Growing your business into a storefront is not a decision that should be taken lightly. 37 Oaks works with small, product- based businesses across the U.S and we have seen, heard and coached them through the good, bad and ugly of this process.
Before you sign a long-term lease, consider these 7 points to help you prepare for this process.
1) Location, Location, Location!
“We are not lost, we are locationally challenged” - John M Ford
We are going to start with a point you have probably heard a million times. Location, location location. Your location is probably the single most important aspect in a storefront’s success and making a smart decision on this should not be underestimated. Sometimes, we may be attracted to a location because of its design potential or price. Although that’s important, there is both an art and science to choosing a location. If not chosen correctly, you can find yourself stuck at a location that does more harm to your sales then helps.
There is a lot to consider in this process. So here are a few pointers that we often see our entrepreneurs forget.
Emotional & Practical Decision: We need to love our space, but make sure you are clear on how that space contributes to your business goals and operations.
Ease of Parking: the last thing you want to do is make it difficult for a customer to shop with you. In fact, 40% of shoppers say they avoid shops where parking is a challenge (flashparking.com).
Competition: Is there enough room for everyone? Think about where customers will shop in your community if they don't shop with you. If there is no strong point-of-difference between you and them, then you may want to reconsider that location.
Signage: Potential customers can’t shop with you if they don't know where you are and what you do. Did you know that certain neighborhoods and cities have laws on where signage can be placed in your window or on your building. It is good to understand this and to see if your signage can be visible from a distance.
There is so much more to dive into regarding this as we just scratched the surface. Point is- do your research. Once you are in a long term lease, it is not a simple process to get out of. Choose wisely.
2) Store Inspection
“Truth is confirmed by inspection and delay. Falsehood by hate and uncertainty” -Tacitus
You have found the PERFECT location! Although it may seem like an ideal fit, it is important to make sure there are no hidden problems. Problems such as incorrectly placed electrical fixtures to poorly designed air conditioning units could cost a fortune to fix. If you catch it in the beginning, you can possibly include repairs in negotiations with your landlord. If you catch them after signing a lease, these issues could delay store opening, interfere with day-to-day operations and lead to unplanned costs. Here are a few points to consider before signing a lease.
Bring in an architect or contractor to inspect the space. They are trained to see things about the location that you may overlook.
Understand which maintenance & repair costs are the responsibility of the landlord vs you (the tenant). These details should be clearly noted in the lease agreement.
Include insurance costs in your budget. If you have an issue and need to make a claim, this benefit can relieve some stress in your budget.
Set aside about 2-5% of your sales for maintenance and repairs. Unfortunately, these always come as a surprise, so the more you prepare for surprises, less stress falls on you.
Get your facility team in order. There is nothing worse than having an emergency and you have to spend valuable time researching, finding someone to trust and negotiating prices. Although you may not need them now, it helps to have the right people on speed dial when you need them.
We know you will find that perfect space, but don’t let emotions take over in the early stages. Make sure this space is going to set you up for business success.
3) Inventory Planning & Management
"Inventory is money sitting around in another form” - Rhonda Adams
Before we talk about space design, let’s talk about inventory. Inventory management is basically the process of having the right stock, at the right levels, in the right place, at the right time, at the right cost and at the right price. Lots to balance, right? We know. This is sometimes an overwhelming topic for entrepreneurs, but why are we stressing it? It's not considered a sexy topic, but it is important.
Too much inventory can lead to expired products and waste. We don't want that and we can't afford that. Equally as important, a product sitting on your shelf is money sitting on your shelf. A product does not bring financial benefit to you until it is sold. Extra inventory on your shelf are dollars sitting around that could be used for marketing, salaries, design, technology and more.
Too little inventory can lead to lost sales, lost profits and a bad customer experience. One reason why customers shop in a storefront is because of instant gratification (they can leave the store with product-in-hand). When you are out of stock on the product they want, it reduces the reason for them to shop with you, and they may not come back.
Look at inventory management as a financial activity. We need to take the time to determine how much inventory we need to sell to cover the cost of running our store. If this is an area you struggle in, check out 37 Oaks University courses in our “Storefront” and “Strategy & Operations” series.
