Opening a retail storefront involves major expenses including rent, utilities, fixtures, furniture and other startup items. While many of these costs are unavoidable, every dollar you can save during this time is one more dollar you will have to put toward your company after launch.
Careful planning and research into every aspect of your storefront expenses can help significantly curb your financial outlay. Review the following advice to ensure you are saving where you can as a retail startup.
Be smart about your rental costs
Landlords typically offer lower prices for longer-term leases, and you may benefit from increasing the length of your lease term if you can negotiate flexibility into the deal. Three years is a typical minimum lease term, but you may want to aim for clauses that provide you with more flexibility and protection, such as a sublease clause that may allow another tenant to occupy the location if you need to vacate the property before your lease term is up.
Do your homework to find out the “all-in” price per square foot in your desired locations. For example, which utilities and maintenance expenses will be your responsibility, and how will they be measured? Ask the landlord about the typical costs incurred by tenants, such as expenses for the upkeep of shared facilities. Everything is negotiable, so ask your agent or the landlord for their best offer, and be willing to walk away if the location’s price tag is too high. If possible, speak to other tenants in the neighborhood or those who rent from the same landlord. Ask them about all expenses they incur and particularly any unexpected ones.
Get free design help
The design of your storefront communicates the feeling and energy of your company, but professional designers’ services can be prohibitively expensive. A low-budget option is to seek out budding designers looking to build up their portfolios. Reach out to your local two-year and four-year colleges or even high schools with strong art departments, and ask school officials about internship work or creating a class project for ambitious, creative students who want real-world experience. Be clear — by creating a project overview document — about what restrictions and guidelines should shape the work.
You can also tap barter exchanges, where you swap goods and services with other local businesses at no cost. For example, you might negotiate with a designer to get some concepts and advice in exchange for some goods from your store. Websites such as the National Association of Trade Exchanges can help put you in touch with local businesses that can work with you.
Buy used furniture and energy-saving lights
Depending on your industry, an Internet search may bring up local stores that specialize in selling used business equipment and furniture for the type of retail business you are starting. Sites such as BuyStoreFixtures.com sell shelving, store racks and other necessities, and eBay has an entire section devoted to store fixtures. If applicable, ask if the former tenant of your space wants to sell you fixtures, furniture and other items.
For lighting, by contrast, it may not always be a good idea to go secondhand. Some types of fixtures can create higher long-term costs for your business. In this case, it may be a good idea to invest in light-emitting diode (LED) fixtures, which require a higher up-front cost but will lower your energy bills and last longer than other lighting.
Keep stock of your inventory
Loading up on items that don’t sell can be one of a retail company’s biggest cash drains. Do thorough research to increase your chances of picking the correct balance of inventory. Consider your target market, seasonal variations in demand and what you need to keep on hand so that your customers aren’t disappointed. Avoid too much investment in items that have a short life cycle. A good way to gather intelligence here is to speak with businesses that are non-competitive with companies like yours. Starting a clam shack in a seaside town? Speak with someone in a beach community 500 miles away who can share trade tips. Opening a cheese shop in an urban hipster neighborhood? Find a retailer nearby who can give insights on the local population’s spending habits. Many business owners are willing to help a fellow entrepreneur. Always filter advice for differences in your market and target customer.
Inventory-tracking apps, such as Stock Control or Intuit’s SOS inventory, which works with QuickBooks, may help you keep a tighter rein on your inventory needs. These apps can list all the items in your inventory, sort them by category and associate them with a storage location to give you a more data-driven look at your needs.
Staff up wisely
Evaluate your staffing needs carefully by time, day and season. Put together a plan that anticipates when demand will be greatest, and figure out the minimum staffing requirements for handling customer flow without compromising service.
Use part-time workers to help control costs. Part-time work can appeal to experienced workers such as retirees or parents who want to work during the hours their young children are at school. Ask friends, family or colleagues if they can recommend someone with experience in your area of retail. Keep your eye out for people whose skills would be a boon for your business. If you encounter a personable lifeguard, camp counselor, or library volunteer, ask them if they might be looking for a job.
A smart strategy can help you keep a lid on the costs that accompany setting up a retail location. With some extra legwork and creative thinking, you can preserve more of your cash and put it to good use later.Print this article