Opening a retail store is an exciting venture that offers to achieve entrepreneurial goals while also providing a direct connection with customers. However, before going on this journey, it is critical to grasp the financial implications.
The cost of running a retail business can vary significantly based on a number of factors such as the type of retail firm, location, size, and personal aspirations.
We will go into the difficulty of anticipating and controlling the expenditures connected with running a retail business in this book, presenting you with essential insights and considerations to help you make informed decisions on your journey to retail success.
How Much Does It Cost To Open a Store?
Business Plan for Retail Store
Unless you buy a business plan template or hire help (which you don’t have to do—check out suggestions and a template here), developing a business plan is free.
A business strategy, on the other hand, is essential for evaluating retail shop opening expenses. It will provide you with a location to save all of your computations, allowing you to keep all of your expenditures in one place.
When you’re ready to implement your strategy, having everything recorded can help you acquire finance, loans, and investments.
One of the first stages towards making your business official is to incorporate and register it. The cost of business registration is determined by your location, the sort of firm you intend to incorporate, and who is responsible for completing all papers.
| Cost of business registration | |
|---|---|
| Business registration | $50–$2,000 |
| Small business attorney | Small business attorney: $150–$1,000/hour |
| Registered Agent | $100–$300/year |
| Finding a Retail Space | |
|---|---|
| Purchase retail space | $127–$300/square foot |
| Loan interest rate | 2.2%–18% |
| Rent retail space | $22/square foot |
If you opt for leasing a retail space, you’ll be responsible for monthly rent payments, potential upfront security deposits, and other maintenance fees.
However, if your business model involves selling wholesale merchandise in other stores, you may not incur these costs directly.
Nevertheless, some retail establishments may charge fees to vendors for renting a table or a section within their store.
| Licenses, Permits & Insurance | |
|---|---|
| Business License | Varies |
| Liability insurance | $790/year |
| Workers’ comp | $540/year |
Business insurance, like business registration, is not a legal requirement—though some states mandate insurance for particular sorts of merchants or sectors.
The cost of your business will also vary based on its kind and location. Little Green Beans, for example, pays $185 every quarter for liability insurance, or $740 per year.
This is slightly less than the national average of $65 per month or $790 per year.
| Operating Costs & Equipment | |
|---|---|
| POS | $300–$10,000 |
| Website build | $50–$20,000 |
| Website Hosting | $1–$27/month |
| Domain name | $9–$20/year |
| Utilities | $2.10/square foot |
| Internet | $64/month |
| Cleaning | $200/cleaning |
Operating costs outside of utilities and maintaining the space also apply. These line items include both upfront and ongoing expenses.
Professional Fees
Joining networking clubs or retail-specific organizations may be required by your local small business community.
For example, joining your local Chamber of Commerce may link you with other small business owners, provide networking opportunities, and include your company in local periodicals. A typical yearly charge for joining a Chamber of Commerce is $300 to $400.
Legal Fees
When beginning a business, you may require the assistance of attorneys and other business specialists to ensure that all of your documentation is properly filed. However, hiring a lawyer to incorporate your firm will not be inexpensive.
Attorneys might charge anything from $150 to $325 per hour or more.
Social Media Management
Social networking may help you generate more cash and bring more clients to your door or website. You may submit organic or “free” content to your channels, or you can pay to reach a specific audience.
If social media isn’t your thing or takes too much time, consider hiring a social media manager. The average hourly wage for a social media manager is $26/hour, without counting any ad campaign expenditure.
Furthermore, to make use of Instagram’s built-in shopping capabilities, we recommend looking for a retail POS system that will assist you in importing your product catalogue onto the site.
Branding and Logo Design
Building a strong brand is critical to the long-term success of any retail firm. While you may create a free logo, paying for a bespoke design is a wise first investment for your retail shop. A quality logo and a strong social media presence may boost brand recognition and help you stand out from the crowd.
On average, a decent logo design costs between $300 and $1,300. The cost of additional branding services, such as brand positioning and message, will be added.
Salaries
Running a successful retail store requires a well-structured team to handle various responsibilities. Here are some key positions you may need to consider and plan a suitable salary budget for each:
| Salary budget | |
|---|---|
| Sales Associate | $11.94 per hour |
| Store Assistant | $14.17 per hour |
| Store Manager | $27 – $41 per hour |
Utilities
This covers costs for gas, electricity, water, phone, and internet service. The average utility cost per square foot in the United States is $1.47 for electricity and $0.29 for petrol fuel.
Janitorial Supplies and Services
If you want cleaning services, budget between $50 and $200 each week. In comparison, in-house cleaning costs $500 to $1,000 for materials and bulkier equipment such as vacuums.
Conclusion
When everything is computed, paid for, and processed, the average retail business costs at least $10,000 to open. However, if your shop is huge, sophisticated, or in a highly coveted location, it may cost several hundred thousand dollars. We understand that it is a wide range, but that is because there are prospects for many types of businesses with varying budgets.
