According to the U.S. Small Business Administration (SBA), “Your business plan is the foundation of your business.” And why is that? It’s believed that retail business plans are essential for three main reasons. Goal-wise, they keep you on track, give you a basis for how you’re going to achieve these objectives, and keep you focused on the direction your business is heading. In other words, according to the SBA, they serve as a roadmap to help you structure, run, and grow your new business.
The purpose of your business plan will most likely depend on your specific business goals, so there’s no specific length, number of sections or format that you absolutely need to use. What’s crucial is that the plan fits your needs. No matter if you’re selling online, through a pop-up shop or even in your own brick-and-mortar store, these steps will help you streamline your strategy.
Step 1: Define Your Business.
This is your chance to hone in on who you are and who you want to be in the retail landscape. Don’t be afraid to boast about your strengths, according to the SBA. Tell the reader what your business specializes in and why you think it’ll be successful. Include information about what you’re selling, your location, your employees, financial information, and who your business plans to serve. Take the time to explain in detail what problems your business will solve and the competitive advantages that will make your business a success.
Some people call this section the executive summary, while others may refer to it as the company description. Some business plans might even have both - the executive summary could cover high-level information about products, goals, and the team, while the company description might detail what problems the business will solve. These sections will depend heavily on what you’re selling, how you’re selling it, and the goals you have for your business.
Step 2: Detail Your Objectives Through Market Analysis.
In this section, show that you understand the industry, your competition, and target market through competitive research. Analyze your strengths and weaknesses, identify trends, and propose forecasts. Make sure you cover your market segmentation and describe the market’s needs, trends, and possible growth.
Answer what you can do better than those who are already in business. According to Shopkeep.com, “you’ll need to dive deep into your specific niche in retail and look at who your competitors are, how big the market is, and who your customers are” to prove that you know the industry inside and out. Plus, narrowing your research to focus only on your specific niche will show any investors that there are people who want what you’re offering.
Step 3: Explain What You’re Selling.
This is your chance to really get into the details of what you’re offering and how it benefits your customers. What does the product lifecycle look like? Are there any patents, copyrights, or intellectual property plans associated with your business? If you’ve completed research and development, you can include it in this section, too. This is also a good place to discuss future products, vendor relationships, and more.
Step 4: Discuss How Your Business Operates.
Take the time to establish the nuts and bolts of how you run your business. Talk about who’s in charge of what, describe the legal structure, and show how each employee contributes to the success of the business as a whole. Don’t be afraid to extensively detail your order process, team of employees, payment terms, vendors, systems, and more. You can even explain future personnel needs, your hiring process, and staff training here.
Step 5: Talk About Your Marketing Strategy.
The purpose of this section is to explain how you’ll attract and retain customers, as well as how a sale might actually happen, according to the SBA. Entrepreneur.com suggests dividing this section up by the four Ps: product, price, promotion, and placement. As you work through these sections, it’s important to describe your strategy as it is today and how it will evolve to fit your future needs. You might also want to include a budget breakdown of each marketing tactic and any research you’ve conducted on trends relating to the demographic you’re targeting.
In the product section, focus on the lifecycle of your product, your branding strategy, and who you’re specifically going to be selling to (also known as your target market). When you get to price, discuss pricing in relation to your profit margin and overall sales volume. Place refers to where people will be able to buy your product, so write about your distribution channels. Finally, promotion refers to virtually everything you do to introduce what you’re selling and your brand to potential and current customers.
Step 6: Spell Out Your Financial Plan.
This section is crucial if you’re applying for financial assistance or seeking investors. According to the SBA, a great business plan can help you find funding or bring on new business partners: “It’s the tool that you’ll use to convince people that working with you – or investing in your company – is a smart choice.” If you’ve been in business for a bit, include numbers from past sales. If you’re just starting out, include your sales forecast for at least the first 18 months.
In the Shopkeep.com article mentioned above, it’s advised that you should take an educated guess when it comes to the number of yearly sales you think you’ll make. Then, calculate out the average cost per inventory item. Your break-even analysis will show just how much you need to make each month to cover all of your expenses, your projected cash flow, and your estimated profits and losses - just be sure to add in the costs of doing business like payroll, overhead, inventory, and your salary. Lastly, don’t forget to include your pricing structure.
These sections cover most of what you want to include in your retail business plan, but an appendix can house ideas for packaging and products, additional market research, extra financial information, legal documents, industry contacts, and more. Whether simple or complex, a great business plan lays the foundation for the success of your company. Remember, the more effort you put into yours, the easier it’ll be to see what doing business will look like and how you’ll be able to compete in the industry.