Experience and knowledge of the business in mind is one of the factors to consider when setting up a retail business. The lack of such experience can reduce the success rate of the business, since it could not cope with the problems of that branch of retail. Therefore, it is worth working as an employee first. The branch of retail trade contemplated is another factor to consider.
You must consider whether your financial sources are adequate and whether you know enough about the business. For example, to set up a cafeteria, you might need something like $ 200,000, while to set up a small concession stand, you might only need $ 2000. On the other hand, there are a few other factors to consider as well and they are numerous. in numbers such as the location of the premises, the adequacy of the capital, the sources of supply of goods, the law of comparative advantage and finally the laws and regulations.
To decide the location of a local or a particular area, for example; in the center of the city or in any urbanization or even on which side of the street to set up a store and for that, factors such as:
• The “demand” for your product. For example, if you are thinking of opening a jewelry store, it would be more profitable to have one in town. The market is much larger as people from the suburbs and the city would converge there.
• The “competition” of stores that sell similar products. Typically, it would be wiser to stay away from areas where there is competition, unless you can offer better service at lower prices, or demand expands in the near future.
Rents in the city would certainly be higher than in the suburbs. If you intend to buy the premises rather than rent it, you will surely need more capital. If you don’t have the necessary capital, you can raise it through friends, family, banks, or other financial institutions. Examples, financial companies.
It is important that you know which wholesalers to go to. Some may offer better discounts and others may grant longer credit. Is the law of comparative advantage more profitable to stay in your current job earning your monthly salary plus interest on the savings you have accumulated? Remember that if you become a retailer you have to give up your salary and interest on your savings. Therefore, your net retail profit must be greater than the lost sum.
Laws and regulations are another factor to consider when establishing a retail business. You should do a study of the commercial laws regarding the retail line in which you want to enter. Do you need to get a license? Can you trade with the specified goods and in the place selected by you?