Owning your own retail business can be an exciting, albeit challenging, undertaking. When you look around at some of the larger brands you can see how shifts in consumer behavior and brand loyalty has changed the success and trajectory of a once rather predictable industry. For instance, Wal-Mart announced earlier this year that they would close 269 locations in 2016, accounting for roughly three percent of their stores.
The retail business for anyone can be rough and tumble, but you don’t have to become a statistic. To help you ensure success in your new retail venture, we’ve compiled some of the most expensive mistakes new retail business owners make, and how best to avoid them.
Mistake #1: Thinking you don’t need to advertise
Advertising is essential for any business to get the word out, and this is especially true for small businesses that are new to the retail game. Marketing is crucial to giving any new business a fighting chance, because it’s such an important way for potential new customers to find you. This might mean advertising in local publications or digital marketing efforts to drive online retail sales. Whatever channels you choose, don’t make the mistake of thinking people will automatically walk in the door, no matter how great your shopping experience or your products are.
Pro Tip: Budget for marketing long before you even open your doors. If marketing isn’t a pre-determined hard cost then it’s likely that you’ll find a reason to cut it out. Many business owners can rationalize cutting out marketing over not paying their rent or electric bill. However, by viewing marketing as a non-negotiable you’ll ensure you can keep paying your bills and then some.
Mistake #2: Not making yourself constantly available
Don’t underestimate the amount of time and effort it takes to start and operate a new retail business. Odds are, you’ll be involved in most areas of the business which will include marketing, sales, finance, human resources, and overall management. You’ll need to constantly be thinking of ways to attract customers, retain them, and do so in a way that generates profit.
At the same time, you’ll be managing the personnel you’ve hired to do all the required administration and paperwork. And don’t forget about the time you’ll be allocating to deciding on inventory, where to put sign stands, analyzing consumer demands, and tracking industry trends. Not having full-time availability to tackle all of these areas effectively is simply a recipe for disaster.
Pro Tip: While understanding and planning for long hours and 7 day work weeks is an important expectation to owning a new retail business, it’s also important to prevent burnout. Having some type of work-life balance is vital, and this can be as simple as hiring an assistant or utilizing experts for the areas you have the least expertise in (like accounting or marketing, etc.)
Mistake #3: Not focusing on customer service
No matter what you’re selling, as a retail business owner you need to be constantly focused on the customer. Letting issues like inadequate staffing or cost containment get in the way of delivering the customer experience your buyers expect is a sure way to prevent them from coming back (or worse).
Make it a point to provide excellent customer service at each and every point of the customer interaction, both physical and digital. In today’s world, all it takes is a handful of poor online reviews to ruin a brand or reputation of a new small business right off the bat.
Pro Tip: Don’t be afraid to “secret shop” your employees. This isn’t meant to catch them doing something wrong, but can instead be used as a training tool to ensure training and expectations are clear and consistent.
Mistake #4: Failure to engage consumers across social and other powerful, influential platforms
Social media is an essential component to marketing any small business, and failure to do so could hurt your credibility big time. Although you don’t have to be everywhere on social all of the time, it’s important to clearly define who your target audience is and meet them on the social networks that they are most likely to be actively using.
This is especially true with the explosion of mobile and smartphone usage in recent years. You’ll want to create a social presence and engage customers outside of your physical store, especially if you’re looking to grow your business on the ecommerce side. Encourage customers to do things like follow your social media accounts and sign up for your newsletter in order to connect and market to them later on.
Pro Tip: Start simple. Don’t feel like you have to be on Facebook, Twitter, Instagram, Snapchat, YouTube, Pinterest, and so on… Start simple by choosing 1-3 platforms that you can really make an impact with. Be consistent, create a plan, and stick to it.
Mistake #5: Not really understanding your customers
Failure to know and understand who your customers are won’t help you in determining what items they want to buy, and you’ll have difficulty deciding on the correct product mix among many other business decisions. You need to get a handle on your customers’ demographics and buying behaviors as well -- not just what you or your friends and family do.
For retail store owners, this starts by simply looking outside at the foot traffic and taking note of customers going to nearby stores. Then take note of the people that are coming into your store. How did they hear about you? Why did they decide to come in? Try to pin down whether or not it was something unique about your business that competitors can’t offer, and focus on those products or offerings. Then, take it one step further and create a plan that really focused on your ideal customers, not just who happens to be finding you. Who are your most ideal customers and how can you get them into your store? That’s where you really want to focus your time.
Pro Tip: As mentioned above, it’s easy to develop what you think is a helpful focus group of friends and family without realizing just how biased this can be. Try talking to people who you don’t know and turning to hard data and research to back up your decisions.
Mistake #6: Inadequate monitoring of your finances
You might think things are going well for your new retail store based on the number of customers you see on a daily basis, but you’ll never know for sure without knowing your books inside and out. You’ll need to carefully monitor financial metrics like Cost of Goods Sold over time to see what direction the health of your business is trending. Common mistakes new business owners make include overestimating future sales, impulse spending during the startup phase, being too passive about receivables and not using a cash-flow budget. Bottom line is that you need to play an active role in your business finances as an owner in order to succeed over the long haul.
All of the mistakes we mentioned here have been repeated countless times by new small businesses in retail. By doing things like dedicating your time, engaging customers on social media, and tracking your finances, you’ll be able to avoid becoming just another statistic in the retail start-up game.
Need help getting started? We can help. Learn more about our resources for retail business owners here.