Pros and Cons of Starting a Retail Business
Retail is a high risk and high reward lifestyle.
When I speak to retailers in my consulting business and ask them about their first couple of years in business, they always tell me how much they underestimated the difficulty of owning and operating a retail store. While retail is rather easy to get into with fewer barriers to entry than most small businesses, the truth is there is a lot more to it than people realize.
If you are considering opening a retail store, be sure you know what you're getting yourself into. While it can be very lucrative and rewarding over the long term, in the beginning, it can be a real slog. Don't have any delusions that the first few years will be easy because retailing is not for the weak of heart. You want to choose a business or a product to sell that you believe in strongly because you'll have tough times to muddle through. And be prepared for the customers not to love your products or services as much as you do or see the value.
There are many highlights (and lowlights) of retailing. Your mileage may vary, but these are pretty universal characteristics of most retail organizations, whether brick-and-mortar or online. Think long and hard before you make any commitments, because as with most things once you're in your retail business, it's not all that easy to get out. I had five stores in my little chain when my son told me he did not want to take over the business. Selling it was incredibly difficult. And years later, my name was still attached to some of the bills and debt even though I sold the business.
Here are a few pros and cons of retail ownership.
Pros of Retailing and Business Ownership
- You get to be the boss. For better or for worse, the buck stops with you, retail owner. You get to set the rules, hire the employees and eventually reap the profits.
- It's a great feeling to be able to make a living from a company or concept you believe in.
- You can create the atmosphere and a company culture that you want to work and shop within.
- You'll meet new people, whether customers, colleagues or competitors and will almost certainly learn more than you ever thought possible.
- You get to help people in a real, tangible way. Whether your providing goods or services, you can make a difference in the lives of your customers.
- You can provide jobs and help others realize their dreams in life as well.
- You can become a part of the fabric of your local community supporting broader visions within the civic sector.
Cons of Retailing and Business Ownership
But along with the good of owning a retail business comes the not-so-great.
- Being the boss is a plus and a minus in some ways because while the freedom is great, it comes with almost total responsibility. The buck stops with you, so you have to be ready to take the bad along with the good.
- You'll almost certainly have to make a large cash investment upfront, even if you go the franchise route. Plus, be prepared to be the guarantor on all of your retail business' debt - meaning you will be responsible for all the bills even if you close the business.
- If you're allergic to long hours and little or no pay, it's not even worth getting started with a retail business, because that will be what it looks like for at least the first year.
- Vacations? Maybe if you go to a trade show or convention, but otherwise, time off is out of the question while your business gets going. You'll probably have to wear a lot of hats, from ringing the cash register to cleaning the restrooms.
- And while meeting new customers is usually a pleasant experience, not all customers are going to love you. It will take some getting used to. Likewise with hiring employees, sometimes you're going to get a dud, and no one likes having to fire someone. But that will likely fall to you at some point.
- Even after you've started turning a profit, if this is a business you love, you might not feel like you're always getting the most bang for your buck. It is why it's so important to pick a business or a line of merchandise you're passionate about, so you can weather the tough times.