Opening your own shop can be a daunting task but it can also be very rewarding. A successful shop will enable you to be your own boss, set your own hours, and hopefully make a lot of money! These days, there are opportunities for every type of shop both offline and online. Today’s consumer knows what they want, and if you are able to provide it, then your shop has the potential to be a big success. Many people have the dream of opening their own shop but just don’t know where to begin.
To help everyone realise their dream, here is our comprehensive guide to opening your own shop in the UK.
1. Think about what you want to sell
The first thing you need to do when opening a new shop is to decide what kind of products you want to sell. This is a very important step in the process because it will influence your business strategy and marketing approach.
Make sure you do thorough market research to make sure that there is a place in the market for whatever type of shop you are planning to open. You need to check out what kind of shops or in your local area, or how many competitor shops there are online. If you open a shop selling products that are not unique or special, then you need to ensure that you have a unique selling point like incredible customer service or super competitive prices.
Once you have chosen your products, you will then need to find reliable suppliers. It is vital that you are always open and honest with your suppliers and that paying them on time is always a priority. Building a great relationship with your suppliers will ensure that you always have enough stock and that a successful shop is mutually beneficial for you both.
2. Create a business plan
The first thing that potential investors will want to see before committing any money to your shop is your business plan. Without this, you won’t get very far in setting up a new store, especially if you don’t have any of your own finances and need external funding. Your business plan needs to be very detailed and include:
- A description of your business and what you plan to sell.
- An analysis of the market in which you will operate, including a SWOT (strengths, weaknesses, opportunities and threats) analysis.
- Your marketing strategy – This will need to include details about your target customers, how you plan to attract customers? Who is your target audience? What makes your store unique or different from others like it? Do not forget to include any plans for social media channels such as Facebook or Instagram that could help promote your products!
- Your projected earnings – This needs to be realistic but also ambitious enough to excite potential investors.
- How much money you will need and where it’s coming from.
- Your planned expenditure: How much is going into stock? What equipment do you need? Will there be any renovations needed? If hiring staff, include what kind of training(s) needs to given to each member of staff as well as their general responsibilities.
All of this may seem like a lot but the most successful new businesses are always the ones that are prepared for anything.
3. Decide on your business structure
Once you have your business plan ready to go, the next step is deciding what kind of legal structure you want for your shop.
The first option is a sole tradership which basically means that it’s just you against the world. You will be responsible for everything from buying stock to deciding on the direction of your shop. If something goes wrong and there isn’t enough money to pay suppliers, an employee quits unexpectedly, or your customers suddenly lose interest, the burden will all fall on you. However, if things do go well and you make lots of money, then all of the profits will be yours.
The second option is to start off as a limited company. This can be an excellent option because you will be protected from being personally liable for any debts or unpaid contracts. If everything goes belly-up and there isn’t enough money to pay suppliers, you won’t be personally financially culpable. The downside of this structure is that when you start out as a limited company all profits will be taxed at 20%.
The third option is starting off as partnership where you work very closely with one or more business partners. This type of business structure is most common when it comes to family run shops because there is a relationship independent of the business which naturally bonds the partners. However, if one person wants out then this can end up causing problems when it comes to splitting shares equally so before you decide to go into business together, make sure everyone agrees on what should happen if issues arise.
If you want to structure your business in a less traditional way, you may want to consider starting an e-commerce store. This is essentially a shop that sells all of its products online. If you want to open an e-commerce store, it’s important that you have a good understanding of the market and how your business will be different from others. E-commerce stores are the ideal way to take advantage of the huge online customer base that is available, and is a great way to reduce your overheads when you start out. Many brick and mortar shops started out as successful e-commerce stores and go on to open traditional flagship shops.
4. Register your shop with HMRC
It’s important to make sure that you register your shop with HMRC as soon as possible. You are required by law to be registered before the end of your first tax year.
The registration process involves:
- Submitting your business name and address to HMRC,
- Registering for VAT with the government which allows you to recover tax on all of your business purchases.
