“To open a shop is easy, to keep it open is an art.” – Chinese proverb
Lots of people who want to get into business for themselves come up with the idea of opening a store. They hope it will provide them with income and, presumably, some equity that they can “cash in” or perhaps leave to their children. This is a common entrepreneurial dream. It seems pretty simple. People come in. You help them shop. They buy stuff. You make a profit.
Of course, it’s not that easy.
Kristie Parks knows that, and that’s why she wrote to me recently. She’s a 48-year-old woman who doesn’t have any business background. But her plan is to open a shop where she can sell clothes and other related products.
“Something went wrong when my husband and I purchased a house. I have less funds now. But I was just about to rent a shop and fill it with clothes and start to sell,” Kristie wrote. “Then I read something in ETR that made me think I might go wrong again.”
My first recommendation for Kristie – and anyone else who wants to make a living with a retail operation – is to buy a copy of my newest book, Ready, Fire, Aim. (It will be published in January.) It explains what I know about launching and growing all kinds of entrepreneurial businesses.
As I point out in the book, most retail businesses fail. The main reason they fail is because they are opened by people who have no experience. They don’t know which products will sell and which won’t. They don’t know how to price their merchandise. They don’t know anything about the management side of the business. But most of all, they don’t know how to get enough customers to walk through their door.
That’s the biggest problem. Not knowing how to bring in prospects and turn them into cash customers. There are many examples in the book that will give you ideas about how to do that. There are also some important rules and principles to follow during the first, critical stage of your business’s growth. But rather than have you wait till the book comes out in two months, here are a few steps you can start taking now:
Step 1. Figure out how many dollars’ worth of products you will need to sell in order to pay all your expenses every month. Not just product costs but overhead as well. Let’s say that number is $10,000.
Step 2. Find out how much the average customer spends on a purchase in similar stores in your local area. You can do this by making friends with shop owners and asking them. Let’s say the average customer spends $25.
Step 3. Divide the total dollars you need by the amount of the average sale. That will tell you how many paying customers you need to bring in every month to survive. $10,000 divided by $25 is 400. So you need to bring in 400 paying customers every month.
Step 4. During the start-up phase of your business, you should be spending most of your time on advertising. So now develop a marketing plan that will attract that many customers. Run this plan by anyone you know who has retail experience to make sure it is sound.
Step 5. Make any needed revisions to your marketing plan, and then get to work implementing it.
There are plenty of other things I talk about in Ready, Fire, Aim that may be helpful to you. Among them:
* Don’t sign a long-term lease or buy a shop during your first year. In fact, try not to get yourself into any sort of debt.
* Choose a strong retail location with good pass-by traffic – traffic that would be interested in the type of products you will be selling.
* While you are still testing your marketing plan, keep your advertising expenses as low as possible. It may take several years to arrive at a strategy that works. Make sure you have enough money in the bank to last until you can figure that out.
* Come up with a USP (unique selling proposition) for your store. What can you offer customers that nobody else in the neighborhood can?
Those are just a few ideas to get you started. You’ll find lots more in the book.[Ed. Note: Get Michael Masterson’s insights into becoming successful in your business and personal life, achieving financial independence, and accomplishing all your goals on his new website. You’ll find updates on all of Michael’s books, news on upcoming ETR events, Michael’s blog, and room to send in your comments and questions. Check it out today.] [Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]