4) Visual Merchandising
“Advertising moves people towards goods. Merchandising moves goods towards people” - Morris Hite
Visual merchandising is a marketing practice that uses floor plans, color, lighting, displays, technology, and other elements to attract customer’s attention. Of course there is an art and design side of these techniques, but there is also a science to it. There is a reason why. Global retailers spend thousands of dollars on the research of design, because it helps drive sales. You don’t need to spend that, but understanding the basics will have a big impact on your business.
Ultimately, your goal as a business owner is to create a great customer experience so people will buy at profitable levels. Visual merchandising impacts customer experience, buying and profitability. So when we don’t pay attention to this, we leave a lot on the table.
There is a lot to cover in this category, but here are a few examples.
Window Display: your store’s success greatly depends on customers coming in to shop- let’s call that store traffic. How are you going to grab the attention of shoppers that have never shopped with you before, don't know what you do and how you do it? Your window display is the billboard of your business. It is important to be thoughtful in its design as it is a limited space that needs to say a lot.
Product Display & Store Layout: As we said, large retailers invest a lot into understanding the way shoppers shop for a reason. What motivates them to buy? How placing things in a certain location will drive more sales and/or profits? How do shoppers feel in different stages of their shopping journey? When you don't consider the research and business side of your design decisions, you could end up losing sales, and not even know it.
Color: Yes, sales is about providing a great product, to the right person at the right time. But it is also about psychology and persuasion. As storefront business owners, there are a lot of ways to do this, and the use of colors is one. Colors are important because they trigger certain emotions and responses. Although a subtle and subconscious effect, it helps create an environment that drives sales and provides a great customer experience.
There are many elements in visual merchandising and they all need to work together to make your store work. Having a sense of where you want to focus for opening will help you in budget planning. Someone has to pay for all of this! :) It is very easy to get lost in the fun of designing your store, but remember, you still have other parts of the business to focus on that are equally as important to business success. Be thoughtful in how much time and money you allocate to this process.
5) Marketing Plan
“Running a business without marketing will kill it” Paul Cookson
“There is no build it they will come model in retail” , “customers cannot buy from you if they don't know who
and where you are” are common quotes you will hear our founder and CEO, Terrand Smith say. If your brand does not have a strong customer following BEFORE your store opens, then you have a lot of work to do. Nothing to get overwhelmed about, it's just something to plan for.
Marketing is another broad category as it includes tactics like email blasts, text messaging campaigns, social media, paid ads, influencers, price promotions, and the list goes on. We can’t cover everything here, but in working with thousands of small business owners across the country, here are a few things to consider as you are laying out your marketing plan.
Building customer awareness takes time: this is a process and you need to prepare for it to be. If you do not have a strong customer following before you open a store, then it will take time to build it up. This is why it is important to begin marketing efforts before you open. Think about it as a “Coming Soon” campaign. Remember, there is no “Build it they will come model in retail”.
One advertisement or post cannot do all the work. On average, you have to get a message in front of customers at least 5-7 times before they even consider what you are saying. Consistency is the name of the game in marketing.
One thing we know about entrepreneurship is that we don’t know it all. Another concept you will hear Terrand Smith (37 Oaks’ Founder/ CEO) often talk about is the importance of testing and learning. This gives you an opportunity for customers to tell you what’s working, and to adjust what’s not. Sometimes, when we find something that is not working, it’s not that it is a bad idea, it's just that some things may need to be adjusted or done differently to see improved results.
You can’t change what you don't measure. For each and every marketing tactic you do, it is important to understand the results. If you did “X” then the results of that are “Y”. If you have a goal for 50 people to click on your website after you post a paid ad, then you will need to track the results to see if it did just that. If so, then great. What did you learn and what adjustments can you make so you can reach 100 people? If not, why? What did you learn and what adjustments can you make to quickly try again. There is no more “throwing spaghetti at the wall and see what sticks”. Let’s be thoughtful about what we do.
Marketing is a topic you can spend a lot of time on, and honestly, it can get overwhelming. If you are in the early stages of this process, we recommend taking our 37 Oaks University On Demand courses in marketing strategy. It takes all the craziness of this process and puts it in a simple and digestible format of where to start and why to start there. Check out 37oaks.com/ondemand for more details.
6) Technology
“You can do anything, but not everything”. - David Allen
If you think you can operate all aspects of a storefront on your own, then you are sadly mistaken. It is a big task with a lot of moving parts. The more you rely on technology, systems & apps, the more you can not only operate a store, but do it efficiently. These tools are designed to free up your time so you can focus on things that technology can’t do. Long gone are the days of pencil and paper for everything. These tools should make your life easier.
