How to write a retail business plan
If you’re thinking of how to write a retail business plan for your store, it’s essential to have a well-planned business strategy in place. A detailed retail business plan can help you secure funding from investors and banks and provide a roadmap for achieving your short-term and long-term goals. Your plan should cover operations, growth, finances, funding, and objectives for 6-12 months. Creating a comprehensive retail business plan can increase your chances of success and stay on track toward reaching your business objectives.
What is a retail business plan?
A retail business plan is a comprehensive document that lays out the objectives and goals of a new business owner. It typically covers the business idea, background, financial information, and the guidelines and rules that the business will follow.
Why should you create a retail business plan?
If a company seeks a business loan or investors, presenting a comprehensive retail business plan is beneficial. This demonstrates to potential investors and loan officers that your business concept and structure have been carefully considered. A well-crafted retail business plan can also mitigate the risks associated with starting a business by accounting for all aspects of operations from the beginning.
Here are some critical elements of writing your retail business plan
We have compiled essential tips for how to write a retail business plan to help establish a successful organization.
Give an overview of your company.
The company overview section of your retail business plan is of utmost importance. It should highlight how you want your business to be perceived by the public, including your brand guidelines, logo design, vision/mission statement, proprietorship and business legal structure, design, and layout. In this section, it’s crucial to list the leaders of your team as well as any company ownership and percentage shares. If you’re having difficulty creating a value proposition, consider a unique retail shop you admire. Take note of the elements you enjoyed and the market position you want to incorporate into your retail business plan.
Create an organizational structure.
Suppose you are going to operate a thriving retail business. In that case, the bank and funding partners will want to know your entity status, company type, entity ownership, formation date, and legal structure. Will you operate as a nonprofit, self-employed, sole trader, partnership, private limited, or limited liability company? Choosing a business entity determines leadership responsibilities, business model profitability, and tax declaration requirements.
Additionally, you must include your hiring plans and how many team members your retail shop employs, whether on a full-time, part-time, or contract basis. Who will serve on the management team? Who will collaborate with the leadership? How will the unit operate daily (i.e., with daily team huddles, weekly cash flow reviews, and monthly development plans)? What ongoing governance oversight is needed to support the company’s operational structure?
Describe your business model, products, and services.
Your business model is how you create income. Most of your readers, especially banks and investor partners, want to know what type of retail business you operate, what customers will buy, and what additional services you will offer at your retail store. Within your retail business plan, you should provide comprehensive details on the items you will be retailing and how you expect customers to purchase the products (i.e., debit card, gift cards, buy now pay later Klarna).
For example, if it is a pet store, include whether there will be food, beds, toys, accessories, and other onsite retail services (i.e., grooming suite, vets, doggy daycare, product delivery to home service). Will customers be able to buy medicines and larger bulk pet supplies at your store? What range of products will you have in stock (i.e., Mars Pedigree, bird food)? What about farming animals’ feed supply and hay? You aim to show that you have a good grasp of your retail business product offering and can comfortably describe your store layout and product catalog so the reader gets an idea of your retail business.
To ensure successful retail business shelf fulfillment, it is essential to provide the reader with specific details on strategic partners, local suppliers, wholesale companies, and initial contract conditions. You should consider whether your items will be sourced locally or shipped from abroad and if there are any holding periods before you can sell the goods. It would be best to have a plan for controlling stock, waste, and damage and for any short-shelf-life products or slow sellers.
Additionally, be sure to have a clear pricing strategy that considers the costs of purchasing the goods and the desired retail price so that you can accurately describe your margins. You may also consider offering promotional discounts, seasonal sales, retail store memberships, loyalty schemes, and at-home delivery or online ordering for store pickup services to attract customers.
You must show your expected sales forecast within your financial plan to detail your daily/ monthly/ annual revenues.
Include market research for the target market, competition, and industry analysis.
As you write a retail business plan for your store, conducting a thorough market analysis is crucial. This involves delving into your primary industry, target audience, competition, and location. By understanding these factors, you can showcase the potential demand for your retail business and give confidence to potential funders that your proposal aligns with the local economy and presents an appealing opportunity.
Knowing your target market and ideal customers:
Based on feedback from our clients, we understand that many retail business owners tend to have a broad target audience, such as all locals or pet owners, as demonstrated in this retail business plan example. However, narrowing your focus to a specific group of customers is often effective. This helps you better understand your audience and tailor your marketing efforts to their needs.
To do this, it is essential to identify your target market’s attributes and buying habits. Collecting data on customer demographics, such as age, gender, marital status, education, and job level, as well as their purchasing habits, including frequency of shopping, browsing preferences, and buying tendencies, can provide valuable insights. By doing so, you can refine your business proposition to meet the needs of your ideal customers better and increase your chances of success in the market.
Industry analysis and sub-segment:
Industry analysis involves qualitative and quantitative evaluations of your retail market. This includes examining the industry’s size, upcoming retail trends, sales patterns, and growth opportunities. It’s essential to differentiate your business model by considering factors such as offering cheap, bulk bargains or luxury goods. Once you understand the industry well, you can focus on specific product categories and how they can benefit your business.