If you don’t register within 30 days then there is a chance that HMRC may take action against you so it’s important not to delay in registering.
In order to work out how much tax you will owe, the HMRC may ask you:
- How much you have already spent on business expenses,
- If your shop has any employees and what their roles are.
Make sure you are totally upfront with the authorities to avoid any potential taxation or legal issues in the future.
5. Finance your new business:
There are various ways to finance your new shop and you will need to consider them all before making your decision. The right financing can have a major impact on the success or failure of your business so it is not a decision to take lightly.
Here are some of the main options available to you:
This is always the preferred option for most new business owners. You can use your own savings to buy all of your equipment and stock before opening day, which means you won’t owe any money and can keep all of your profits. The main downsides with self-funding is that you will need enough cash on hand to get your business off the ground, and you could potentially lose all of your savings if your shop fails.
A business loan
A business loan is the best option if you don’t have enough startup capital, or need to scale your operations quickly. You can get a loan from a bank or building society, and if they are impressed with your business plan, you may be offered favourable interest rates. The downside of taking out a loan is that they typically only last between one to five years, so it may not cover all of your needs during this time – particularly as your shop begins to grow. If you do decide that a loan is the best way forward, then make sure there aren’t any hidden charges involved before signing on the dotted line.
Investors can provide you with all the capital you need but you will need to convince them that their money is in good hands. While an investment in your shop will show that they have faith in your business and you as an owner, every investor will ultimately want their investment back plus profit. These days, investors don’t just come in the form of wealthy people who see potential in small businesses. Crowdfunding is also a popular way to raise money online today through sites like Indiegogo or Kickstarter where internet users donate whatever amount they choose towards something that interests them. Some companies even sell shares so that others can own part of the business as this allows more opportunities for growth.
Make sure you consider all funding options available to you before securing the money you need to get going.
6. Open a business account
The next step in opening your new shop is to open a business account. This has various advantages over a personal account including:
- The ability to write off business expenses against your taxable income, Having a separate account for your personal and business finances so that you can keep track of both easily.
- Extra services such as a business credit card which will allow you to pay for goods at a low interest rate.
- A low interest business overdraft.
- Potential advice from business experts working in the loans department.
Every bank has its own selection of business accounts so make sure you shop around before choosing the right one for your shop. If in doubt, ask for recommendations from other business owners that you know.
In addition to your business account, you may also want to consider opening a high interest savings account, which will allow you to set aside money every month towards paying off debts or future investments in your business.
7. Take out business insurance
Once you have set up your business account, you will then need to take care of some additional insurance requirements. The first thing you will want to do is check with your bank or building society which insurances they can offer through their specialist partners.
You may be offered the following items as part of an all-inclusive package:
- Public liability insurance – This will cover legal fees and damages if someone on your shop premises gets injured or suffers damage during normal business operations. If there are any claims made against this policy, then a lawyer from the insurer should handle things for you free of charge.
- Professional indemnity insurance – Although not compulsory in most cases, professional indemnity will help cover costs if one of your products causes injury to people outside of your shop.
- Employer’s liability insurance – If one of your staff members is injured at work, you could be held responsible, but this will protect you against claims from employees who have been hurt on the job.
8. Plan and execute your marketing strategy
Once you have set up all your essential business accounts and taken out any relevant insurances, it’s time to get the word out about your new shop. These days there are countless potential marketing avenues including social media, email marketing, radio ads, digital marketing strategies and SEO, and many more. The trick is to effective market targeting, and many every penny count. Identify what works for you, dedicate a suitable budget, and watch your new shop take off!
To sum up
If there is one thing that is certain in life, it is that people love to shop! While retail trends may change, and the way we purchase products evolve, a great shop will always attract customers. However, with so much competition in every niche in the retail sector, you need to make sure you have every aspect of your new shop absolutely perfect. Create a great business plan, source great stock, and implement a winning marketing strategy. Get it right, and there is still a fortune to be made in opening your very own shop.