What are the costs in running a shop [2022]

What are the costs in running a shop [2022]

The cost of running a shop gets to be complicated very quickly. There are endless seams of complications, variables that need to be taken into account, and lives that are impacted by how well the shop is operated and run.

A license for running a shop can cost between £40 and £2,900. The cost may change based on the cost of upkeep, the wage of the workers, utilities, and anything extra that might be needed to pay for rent, products, or any number of additions required to run a shop.

These estimations are great things to go off of, as they provide the framework to plan for expansions and ideas that have yet to come to fruition.

Shop Size and Type

The size of the shop will determine a lot of the later pricing and costs that have to be factored into the ultimate overall budgeting. The size of a shop will affect the rent or the price of the space itself, as well as the utilities and how many employees will be needed to run the shop properly and efficiently.

The type of shop goes into what sort of product the shop specializes in purchasing, creating, and selling. The product itself will generate income and profit, but it has to be something already thought through as something that will bring in potential customers and investors, and you need to have all of the appropriate licenses to make that happen legally.

Renting versus Owning

The space in which the business is run is extremely important. Most first-time business owners will rent a space on a street to turn it into their own. What the landlord will charge greatly depends on the market in the area, the size of the shop, and the rules that are in place in the area. These rules will be different than renting an apartment, and it’ll come with a few different options.

The annual cost will vary from city to city, but the upper end of rent will be about £14,355 in London. In much smaller cities, rent will cost about £1,030. This will vary on where in the city, what sort of building is being rented, and the landlords. Make sure to research what is acceptable in the area and what other building owners charge others.

Owning the property and building space is much easier to work around since most of the other issues that might arise with a landlord wouldn’t have any hold on the outcome of arguments anymore. Most commercial properties start at around £150,000 and a downpayment. However, the cost to own the property will vary depending on the size and where it is located. If your business can afford to buy the property outright, it might be worth it in the end.

Employees

 

Shop Employees

 

The minimum wage in the UK is around £9.50, which should be taken into account when hiring employees. Being able to pay your employees more than minimum wage is advised and will help a business owner keep employees for longer. If you pay a living wage, especially if it is hard for employees to find a job that pays more, your employees will stay for years rather than months.

Being able to pay employees and subsidize them in other ways, including benefits as the shop gets bigger, will help to retain the employees as well as garner a reputation for being a reputable business and shop owner. While this is definitely something to aim for, when you first open your business you should set a reasonable wage for employees and factor that into the expected retainment from profits.

Utilities

The utilities will make a sizable dent in the money available to pay for things, as these include gas bills, electricity, and the water bill. If your store is heated by gas, you will have to pay that as well. These things are all necessary to make a shop feel professional and nice, both for the employees and customers that come through to look at the wares and products.

Having a good working bathroom, sinks that have good water pressure, lights that give a good ambiance, and a cool or warm place during the extreme weather will help to make the shop more inviting and enticing for the average passerby.

A shop owner should estimate a good £115-£200 for utilities on a monthly basis. This will allow room for when the utilities are higher or lower since most utilities will charge based on the average use of the month, so what you pay in utilities will vary each month.

Maintenance

As with utilities, there is often the same wiggle room with maintenance costs. There is no way to tell when or where something might need maintenance and even less so when renting from a landlord. The best thing to do is stash away a good amount of money to be used for maintenance as necessary to ensure that you have the ability to pay for the needed repairs.

Keep in mind that if your store looks poorly maintained, customers won’t want to come inside to make purchases.

This might look like £300 to £500 set aside for smaller, emergency maintenance and then drawing from the regular profit if the maintenance will require more to complete repairs. Be sure to look out for what the contracts pertaining to maintenance and other construction are in the contract for renting a building space before doing anything outrageous.

Maintenance could range from plumbing to electrical to working on smaller things like windows. Depending on the contract with the landlord, it could be covered by the landlord or the cost might have to be paid by the shop owner. If the shop and most importantly, the shop location, are physically owned by the business owner, those maintenance fees will have to be paid by the store owner.

