Checklist For Starting a Brick And Mortar Business
Brick and mortar businesses are part of the traditional economy and include retail, commercial and service businesses. In addition to start-up and advisory costs, here is a list of common initial considerations for starting a brick and mortar business:
- Determine the legal structure — Sole Proprietorship, Partnership, Corporation or Limited Liability Company (LLC)
- Obtain any required licenses and permits
- Decide on a business name using unique words that’s available at the state level and registered with your county clerk
- Notify creditors of your new business with its own tax ID number within 30 days of opening
- Register for an Employer Identification Number (EIN) from the federal government if you have employees or are not self-employed…If you are registering as single owner LLC then you may use your SSN instead
- Establish business banking accounts, keeping personal funds separate
- Obtain general liability insurance including product liability for products you will be selling
- Apply for a merchant account if accepting credit or debit cards
There are a number of things to consider when starting a brick and mortar business:
Capital Expenditures
Research the required investments for your chosen business including supplies, equipment, rent/lease, utilities etc. The Small Business Administration has a helpful website that outlines the steps involved in buying a franchise or opening a small business. Another ambitious option is to develop your own software product from scratch as one young entrepreneur from Pakistan did recently.
Income Statement
Determine your expected income levels based on industry standards. You should also factor in the cost of living expenses specific to your geographical area as well as time spent running the business after it opens.
Cash Flow Projections
Determine your expected revenue and expenditures over time to ensure there is enough money in the business account at all times. This applies to both small businesses with multiple employees, as well as self-employed individuals.
Legal Considerations
Research local regulations for your chosen industry online or through other sources such as; trade associations, lawyers, etc. Determine if you need to work with any other professionals including insurance brokers or graphic designers.
Personal Budgeting
How much will this new venture cost you financially? Will it affect your current financial situation? Utilize a reliable cash flow analysis tool like YNAB’s free Excel Add-In to track your expenses and income alongside the business activities
Unique Selling Proposition (USP)
Figure out your unique competitive advantage in the marketplace. Think about what makes your brick and mortar business different from various other similar businesses that are already operating or might open in the future. Your USP should be compelling enough for customers to choose you over your competitors.
Market Research
Once you’ve chosen which type of business to open, get a sense of its market size – how many people are interested in buying products/services like yours? What is the industry’s growth potential? Who are you competing against? How strong is their presence locally or online? Outline your marketing strategy on paper before launching it so you have an accurate picture of costs versus returns.
Products/Services Offered
Outline all goods and services you will offer customers. Take into account current market trends and future expectations to stay ahead of the curve.
Target Audience
Determine your intended clients (a.k.a. target market) by age, gender, location, income level etc. Once you have a better understanding of who is likely to buy from you, it becomes easier to devise effective marketing strategies to reach them through various channels including social media.
Promotional Items
Decide upon promotional items/services you can offer customers once they are buying products or services from you regularly that are useful for their daily lives but not easily available at retail outlets or online e-commerce websites. Therefore you also need to consider where to buy an electronic message center since they are not found at your local department stores.
Business Staffing
Factor in your business operational for all staff members including yourself as the primary owner/manager. Determine salaries, benefits and other costs to ensure you can afford them.
Customer Service
Plan for customer queries (call center, email etc.) and how the business will handle them. Aside from answering questions, include in your strategy how you can delight customers with additional value such as personalized follow-up calls or special offers to make their experience memorable and keep them coming back for more.
Location
Search online and offline (through trade associations and Chamber of Commerce) for a proper location that suits your budget and budget needs like store space rental etc. If selling products out of your own home is part of the business idea, be sure to consider zoning restrictions because it may not be allowed at your location.
It’s also a good idea to check with your state or local government for possible business-related tax incentives that may be available before making any decisions.
Marketing Plan
Outline how the brick and mortar business will generate revenue including its marketing strategy, e.g., types of promotional items used, prices for products/services etc. Be sure to include the estimated costs involved so you can track them against actual returns closely.
Startup Expenses
Factor in all costs necessary to get the physical store off the ground such as purchasing inventory, signage etc.
Support Staff Structure
Incorporate accounting, IT, legal employees needed if they are not already included in your startup expenses (i.e., part of your salary).
Projected Income
Estimate how many customers you expect to serve per day and projected revenue. Determine what services you will offer them such as gift wrapping, delivery etc. so it becomes easier to determine cost versus returns.
Legal Compliance
Talk with an attorney and accountant about all legalities involved in setting up a brick and mortar business including local zoning laws, tax codes etc. Explore various licenses or permits required for different types of businesses such as licenses for retail outlets or cafes .
Competitive Advantage
Decide on how your business will stand out from the competition. What services can you offer customers to help them find it more desirable than other options available? How can you keep their loyalty so they keep coming back for more?
Management Structure
Outline how management responsibilities will be divided by defining roles and responsibilities of each employee including hiring an assistant if needed.
Risk Management Strategy
Determine what risks are involved in setting up a brick and mortar business, i.e., natural disasters, theft etc. Identify your risk tolerance (the amount of risk you are willing to take) before making any decisions.
Exit Strategy
Develop an exit strategy in case the brick and mortar business becomes unprofitable for any reason.
In conclusion, if you are interested in starting a brick and mortar business, be sure to map out all the operational details such as marketing plan, location etc. before making any commitments because it will determine your success or failure at becoming an entrepreneur.