Consider customer analysis to determine how to develop a product mix that aligns with industry trends, such as offering organic or plant-based foods. You can also leverage different selling channels, like social media and websites, and in-store point-of-sale systems for wholesale orders. You can secure the resources needed to grow your business by demonstrating profitability and success metrics to funding partners.
An excellent retail business plan will include a competitor analysis. At a minimum, you would want to review two competitors to see how your business fits the market demand. These could be direct (other pet stores) or non-direct (supermarkets selling similar products).
When analyzing your target retail market and location, research which of your competitors has the most significant market share, how close competitor retailers are to your retail location, and what competitive advantages your company brand has over these competitors.
Another good idea is to include a SWOT analysis. This strategy tool helps you review your internal capabilities, strengths and weaknesses, and any external opportunities and threats your company can address. As you include the SWOT analysis in your retail business plan, it will help you to reflect on your focus points, prioritize your strengths, and mitigate against weaknesses and external threats (i.e., cost of goods, competition) while demonstrating the growth potential with the opportunities (partnership with specific brands, new locations)
Evaluate marketing, pricing, and sales.
This guide will provide strategies to market your retail business and attract customers. Your retail business plan should include a situational analysis of your current state, marketing objectives, process, and tactics. To develop a positioning statement, consider how your retail shop differs from competitors, what sets your products and services apart, and why your business is the best choice for your target customers.
Planning your marketing activities over a specific period, such as a month or a year, is essential. Consider creating an annual plan with monthly promotional activities that align with your advertising, direct mail campaigns, and in-store promotions. For instance, if you sell summer products, you might want to promote items like tick medication and cooling mats before the season begins.
When customers purchase a product, the retail price is the amount they pay for the final item. Unlike distributors or manufacturers, these customers buy the product for personal use, not resale. It’s important to note that there are distinct differences between the retail price, manufacturer price, and distributor price.
When planning your sales activities, consider the different methods you will use to operate your retail business, such as traditional checkout, in-store POS, or online ordering. It would be best to consider the channels you will use to promote your business, including your store website. These social media platforms, like Facebook and Instagram, offer direct mail vouchers, loyalty programs, exclusive promotional events, reward points, free products, and delivery services.
Define operating structure
As you start your retail business, how the business operations will run is essential, as it helps fuel your growth plans and should be included when you write your business plan. Therefore, assessing several local retailers is worthwhile to help determine a custom strategy for your retail business and how customers complete their journey around your store. After all, changing the store planogram becomes much more complex once the shelves and stock are in place.
Supply chain management:
Within this aspect, you will forecast, procure, store, and manage your inventory management. Ensuring your supply chain runs smoothly is the best way to ensure profits. Incorporate how you will control, order, deliver, and address inventory needs, store that inventory in-store or offsite at a warehouse, and manage the product portfolio to ensure you have no empty shelves or redundant products for sale, which helps to ensure you never run out of products or overpay for them.
- Will you manage the product development lifecycle or outsource?
- Do you plan to introduce your portfolio to new stock-keeping units (SKUs)? How will you keep the store secure?
This is an essential part of a retail business. You can do everything manually or leverage technology solutions to streamline your day-to-day operations, from customer relationship (CRM), stock ordering, accounting software (i.e., QuickBooks, Xero, Sage), and customer payments to inventory management.
As a retail business, a plethora of data will be exchanged between your store, suppliers, and customers. Therefore, ensuring you have sufficient data stored securely and compliant with your market legislation (i.e., GDPR) is crucial.
Provide a financial plan within your retail business plan.
Your financial plan helps banks and investors appreciate how your company will make money to realize its growth plans and future goals. For your retail shop, you must complete a thorough financial analysis by analyzing your startup budget needs, ongoing operational expenses, projected sales forecast, salary costs, funding options, break-even point, cash flow needs, and projected profit and loss. A good grasp of your cash flow helps you balance your inventory and staffing needs with available funds.
As you analyze your operational costs, you should consider all aspects of operating your retail store successfully. That includes all resources, inventory, marketing materials, staff uniforms, security, website, supporting technology (i.e., CRM, POS, Email, stock control), and ongoing store maintenance costs. Banks and funding partners would like to know how much your retail store will cost upfront and when you will reach a point demonstrating a return on investment (ROI) and are comfortable with any debt repayment plans (i.e., loans).
Financial Plan Creation:
Your financial plan is typically created in Microsoft Excel, or you can use business planning software like Liveplan. As a minimum 24-month cash flow forecast, some banks and investors may require up to five years of forecast projections. So, checking with your funding partners or the bank’s website first is always worthwhile to develop a robust forecast.
Speak with a Noirwolf consultant to review your retail business plan or explore how the appropriate business planning software, like Liveplan, can demonstrate to investors and partners that your business plan is serious.
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