Many people dream about opening their very own shop front. You can be your own boss, manage your employees, surround yourself with products you love, and sell those to the people in your community. When done right, a shop front can be a rewarding business that stays with you for the rest of your life.
However, most shop fronts don’t stay open for longer than a few years. The first few years since the time you start your new business will be a slog. You’re just beginning to establish your business, you haven’t yet built a loyal customer base, and you need to focus on aggressive marketing. What you may not be aware of at this point is that there are certain risks associated with opening a new shop front.
The economy in which you chose to start your business and how much disposable income people have can affect your shop front. Whether the products you’re selling will attract customers or not is another risk. New shop front owners aren’t always aware of the risks associated with opening a new shop front. Protect your shop front against these five common risks that shop front owners face within the first few years of starting their business.
1) Macroeconomic factors
The economy will always be the ultimate factor that decides how successful your shop front will be at any time. During boom periods, people have more disposable income. Since people use disposable income to purchase your products, your shop front could potentially suffer during a downturn. But there’s a silver lining here that you can use to your advantage as well.
“Also Find Online Colleges to study Online”
During downturns, rent for shop fronts goes down as well. At the same time, the sale of essential products continues as usual. If your shop front stocks daily essentials, food, medicine, or other items that people can’t do without, you can use economic bust periods to your advantage.
2) Product and pricing
Choosing what you want to sell in your shop front sounds easy, but there’s a lot of research involved at the beginning. You can’t always sell only what you want to unless there’s a real demand for it. So if your shop front only stocks unique items, then you’re less likely to find a steady stream of customers walking through your doors.
The kind of products your shop front stores has to match the needs of the customers. Stocking products that your target audience wants to purchase requires you to first do market analytics. Ask yourself these questions:
- Who do you think are your direct competitors?
- What kind of products do they store?
- How have they priced their products?
- How well do customers respond to their products?
Instead of selling what your competitors are selling, look for areas that they don’t sell. So, if your competition is a clothing brand down the street, and you notice that they don’t sell shoes or accessories, then adding shoes and accessories to your inventory can attract customers who are looking for that product but can’t find it anywhere else.
When you’re pricing your products, you need to be careful. Set your products to the average of what your competitors are pricing theirs at. While this works great for most kinds of products, if you run a shop front that focuses on customized goods, your pricing will be different. If you try to be too competitive with your pricing, you might not be able to breakeven. Instead, maintain your profit margins by carefully taking into account your material and labor costs and then pricing your product 50% higher.
3) Cybercrime and theft
Shop fronts have to deal with two potential threats – the digital and the real world. Theft is a common experience many shop fronts have had to endure, but it can be dealt with pretty easily.
Turn to modern technology and add security cameras and CCTV surveillance to your shop front. Add sensors to your products so that a warning sound will go off if anyone tries to leave without paying for your product. Ask your staff to be vigilant, and tell them to monitor places where theft is more common. The dressing room of a clothing boutique is a prime example of this. An insurance policy that provides cover should any of your insured products be stolen is another way to deal with theft in your shop front.
The other risk you need to be aware of is related to cybersecurity. Hackers, malware, phishing scams, and other kinds of dubious activity can hamper your business and your reputation. Cybercriminals can steal personal data from your servers, including credit card information and client details. If this happens, you could get sued as well.
Protect your shop front by getting your hard disk encrypted. Full disk encryption is another excellent way to ward off cybercrimes. An insurance policy against cybercrimes can also protect your shop front. Cybercriminals use new ideas and technology to target their victims.
4) Inventory and supply chain management
A crucial part of keeping a shop front opening is by ensuring that you have a steady supply of stock to sell. Any disruptions in your supply chain can leave you with empty shelves and disappointed customers. You also need to be wary about what’s in trend during that season. Trends come and go, and stocking what people will want to buy that season will ensure greater sales.
Enter into a deal with a wholesale manufacturer who can provide your shop front with the latest and newest stock each season. That way, if you were selling smartphones and a new version comes out, your wholesale manufacturer will deliver it to you.
You also need to keep track of what’s actually in your inventory. This ensures that you know what is available and what needs to be restocked. A good inventory management system is a must-have for new shop front owners.
5) Property and employee-related risks
Since you’re operating your shop front through a brick and mortar location, your business is open to physical disruptions as well. Fires, rain and storm damage, accidents, and other unexpected events can harm the building your shop front is in. If you own the building, your expenses go up even more. But even if you rent the space, you may still have to pay for certain expenses out of your own pocket. This holds especially true if you can be held liable for the damage. Get the right insurance for your shop to protect against unwanted risk.
Irrespective of that, if your shop front’s glass breaks, that’s still an expensive repair job. Your employees could also fall sick or get into an accident while at work.
Read More on Forbes Magazine