There should be emergency funds for larger fails on the maintenance side, such as if a pipe bursts or the heating/cooling system fails on a day with extreme heat. These things might appear small, but having the funds set aside, either from the profits of the shop or from the startup funds, will make these eventualities be a lot less stressful for the owner and the budget.

Renovations

 

Shop Renovation

 

Renovations, especially if a shop owner purchased a space and isn’t renting it, are much easier to navigate when there is no discussion with the landlord. However, if there is a landlord, making sure there is communication and permission to make changes to the space is very important to avoid breaches in a rental contract or anything like that.

The cost of renovations will depend on if they’re done by the shop owner themselves and cobbled together or professionally done, as well as the price of the materials, how complicated the designs are, and what needs to be changed. If it’s structural, it will cost a lot of money. Most construction and renovation companies will give quotes based on circumstances and not based on the hours worked or a fixed price. Contracts will be discussed before agreeing to a job.

Included in the renovations will often be the shop fronts. These can range from being extremely expensive to very cost-efficient and are extremely influential in what might make a potential customer interested in the business, causing them to go inside and purchase items. The same sort of quotes for the vision of a shop owner applies to what the pricing is. These shop fronts are some of the most important marketing that a shop can do that might catch the eye of a customer and draw them into the shop to see what it offers.

The types of materials both for renovations, inside and out, will also factor into how much it will cost to do them. All in all, a shop owner should budget a couple of thousand pounds to be able to afford renovations to their liking but still within their means. This might mean going through some negotiations, but that is part of what owning a shop is about.

License and Insurance

The licenses and insurance required to actually run a shop are important costs to making a successful business. If the shop is food-based, there are certain licenses that need to be gotten in order to prove that there are safe food practices within and that the food is safe to sell and consume. The license to even sell something is also very important to factor into the cost of the shop.

The license will vary depending on what kind of business it’s for, and as such, it will cost different amounts of money. Obtaining all of the necessary licenses could cost as little as £40 and cost as much as £2,900 depending on the business and the products that are sold. Additionally, the place and authority in which the license is being gotten from will sometimes have additional fees that other places might not.

Shop owners should research what sort of license they’ll need to run their business legally. There are a few different tools available to help obtain this information, particularly on the internet, but it’s helpful to check with the local legal departments to ensure that all appropriate licenses are acquired before the opening of a shop.

Insurance for a shop is also going to affect the price of keeping a shop open and functional.

Marketing Efforts

 

Market Your Business

 

The marketing efforts for any given shop will have vastly different resources. As such, the cost will be different as well, depending largely on the type of marketing that is done for the business, the business’s products, and where the marketing is put out for the public to see.

The modern age has made for a large expansion in what kinds of marketing there can be, and one of the things that might come in handy is purchasing a site domain so that there will be a website for the shop where online orders can be placed and processed. A website can also help you categorize and track your inventory.

Marketing also includes the appearance of the shop, which was mentioned in the renovations subheading, but can be expanded upon seeing as the front of a shop is a huge part of what draws a customer in to peruse the wares or intrigues a guest enough to have them searching up what the shop might sell. There are a wide variety of things that can be done to attract an audience for the shop and unfortunately, a price tag can’t always be set on those.

Create a logo and put it on your windows, as your logo will catch the attention of potential customers. However, vinyl logos can be expensive. If you sell clothing items, you could also feature some of your best items on mannequins in your shop front windows.

Legal and Finance Options

Something to factor into the cost of running a shop is whatever legal fees, costs, or bills that might appear, as well as the option to have someone finance the shop and business owner. This is sometimes a great option, especially for a shop owner who doesn’t have as good of a handle on the financial aspects of the business world as someone who is trained in that field does. However, finding someone for that job will be easier said than done and cost a pretty penny.

Hiring a financial advisor could cost £75 to £350 an hour for their services, though the benefit of these costs could include greater profit, better resources, better products, and an overall handle on the finances of a shop, rather than being high and dry in what might need to be done to enable a shop to flourish and grow.

If a shop owner is confused at any point with any of the potential legal and financial proceedings, it is highly advised that they should seek out professional advice on what to do in their circumstances. As the business grows, it will also be helpful to bring someone on to help with the negotiations of legal contracts, as contract negotiations can be tricky.