The Basic Costs Of Setting Up A Retail Store
Quite a few people have dreamt about starting their first business. The possibility of success can be too appealing, with many people diving into entrepreneurship. One of the more popular options is setting up a retail store.
While many people have gone for online companies, retail premises can be just as profitable and successful, when done right. That success could take time, however. As such, you’ll need to make sure that you can stay afloat until your store makes money.
You’ll need to budget and plan as much as possible to figure this out. Naturally, you’ll have multiple questions about this process. One of the more notable is, ‘how much does it cost to set up a retail store?’
This can vary from place to place, alongside what exactly you’re selling. That means that there’s no definitive answer to this. There are, however, multiple start-up and operating costs that you’ll need to cover.
Though these can vary somewhat, depending on your business, most should be relatively common for any retail store.
What Are The Costs Of Setting Up A Retail Store?
Basic Costs
Regardless of what kind of retail store you’re setting up, there will be multiple costs associated with it. These can’t be overcome, so you’ll need to work them into your budget. The most significant of these are:
Rent: This will be your biggest expense. In some places, it’s legally required that you have enough capital to pay your rent for a minimum period, so keep that in mind.
Equipment & Tech: There’s a lot of equipment that you’ll need to pick up, such as cash registers and credit card readers. If you’re looking for places to pick them up, this is a great option.
Cleaning & Maintenance: You’ll need to keep your retail store clean. While this could be done by a janitor or other staff, you’ll also need to get supplies. Alongside this, you’ll need to make sure everything is well-maintained so it doesn’t break.
Signage: If there are no signs advertising your company, then few people will notice it. Putting a few outside and close-by is vital.
Legal Fees: There are multiple legal hurdles to jump through when setting up a retail store. These will have associated costs, so keep them in mind.
There are several other costs that you’ll need to think of, such as clocks and office supplies. These can be relatively minor, although you’ll still need to keep them in mind. Thankfully, the majority of expenses should be relatively affordable.
Operating Costs
Your basic costs are the tip of the iceberg when it comes to retail store costs. There are multiple operational costs that you’ll need to be aware of. The largest of these is your payroll, as your employees can be one of your largest expenses.
Then there are the likes of electricity and other bills, alongside any costs associated with your suppliers. Many of these can be much higher than you’d initially expect.
It’s worth noting that your business might not be profitable when you first start it. In most cases, this takes months or years. Your business plan will give you an idea of when you will make a profit.
When you’re starting a retail store, you should include a salary for yourself, too. If you were planning on paying yourself out of the profits, that might not be possible. Even a basic wage for the initial stages will be enough.
You’ll also have marketing costs, alongside a few others, although these vary significantly from company to company.
Borrowing Costs
Few people have the funds to start up a retail store themselves. While some people find investors, you might end up borrowing the money you need. That naturally means that you’ll need to factor the costs of borrowing into your business plan.
These costs can depend significantly on who you borrow from and what kind of small business loan you get. If you fail to keep up with your interest payments, then the consequences could be quite high. It’s not uncommon for stores that default on loans to have their equipment repossessed.
Wrapping Up
The costs of setting up a retail store can add up much faster than you’d think. Thankfully, many places have grants available for new businesses. That should ease the burden for your new store, which could help make or break the company.
Regardless of whether you get a grant, proper planning will be needed before you start your company. Doing so makes sure that you know what to expect and what expenses you’ll need to pay. A proper business plan will be mandatory with this, as it’ll help you guide your business in the right direction.
