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How Do You Open a Shop in the UK?

How to open a shop

Opening a retail store can be a worrying ordeal, but many find the rewards outweigh the initial fears. Today’s world of online shopping and easy communication makes it one of the best times in history to be your boss. But how do we go about doing this effectively? In this guide, Real Business will detail how to develop a solid business idea with eight main considerations, covering everything to ensure your start is as strong and focused as possible.

Read on to find out more.

New Retail Business

1 – What is your core product or service?

Opening a new shop is exciting, but without an idea of what your unique or higher-quality product or service is, you won’t get far. Evencorner shops that sell essential everyday items have found ways to adapt to bring in new revenue from their target market, according to NACS’ 2020 study, found that stores participating in the Amazon Hub Counter program saw an average of 16% increase in overall sales.

Start with the number one concern – what problem can you solve, and where is the need in the market? To open a shop without catering to a need is to play a game of chance, and people reserve their money for what they feel they need. Thorough market research is required, including finding competitors and seeing what they do best, and how you can do it better. Searching for examples online and within your local area is the best way to do this.

Of course, not every store can be top-of-the-line quality with unique, palatable ideas, but there has to at least be a unique selling point – such as competitive prices, good customer service, aftercare, etc. Furthermore, ensuring a successful business also means that whatever service or goods you use within your stores are supplied by a supplier that you can form ties with, something especially important for small business owners.

2. Creating a solid business plan

A solid retail business plan effectively means that your big decisions are set in stone, allowing you to focus entirely on other small decisions that build your business. It must include and detail:

  • Business Description – What is your business, what are you selling, and how much profit could you be looking at?
  • SWOT analysis – Build a SWOT, which is effectively an analysis of the market that you’re operating in that identifies your position. It details your strengths, weaknesses, opportunities and threats.
  • Marketing strategies – Including details of your target customers, how you plan to attract customers, target audience profiling, and what makes your store unique whilst appealing to these same people.? Most important of all, however, is how you’ll contact these people – with social media being one of the best avenues.
  • Projected earnings – What could you possibly earn?
  • Outgoing expenses – How much will you be spending, and where is the money coming from? Business loans are a factor that we’ll be speaking of soon.
  • 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 be given to each member of staff as well as their general responsibilities.

3. Decide on your business structure

What business structure will your organisation choose:

Sole Trader – A sole trader is someone operating under their name. You are responsible for funding your store, as well as everything else, such as debt or employment issues. That being said, you are in charge of the profits, and whilst your business is small to mid-sized, you will earn quite a lot – until you reach higher tax brackets.

Limited Company – Choosing these options requires increased administration and reporting, but it acts as a legal barrier between you and your store. Debts and other responsibilities are tied to the company, rather than the business owner. All profits will be taxed at 20%, which is worthwhile if you’re a high earner, but likely not worthwhile when first starting.

Partnership – This business structure is most common in family-run stores, as the preexisting relationships lend easily to partnership. But responsibility is typically shared equally, and fairness is left to the partners, meaning there can be imbalances.

Online Store – An online store technically functions as a retail store, allowing you to deal with all transactions online. This is also known as an e-commerce store. With a massive online customer base, you will find that you’re able to find many customers across the nation, but this also opens up logistical concerns such as how you’re going to deliver the service. Furthermore, when starting an online retail business, you’re also able to begin work immediately with potentially much smaller start-up costs involved.

4. Register your shop with HMRC

In most cases, you will need to register with HMRC for tax compliance, legal recognition and reporting. The only exceptions are stores with very low turnover, below £1000 a year. Nonetheless, keeping records of your income and expenditure is very important.

To stay safe, 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 if you earn above £1000 annually.

The registration process involves:

  • Submitting your business name and address
  • Registering for VAT

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.

5. Finance your new business:

Securing the right financing is crucial for the success of your retail store.

Financing, and ensuring you keep track of all your finances, is mandatory for the success of a retail store. The various methods of financing your retail business are as follows:

Personal savings

This is always the preferred option for most new business owners. Using your savings to make the necessary expenses means you won’t owe any money and can keep all of your profits. The main downside of self-funding is raising the funds, to begin with.

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. They typically last one to five years, meaning you may need to turn a profit quickly to stay ahead.

Investors

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, and as time goes on, if your business is booming, consider selling shares – though this means giving up part ownership of the business.

6. Open a business account

A business account for your new shop has several advantages over a personal account:

  • Writing off business expenses and taxable income.
  • Streamlining your capital.
  • Business credit cards allow for the payment of goods at low interest.
  • Low-interest business overdraft
  • Access to business experts

Every bank has its 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

Various insurances may be of interest to all prospective business owners, especially in customer-facing roles:

  • Public liability insurance – This covers the legal fees for accidents happening within your retail store.
  • Professional indemnity insurance – This covers you if a product of yours causes harm.
  • 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 insurance, it’s time to get the word out about your new shop. Having your website is crucial for marketing purposes, as it helps build an online presence and reach target customers. 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 effectively market targeting and every penny counts Identify what works for you, dedicate a suitable budget, and watch your new shop take off!

Business Structure Decision

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 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.

 

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