A successful retail business depends on a precise mix of inventory selection, marketing methods and operational procedures. Your great product selection won’t do you any good if your overhead costs are too high or not enough people know where you are. Creating a thorough business plan that addresses all of the areas of retail management will help you maximize your sales, control your costs and optimize your profits.
Create outlines for separate operations and development sections for your retail business plan. Under operations, divide your contents by typical business functions such as accounting, administration, marketing, legal, human resources and technology. Divide your development contents into inventory selection, advertising, promotions and public relations.
Write the tasks associated with each operational area of your business. For example, include budgeting, cash flow management, debt service, credit management, taxes, payables and receivables management and payroll under accounting. Include inventory selection, marketplace research, pricing strategies and brand development under marketing.
Determine who will handle what duties for your business. If you have no staff, using only hourly clerks, list the administrative and development tasks you’ll need to farm out to contractors. Get bids from contractors to determine what it will cost to hire them. For example, contact a technology company to determine your costs for having a website, taking credit cards, using a point-of-sales order system and generating invoices and receipts.
Write the operations section of your plan listing the day-to-day duties for addressing each area you listed in your contents section, the long-term goals for each area and the costs to execute these operational responsibilities.
Write the development section of your plan. Start with your market research, which will help you determine what products you’ll sell, who your target customer will be, who your competition is, what brand you’ll create for your store and what pricing strategy you’ll use. Create plans for advertising, promotions, social media campaigns and public relations efforts. Include specific marketing tactics, such as print advertising, manufacturer’s rebates and co-op advertising, online sales, buyers’ clubs, cross promotions, cause marketing and in-store promotions.
Set an inventory strategy based on the profit margins you need from the products you sell. Create a formula that measures the shelf space footprint of each product you sell against its profit margin and sales volumes. For example, if two products cost you the same to buy, sell for the same price and generate the same number of sales but one takes up twice the shelf space, the smaller item will be the better option for you, letting you sell two other products in the place of the one larger items you’re replacing. Create a spreadsheet that tracks your sales by these parameters to guide you in inventory management.
Review your plan as if a new owner was taking over the store. Determine if the plan is complete enough for him to run the business from the plan. For example, he could only create a pricing strategy that works with your brand strategy if he knows what your overhead costs are. Using that information, he can set prices that align with your brand and provide the gross profits he needs to stay in business.
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