How to open a shop [2022]

Are you wanting to open a shop? Are you wanting to open a shop specifically in the UK? Are you at a loss for where to start? This article can help you get started with the basic steps of how to open a shop.

Keep reading to learn more about some of the steps of how to open a shop!

Step 1: Decide What the Business Will Sell

This step seems obvious, but it really is key to having success in the steps that will follow. Knowing what you are going to sell, whether that be clothing, cookware, books, or home decor, is the base of all the business and marketing that will follow. It is important when deciding what you will sell to do some research beforehand.

You don’t want to be selling cookies with a bakery right next door. Identify a product that is unique or put a fun twist on an already existing product that will draw people in, then the marketing strategy will help encourage people to then come in and purchase it.

Once you have decided and solidified what products you will be selling, you will need to establish a business relationship with some manufacturers that are both professional and reliable. This is important because you will want to know you can count on those manufacturers to get you the correct amount of product on time so you don’t run out of product or receive product late, as that can delay sales, especially if the product is extremely popular. You may have to have some trial and error through multiple manufacturers until you find one you can rely on.

Step 2: Develop a Business Plan

When starting a business, you will want to put your best foot forward when approaching potential investors. One way to do this is to develop a business to present to them and for you to reference as you go through these beginning steps of opening up a shop. A business plan will need to include the following elements:

• A description of your business and products
• SWOT Analysis: Identify strengths, weaknesses, opportunities, and threats within your chosen market.
• Marketing Strategy – Digital, Social Media, Copy
• Estimated income – Give a confident but not unrealistic number
• Estimated budget and its source
• A detailed checklist of everything that needs to be accomplished before opening

These are all of the elements that most investors are sure to ask for when you approach them. You can always have things in addition to what was mentioned beforehand that you would like to discuss with that potential investor, but these are basic points that will help have a solid understanding of each party and their expectations.

Potential investors want to know every detail of your products, marketing strategy, and budget and really get to know where you are at in your business plan so they can know how to best help you and determine whether or not they should invest in your business.

Step 3: Set Up a Business Structure

 

 

One of the major steps in starting a shop is setting up a business structure, meaning how you want your shop to be set up legally. There are three major options to choose from when it comes to deciding how you want your business structure to function. These options include sole tradership, limited company, or partnership.

A sole tradership business structure puts all of the responsibility on you. If you feel confident in your abilities to make your business function completely independently and don’t want to listen to various opinions, a sole tradership business may be a good option for you. The downside to this option is that if things go badly, it’s all on you and there’s no one to pass the blame to. If things go extremely well, you are the sole recipient of the praise and money.

A limited company is a slightly safer way to play it if you don’t want all the responsibility on you, especially if things don’t go well. This option protects you from taking all the heat for debts or late payments. If you start to lose income and aren’t able to pay employees, that won’t fall on you. The major deterrent in this option is that you will be charged a 20% tax on all profits.

A partnership is a great option if you are hesitant about starting up and want a shoulder to lean on while you get your feet on the ground. You would work with one or more businesses, which is great for small businesses because that kind of camaraderie happens naturally already.

Step 4: Register the Shop

While this step isn’t as urgent as the others, it is still important and it’s better to get it done sooner than later. For your shop to be open legally, you will need to register the shop through HMRC before the end of your first tax year.

In order to complete the registration process, you will need to follow the following steps: submit your business name and address to HMRC and register for the VAT with the government. If you are not registered within the first 30 days after the end of your first tax year, the HMRC will contact you and request your immediate registration.

When you register, the HMRC will need to determine how much tax you will owe them, so it would be smart to come prepared with the numbers for how much you have already spent on business expenses and the number of employees you have if you have any and what roles they occupy in the shop. It is important that you are completely transparent and honest when registering to make sure they are getting all the correct information they need and you are getting properly registered.

Step 5: Set Up Finances

Just as there are multiple ways to set up your business structure, there are multiple ways to set up your business’s finances. This step is a huge point in the make or break of your business, so consulting with a financial advisor is a good idea to make sure you have every financial aspect of your business accounted for from the start. There are three options to consider when setting up finances for your shop: personal savings, a business loan, and investors.

