Learn how to open a new shop or retail business

Online shopping may be popular, but there’s sometimes no substitute for the high street. After all, certain goods and services just can’t be bought online, like haircuts or beauty treatments, while other products need to be appreciated in person. If you want to open a shop, there’s a lot to think about, but the right preparation can help you succeed.  

Where do I start?

You start with an idea. Perhaps inspiration has already struck, and you know what you want to put in your shop – if not, it’s probably worth a little more brainstorming before proceeding.

Once you’re ready, it’s a case of following the process. No matter what type of business or products will be housed in your shop, you need to:

• Plan properly

• Secure finance

• Research the market

• Check and adhere to legal requirements

• Take on staff

• Brand and market your shop

How to create a business plan 

Your business plan is where you check if you can turn your idea into something viable. It’s something of a living document. When you begin, it’s about putting your plans and expectations down on paper. As you go on and perform further research, you’ll want to return to your business plan to refine your facts and figures.

A business plan is central to determining the ins and outs of how you want to do business. It is an essential tool if you are looking to secure investment or loans to help you start your business – investors will need to see evidence that your business will likely succeed before they commit their money.

Complete it properly, and a business plan will also highlight the challenges your business may face, giving you a chance to start solving them before you or anyone else has invested financially. 

What should my business plan contain?

As part of creating your business plan, you’ll need to narrow down certain aspects of your new outlet, including:

• Your proposed location

• The ways you plan to finance your business

• Pricing and spending strategies

• Customer profiles

• A back-up plan, should things not work out

A fully formed business plan takes significant work to ensure it is underpinned by adequate research and contains the right level of detail. It is not a small undertaking. But you do not have to start from scratch. For example, the Prince’s Trust offers a business plan template to help you cover every base.

How to secure business finance for your shop

While starting a business without money is possible in some industries, it’s a little far-fetched to think about opening a shop without a significant initial outlay.

If you’ve prepared a strong business plan and can demonstrate intimate knowledge of your sector, you can approach a lender for a business loan. Your eligibility will depend on your age, residency and the results of credit checks, but if your business plan is good enough, you may be accepted. If you’re new to the world of retail, you may also be able to secure a startup loan designed for businesses under three years old.

Your business plan may also help you attract independent investors – though in this case, you’ll need to know the right people or do significant marketing work to get your idea in front of the right person’s eyes. 

As you grow your business, ensure you invest profits back into the operation. Try to avoid borrowing more money if you can, and consider a business savings account to grow the money you make. Don’t forget to keep clear, detailed records of your shop’s customer payments as well as its outgoings.

How to carry out market research

Understanding your market is vital. Even if you have a fantastic idea and a stellar business plan, you’ll need concrete evidence that your business will work and that you’re not inadvertently treading on anyone else’s toes.

Your market research could include the following:

• Companies House and trademark searches to ensure your business name will not land you in legal trouble

• Local area searches to determine potential competitors in your vicinity and the history of your proposed location

• In-person and online research to see how other businesses of your type go about their day-to-day operations – find out how to run a shop like yours before you dive in head first

• Customer profiling to determine how affluent or receptive your potential customers may be

• Product research to determine exactly what you’re planning to sell, along with additional extras that might help your business stand out

Your research requirements will differ depending on exactly what your shop will provide. Still, it is essential to do your homework before launching your business.

Understanding the legal requirements of opening a shop

You must also research the legal side of shop ownership. It is not enough to simply sign a lease on a premises and open your outlet to the public. As a proprietor, you will have certain obligations which must be fulfilled, including:

• Company registration. If you hope to hire employees, you must register as an employer with HMRC (see below). If you want additional legal protection for your business, it may be worth creating a limited company – this means your business must be registered with Companies House. Limited companies also need to issue yearly tax accounts to HMRC, and you need a business bank account to keep your firm’s finances separate from your personal accounts

• Business rates. Most UK businesses operating from non-domestic properties – whether a shop, warehouse or other non-residential premises – need to pay business rates determined by your local council.

• Opening hours. The hours you’re allowed to operate are dictated by the government. They will differ depending on the size of your shop.

• Health and safety requirements. As the tenant of a shop, it will be your responsibility to ensure that fire safety, gas, asbestos and electricity inspections take place and that adequate on-site safety measures are in place.

• Proper use of technology. If you use CCTV to protect your property and staff, you must do so in accordance with the guidelines issued by the Information Commissioner’s Office.

• Lease legalities. When renting business premises, check the fine print carefully to determine which responsibilities are yours and which belong to the property owner. It may also be smart to run any legal documentation past a solicitor

• Insurance. If you own a retail business, you should consider business insurance and public liability insurance. If a customer is injured or suffers damage to their property while in your shop, this type of insurance will help cover legal costs. You will also need employers’ liability insurance if employees or volunteers work in your shop.

Taking on employees for your shop

Staffing is a vital part of keeping a shop open. It is unlikely that you will be able to fulfil all the responsibilities of running a shop alone – and equally unlikely that you will be able to be present for every business hour. 

Taking on staff is complex. Among a litany of other responsibilities, you must register as an employer with HMRC, pay tax and national insurance for your employees and, depending on your circumstances, match pension contributions. 

Your business bank account may include a payroll function, which can help with this. If it doesn’t, you may wish to invest in solid accounting software to ensure nothing is missed.

Marketing and branding a shop

As much as your shop will be selling a product or service, your responsibility is to sell the shop itself. Your market research should have identified your target customer – now, you need to ensure that your brand and customer experience match the kind of thing they’re looking for. 

If you’re not a natural designer, you may wish to allocate some of your budget to professional design work. An investment in advertising may also pay dividends.