet your financial objectives. The forecast for the first year of operations will show you how much funding you need to open the business and keep it operating until it reaches positive cash flow. Decide whether you are comfortable with this financial commitment and where you will get additional funding beyond the amount that you can contribute.