We know for some, the topic of technology, systems, apps and integrations can be overwhelming and intimidating. But, it does not have to be. Here are a few points to consider as you think about the right tech for your business.
Cost: Although you may need to make bigger investments in tech, it all does not need to be expensive. Sometimes you can find free or low cost versions, but it probably comes with feature tradeoffs. But, if you are on a budget, then those tradeoffs may be ok.
Research: Much of the frustration and intimidation of storefront technology can come from answering the question, “which tech should I use?” There are a lot of options out there, so we first recommend talking to business owners that match your profile and see what they are using. Although much technology can work with many types of businesses (food, apparel, beauty, books, etc), there are some nuances of each category that should be considered. If someone has done the research, experimented and learned, then leverage their knowledge to give you a running start.
Integration: Like the other topics discussed, there is a lot that falls under the topic of technology. This can include POS systems, accounting, social media management, email blasts, CRM, inventory management, vendor management, security, and more. Other sources of frustration and intimidation in this process come from finding the tech that works together, or integrates with each other. To help with this challenge, focus on platforms that include much of what you are looking for. For example, POS systems may have a way to send email blasts & text messaging campaigns; manage customer databases or send automated purchase orders. Your accounting platform may send invoices, create financial airports and automatically generate monthly reports. It also helps if these platforms have apps or plug-ins that fill in the gaps on what you find is missing. This way, you know that the app or plug-in integrates with the platform.
The question is not IF you should use technology, it's more about what technology should you use. Remember, if it doesn't make your life simple, then ditch it.
7) Financial Plan
“Every decision you make in business has a financial consequence” Barbara Vancik
37 Oaks educates and prepares entrepreneurs for growth into e-commerce, wholesale, pop ups and storefront channels. Out of all these channels, storefronts can be one of the more expensive channels. It is super critical to have a good idea of start up cost and year-1 operational costs before you open. Here are a few things to consider in this process…
Start Up Costs: Each point mentioned above takes money. And we just scratched the surface on everything that needs to be considered. It is important to outline what you want your store to look like, the goals, and then back into the costs to make it all happen. You don't want to get halfway into opening a store and find out you do not have the funds to continue. Or worst, launch with a store concept that is sub- par.
Year 1 Operating Costs: Operating a store has many parts and all those parts have costs. Some costs are consistent each month and some will vary each month. It is important to lay out all of your Cost of Goods Sold (COGS), Expenses and the Sales you will need to cover it each month. Even if you are making quite a few educated guesses right now, that is ok. It will give you a goal and a good idea of what it will take you for you to keep the doors open.
Bookkeeping: This is a good practice to pick up early. As you can tell, you have a lot of financials to manage in the early stages of launching a storefront. Getting a bookkeeping system or software that can manage and categorize all your expenses will be helpful. It helps you stay on track with your budget and have visibility on where your funds are going.
Capital & Funding: As mentioned, opening a storefront can be costly, and you will see why as you lay out your start up and year 1 operating costs. We don't say this to scare you away, we say it to set expectations and help you prepare. Our neighborhoods need you to open and be successful, so there is a lot of financial support for entrepreneurs that need it. This can include loans, grants, investors or just ways to save or use business profits to fund your venture. You just have to research and feel comfortable with the route you choose to be financially sound on this journey.
37 Oaks is passionate about storefront businesses because they mean a lot to strengthening and revitalizing our communities. Your success plays a big role in this: You create jobs; generate tax dollars for schools and roads; support the needs of residents and businesses in the neighborhood and you improve the overall quality of life in your area.
We know this is a big step and we know it can be overwhelming, but take it one step at a time and you will get through it. This is where 37 Oaks comes in. We have a ton of resources to support you through this journey.
FREE Download: Download this Resource Guide so you can reference these points as you launch your business.
37 Oaks University On Demand Courses: Building commerce, distribution & retail knowledge from the comfort of your personal device. 37oaks.com/ondemand
37 Oaks Community: Here you can get a list of helpful resources; join discussions with small business owners and experts and get the support you need to take your business to the next level. Join for FREE at 37oaks.com/community
37 Oaks University Bob & Weave Series: Learn how to navigate the punches of business ownership. Watch this free live interview series with industry experts and experienced business owners. 37oaks.com/bobandweave
Terrand Smith
Founder/CEO, 37 Oaks Consulting