So you’re starting a business and you got a great idea of how to sell your product. Soaking your toes in a retail store can be a bit difficult at first, so be familiar with the different types of retail structure if possible.
It is important that whenever you inherit a business, you need to make sure you have all the information on company registration. This includes all the paperwork, including the updated taxation reports and bills. This will ensure that you know how the business is performing and what you need to do to take it to the next level. Make sure you work with real experts when it comes to handling or transferring the paperwork. You cannot afford to be working the new business with incomplete of incorrect company registration documents.
New entrepreneurs can take advantage of many forms of retail ownership. Each business model has its own pros and cons. Choosing the type of retail business to start depends on why you want to own your business and your lifestyle, family, personality, and who you sell. Do you have an employee or just you?
The main types of retail ownership and their respective pros and cons and support systems are:
- Independent retail store
Independent retailers are retailers that build their business from scratch. From the business planning stage to the opening day, independent retailers do it all. We can also hire consultants, staff and other staff to support our business endeavours.
The opportunities are endless, but be prepared to put a lot of hats on this kind of business until you have an income. It may take some time before you pay someone else.
This type of retail endeavor has a unique brand and is struggling to be heard among the retail giants. However, if done correctly, it can be a preferred shopping place for local customers.
- Existing retail business
The person who inherits or purchases an existing business takes ownership and responsibility for the efforts of others. The foundation has already been established and the baton is being delivered to you. This is often the scenario of a family business where a generation takes over from retired parents. Especially if your parents have built a company, they have a great responsibility to carry on the tradition.
Buying a franchise is buying the right to use the name, product, concept and business plan. The franchise receives a proven business model from existing businesses. Since the store must represent these values, it is imperative to adhere to all company practices and their principles. Clear knowledge of what costs to bear and when the parent company will issue the bill is key to maintaining a healthy relationship with the franchisor.
A licensed reseller is a mix of franchise and independent retailers. Licensee has the right to sell the product brand (sometimes exclusive). Unlike franchises, dealers can sell a variety of brands, and license providers generally have no fees. Distributors may or may not be identified as an authorized seller or company trademark. Think of cars and trucks as the most common examples of dealers.
- Member network
This type of store is similar to a franchise or dealer, except that the connection with a larger brand name is about the purchasing power of inventory and services. In this model, it does not follow the strict guidelines or rules that the store must follow. In most cases, as long as you keep your purchases at a certain level, you don’t even have a percentage of your sales to pay off each month.
An example is the Do it Best hardware store. Some of these stores have garden centers, others have crafts and hobby areas, and some focus on wood and hardware. Neither does look the same, but they share the benefits of private-label products and the cost of advertising.
In the context of retail ownership, the comparison between private label vs white label products is an important aspect to consider. Both private labels and white labels refer to the practice of retailers selling products under their own brand name, but there are some key differences between the two.
Private label products are those that are manufactured specifically for a particular retailer and are exclusively sold under that retailer’s brand. On the other hand, white-label products are typically generic or unbranded products that are produced by a manufacturer and sold to various retailers who can then label them with their own branding.
- Network Marketing
Multilevel Marketing (MLM) or network marketing is a business model in which the sale of products relies on network users. Not only are the products sold, but different salespeople are being hired to sell the same product or product line.
It’s not the first type of business to consider when discussing retail, but Advocare (#1 MLM company) has used this model quite successfully over the years.
This type of retail ownership does not require a physical storefront, inventory is sold at once and is owned by the brand, not the retailer.
Also Read: Internet Marketing Tips for Small Businesses
To start a retail business, you have a number of options. Each business model has advantages, disadvantages, and styles. Spend time interviewing people who run different types of retail business before you make your choice.