What to Consider before starting a small Retail Business

 

What to Consider before starting a small Retail Business

What is a Retailing Business

The activities involved in selling commodities directly to consumers,
the selling of goods to consumers; usually in small quantities and not for resale.

Who is a retailer?

A merchant who sells goods at retail, this means that he or she sell goods in smaller quantities to the direct consumer of such products who are the end users of finished products.

Four important factors to consider before setting up a retailing business

Small retail business

1. Amount of cash at hand:

Before setting up in business, the would-be retailer should make sure that he has accumulated enough money as capital to carry on the Business. This will naturally depends upon the nature and the extent of the proposed Business. If the shop is to be conducted on cash basis. i.e. if all purchases are  are to be paid for in cash by customers, then a small amount of capital will be be needed than would be required to finance  similar business run on credit lines. In any case, the retailer must find sufficient cash to carry adequate stock of goods.

2. Consider competitors:

He or she  must discover how many shops are selling the type of goods he or she is going to sell in the area and decide if there is enough trade to support another shop. If the trader is alert, capable and enterprising, there is no reason why he should not open his shop in a district where competition is keen. The advantage is that such district is well known to the public as a recognise shopping center for goods of a particular kind,. For example groceries. Moreover, if he or she deals in expensive goods they will not sell in poor district. But, whereas some types of shop can be successful only in the center towns, others can be sited wherever there is a demand for their products. A small retailer may at times find it rewarding to establish in a suburbs where customers who unable to travel to city center can conveniently make their purchases. Again other retailers may find it expedient to establish in slum areas the large multiple and department stores are unlikely to establish but where there is a potential large market for certain types of consumables.

3. Location and premises for the business:

The next question to consider  is that of premises. In some trade the premises need to be lifted up with expensive appliances; in that case, it is advisable for the trader with the possible chance of buying later. In this way he can discover if it is worth continuing with the business before he buys the premises.

4. Major product to sell:

To be a successful retailer, one needs to concentrate on one particular line of items so as to become identified by the public with a recognised speciality. This speciality line is not necessarily the one of which most is sold, but it means that there is a definite reason why a number of persons come to the shop and more a shop can be identified with a special feature, the greater will be the volume of the business transacted and more opportunities there will be of selling other goods. A good reputation for one particular product or good is a useful introduction to the sale of other goods and products.