Personal savings is the option that is most popular with most small business owners. This option allows you to use all of your own personal savings to purchase any and all equipment, supplies, and materials that you will need prior to opening. While this does mean you are using your own money, it also means you won’t have to pay anyone back and can keep all of the incoming profits.

Using a business loan is your best option if you don’t have enough personal savings to get the shop up and running. This comes in when you present your business plan to potential investors, which can then indicate how much money you would need to take out as a loan to get things started. The cons related to a business loan are that they typically only give you money for 3-5 years and you will have to pay all the money back with interest unless there is a prior arrangement made with the investor.

Investors are a difficult option to use mostly because it can take a lot of persuasion to convince an investor that your business is worth putting money towards. Investment is also something you will have to pay back, and the catch with an investment rather than a loan is they usually will want all of the money that they invested in your business back, as well as a percentage of the business’s profit. Investors are usually the last resort for most people in regards to setting up finances.

Step 6: Open a Separate Business Account

It would be a smart choice to open a separate business account from your personal checking account so it is easier to keep track of purchases and have those finances completely separate from your personal finances so no lines get crossed or money gets lost.

In addition to the ease of bookkeeping, there are more benefits to opening a business account including being able to write off business expenses against your taxable income, extra services that come with a business account including a business credit card, low business overdraft, as well as potential advice from business experts that have experience in the same area.

When setting up a business account, do your research beforehand. There are hundreds of options with a hundred different branches that you could choose from, and all of them offer different benefits and capabilities. Make sure you know what you want and compare your options to make sure you are making the right decision.

Step 7: Obtain Business Insurance

 

 

In addition to setting up a business banking account, you will need to set up business insurance. You can do this at the same time you set up your business banking account, just let them know you would like to add insurance.

Most banks have options for business accounts that already have insurance attached to them, but that is not always the case, so it is always good to ask. That being said there are three options that are typically offered at most banks: public liability insurance, professional indemnity insurance, and employer’s liability insurance.

Public liability insurance is the basic one that most businesses that are starting out decide to go with. It will help cover legal fees and damages if any employees get hurt while on the job. If there are ever any claims made against the business, you will not have to pay for a lawyer to come and bail you out.

Professional indemnity, in most cases, will cover the expenses if a product that is sold from your business causes harm or injury to one of the employees while they were off-site.

Employer’s liability insurance is coverage for those who were injured while on the job. This does hold you as the employer responsible and can help protect you from any further charges the injured employee may claim against you.

Step 8: Create and Launch a Marketing Strategy

While creating a marketing strategy is one of the last steps, it is one of the most important, especially when you are at the end of your preparations before opening day. You are going to want to create a marketing strategy that involves digital, social media, as well as copy. You can either decide to launch your marketing strategy organically or budget for it and put some money into it so your marketing content has a wider reach and a stronger influence on people.

Each aspect of marketing is important. Digital will cover things like ads on websites, tv commercials, etc. Social media will cover ads on various platforms like Instagram, Facebook, Twitter, etc. A copy will cover any ads you want to run as physical copies to hang on bulletin boards, in other businesses’ windows, in newspapers, etc.

There are many ways to get your name and products out there, but you have to create a strategy for it to be successful. Your marketing strategy will be completely unique to your business and how you want to see it pan out.

One of the biggest pieces of advice we can give you is to make your storefront unique and special. Customers will see your storefront first, so make sure to market your store based on things you think will be popular.

Step 9: Understand Business Rates

Business rates are inevitable. In addition to all the expenses you are already paying to set your shop all set up, you will also be required by law to pay business rates.

Depending on where your shop is located will determine what you are required to pay in regard to business rates. Most of the time you are allowed to opt to pay those rates in 12-month installments if requested, but that is not always the case, so if that is something that interests you, make sure to talk to your local council. Some locations and buildings are exempt from business rates altogether, so it is imperative you check with your local council to find where your business location lands.