There are numerous different considerations and costs when starting a brick and mortar business. We will delve into them in this article. From what you need to consider to what you can expect it to cost.
Where to Start?
For this article, I am going to assume that you have already decided on what your retail business is going to be and what product and/or services you will sell. But if you need some guidance about how to make those decisions than check out my article “Characteristics of an Entrepreneur”
You will need to have a business plan. It will serve as a road map of every detail required to launch a retail business and is necessary in order to apply for business loans. There are two ways you can get a business plan done; hire a professional to write it at a cost between $75 – $150 an hour, or you can purchase business plan writing software at a cost between $50 – $250.
Open a business bank account. This usually means that an appointment with a bank employee will be necessary. You will need to put at least $50 into the account to open it and make it active. If you can, deposit more money as you may be able to negotiate lower bank fees with a larger deposit.
Form your business entity. Will you be a sole proprietor? Or will you enter a partnership? Or should your business be a corporation? Once you know you can go to a Registries office and pay the requisite fee to start your sole proprietorship or corporation.
If you are entering a business partnership, make sure to read my articles: what is a business partnership, and “What is a business partnership-part 2”. I cannot stress this enough, get a lawyer to write your business partnership agreement. I would suggest that you contact a local law office to inquire about the fees associated with that.
The fee involved at the Registries Office (in Alberta) for registering your business will range from around $100 up to $1000, depending on what type of entity you are starting. There is a lot of information to understand, and to think about, before deciding on what type of business entity you should form. Please consider all the options before proceeding.
Contact city hall to find out what type of business license your city requires you to have. Ask at that time whether any permits are required before opening your business. The fees associated with the license or permits vary from city to city. Now step 4, may require you to have the address where your business will operate from. Therefore you may need to be setting up a lease, or the purchase of a store front at the same time that you are getting your business licence, and permits.
The Next Step
I’ve given up on numbering the steps as they begin to happen all at the same time from here on out. You will need to get insurance, in the form of general business, liability, and worker’s compensation coverage (in Canada). In order to have WCB, you will need the names and other pertinent information about your employees. Different types of businesses have different insurance needs, so you will need to consult an insurance professional.
If you need employees you will need to estimate the cost involved in their pre-opening training. If they require uniforms, you will need to source those out and order them.
Advertising and promotions can get expensive at a quick pace. Set a budget and stick to it while trying to get the most exposure you can for your money.
The lease of a store front is usually set on a per-square-foot rate. The price will vary from city to city, and even within different areas of a city. There are again many things to consider when choosing a location for your business. If you are in a large city you will need to consider your target demographic, the cost of a lease or purchase, parking, public transit, what hours do you wish to be open, and are there set hours that you must be open as required by your lease.
Estimate and budget for your overhead. Overhead is all costs related to running a business. Find out if deposits will be required for the utilities such as electricity, gas, water, and business telephone service.
In a retail establishment, you will require at least one cash register, computer, software, business telephone, and you may want to have credit, and debit card processing set up.
What am I Selling?
Is your business selling product(s), or services? Is your product produced by others? If so, you will need to order inventory and once it is received it needs to be displayed, paid for and sold to your customers. There are a lot of moving pieces to make that all happen in a timely manner. There will be many costs associated with getting your inventory, such as the wholesale cost (COGS), delivery fees, employee time spent pricing and displaying the inventory, and the cost of fixtures, and any leasehold improvements.
If your business is more about selling services than it is about selling products you will need to have qualified staff, and will likely spend more in leasehold improvements, and equipment. As an example, if you are opening a spa, in a store front that used to be an apparel store, you will want to hire estheticians, registered massage therapists, and nail techs. You will need private treatment rooms and some massage tables, perhaps pedicure chairs, and nail stations. There is so much to consider and the timing of everything coming together can become a bit of a nightmare.
An option to stay away from the hassle-both financially and the risk involved with starting a brick and mortar business is to start your own website- Have a look at my review here.
As it All Comes Together
You will need to know if you require funds to live on during the set-up period. This can usually be worked into a bank loan. Make sure to check in to different Government Grants if you are starting a business in Canada, there are also programs that offer loans to new businesses. These programs will require you to jump through some hoops but the hoops are not ridiculous, they are in fact necessary to jump through even if you weren’t seeking assistance. Take advantage of what is being offered, and as a new business owner, be open to listening to the advice of others that have been successful. Don’t be discouraged, be patient, and keep working towards your goals. May all the success you desire become yours in the near future.
Please let me know of any questions or comments you may have.