Before you get started, remember that finding a retail space is not that simple, or at least it wasn’t easy for me. I had to go through a lot of studies, sketching up a lot of ideas and necessities. Gradually I came up with few notable points on how someone can prepare themselves to decide on renting a retail space.
What it Costs to Rent a Retail Space
Plan on What it Takes for Retail Business
Estimating and evaluating startup costs for a rental space can be difficult for new retailers or wholesalers. On top of that, as I said there are many pre-requisites, you need to keep in mind. And one of them is to know what licenses and permits are required for your business plan.
But before that, you also need to assure yourself whether your retailing business plan is a viable one for you soon. And I think, for starting up a retail business planning, you can make it from scratch to a complex multi-page document. That’s totally your decision but the points you need to bear in mind are described below.
1. Executive Summary of Legalization
The first and most demanding part before a startup retail business is the executive summary of your business plan. This includes the brief rundown of your business plan and focuses on the key points you have mentioned in the rest of your document.
2. Analyze the Business
In this section, you need to mention the type of your business and describe your business plan in an easy-to-read technique. During the business analysis, it should include your store name, the location, how many employees you need and the type of product/ services you are planning to offer.
3. Have a Financial Plan
Hard to predict but one of the most important requirements is the financial plan for your retail business. This plan helps you evaluate the amount of capital you need for the startup as well as for future needs. If you can create a monthly breakdown of financial requirements then that would be great for predicting how much you may need in the next couple of years or so.
Also, read: Merchandising: Accelerate Your Retail Store
How big of a space do you need? I am just going to address that this is not for the people who want to repair a space out of their homes. I would also suggest that you don’t need to have a retail space to be successful and make money in this industry. You can work in your vehicle, work from home while meeting people at a coffee shop. But a guide is always helpful before starting something new.
1. Look for a Populated Area
You need to have your retail store in a well-populated area where you can grab the most attention of your customers. Some people try to open a store in a very small town and may think, well there’s no store in 100 miles and your one would work fine. But that might prove you wrong.
So, start by looking at vacant properties which may cost you more than a rural area but it’s safe to open a retail store within a more populated area. This may take you driving to the town-side but then again who doesn’t like to work hard for more profit!
2. Space/Store Size
It’s not that you need a huge space for a startup retail business but a minimal one maybe around six to seven hundred square feet will go. Unless you want a big store where people can walk around with tons of stuff hanging on the wall.
But according to your location if the retail space costs you 5000 dollars a month then you are lucky! Because if you can find a small space and it won’t cost you much! Note down this mathematical formula. Total square feet multiplied by Price per square feet and then dividing it by 12 gives you the monthly rent.
That’s why it’s always better to find a small retail space in a high traffic area for your startup retail business. It also lets you have easy access to a huge number of people around you.
Probably the better word for this would be the marketing plan for your retail business. Because before you open a retail store, establish the name of your store. The name of your store matters to the customers. Focus on advertising your retail store. Some people may advertise their business over social media and other retail business owners might spend a few dollars by publishing on the newspapers or in the ROP broadly known as Run of Paper.
With the use of ROP, your advertisement can be placed anywhere in the paper and it helps to reduce the cost of local advertising. You can also use road signs for advertising. Because due to this many customers may notice your store while driving by.
So, in short, you have to calculate a few costs regarding advertisement
- In the local newspaper or ROP
- Using road signs
- The Naming plate of your store
4. Study the Lease Terms
Most retail space rental rates are calculated based on the annual cost per square foot. There are mainly three common lease charges based on the base rental rate and operating expenses which are made up of the taxes, insurance, and common area maintenance. And fundamentally it’s the tenant’s prorated share of expenses. Which is combined with the base rate plus operating expenses.
That gives you your full-service rate or the gross rate. Then you get to calculate the annual total by multiplying that full-service rate by the number of square feet your retail space is in. Dividing it by 12 you get the monthly cost. Now, remember, this method does not consider the intricacies and concessions of some deals but it’s a good place to start.
Lastly, I hope you find your solutions for a start-up retail business and sketch out the costing from the above considerations.
Read more: Small Business Ideas 2020