If you’re thinking about opening a new retail store, start-up costs are an important aspect of financial planning. You need to know what expenses to expect so you can budget accordingly, or you’ll never make it to opening - let alone through your first year. There are plenty of surprising start-up costs with opening a retail store, but this list should help you plan for the major expenditures.
Legal/Accounting Start-Up Costs When Opening a Retail Store
It’s important to keep your business legal, and if you aren’t sure how to do it, you’ll need to hire an attorney to help. While you’re at it, you should probably find an accountant to help you keep your books as sales tax and other fees/forms can be difficult to navigate on your own. The licenses and permits you need will depend on the type of retail store you are opening and your state but may include an Employer Identification Number (EIN), state and local business licenses, a Resale Certificate, a seller’s permit, and a certificate of occupancy. Costs range from $200-2000. If you are working with an attorney to incorporate your business or an accountant to set up and keep your books, plan on another $1000-10,000 per professional service. Don’t forget about insurance either; you’ll need property coverage and coverage for your employees and yourself.
Location Setup Start-Up Costs When Opening a Retail Store
First, you should have enough capital to pay your rent for the first two years as retail stores can take a while to get established and require a pretty extensive initial investment. You’ll also need your initial inventory for the first third of the year (likely one of your most sizable investments but varies dramatically depending on your type of store), a point of sale system (typically around $2,000-3,000) and other technology, janitorial supplies (about $500-1,000 to get fully set up), interior and exterior signage, and any office supplies you need for basic management. You’ll need to account for any remodeling that needs to be done as well. While you are planning out your location, be sure to spend time evaluating store fixtures and store layout so that you can have the best customer experience possible. Purchasing the right store fixtures for your retail store the first time makes a dramatic difference on your bottom line and can ultimately be the determining factor in establishing a successful business.
Marketing Costs of Opening a Retail Store
If you’ll be having a grand opening event, that budget will need to be included. You will also need a website, web hosting, and social media as well as traditional advertising. Depending on which advertising strategy you choose and your own level of comfort with the computer, you may be able to save a lot of money in this department. Just remember that the only way you make money is if people come to your retail store. It may be better to spend money on local advertising strategies so you can increase sales quickly.
Figuring out your start-up costs is only the first step in opening a retail store. Next, you’ll need to make sure your store is set up to maximize customer purchases and loyalty. Learn how we have helped clients choose the right store fixtures and layout to be successful.