Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their retail and online stores. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a retail business plan template step-by-step so you can create your plan today.
How to Write a Retail Business Plan?
A retail business plan is a roadmap for your retail business that outlines where your business stands today and how you plan to grow over the next five years. When learning how to write a retail business plan, you’ll focus on defining your business goals, detailing the strategies you’ll use to achieve them, and presenting a clear plan for operations, marketing, and sales. A strong retail business plan also includes comprehensive market research, demonstrating your understanding of customer needs, industry trends, and the competitive landscape to support your growth strategy.
Why You Need a Business Plan for a Retail Store
If you’re looking to start a retail business or grow your existing retail business you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your retail business in order to improve your chances of success. Your retail business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Retail Stores
With regards to funding, the main sources of funding for a retail store business are bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. The loan officer will not only want to confirm that your financials are reasonable, but they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a retail business.
The second most common form of funding for a retail business is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan.
How To Write a Business Plan for a Retail Store
A strong retail business plan should include 10 sections as follows:
- Executive Summary
- Company Overview
- Industry Analysis
- Customer Analysis
- Competitive Analysis
- Marketing Plan
- Operations Plan
- Management Team
- Financial Plan
- Appendix
Executive Summary
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of retail store you are operating and the status; for example, are you a startup, do you have a retail business that you would like to grow, or are you operating a chain of retail stores.
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the retail industry. Discuss the type of retail store you are operating. Detail your direct competitors. Give an overview of your target market. Provide a snapshot of your retail marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
Company Analysis
In your company analysis, you will detail the type of retail business you are operating.
For example, you might operate one of the following types:
- Specialty Store – a store with a tight focus (e.g., hip apparel for women)
- Off-Priced/Used Goods Store – sells massively discounted or used products
- Department Store – often located at a mall and offer tons of products (e.g., Macy’s)
- Supermarket – focuses primarily on food items
- Convenience Store – offers just the most popular items a supermarket offers in a much smaller location
- Drug Store/Pharmacy – primarily offer medicines and medical products
- Discount Store – offer large inventories at low prices (e.g., Walmart)
- Hypermarket – offer many food and non-food items often in large quantities at a discount (e.g., Costco)
- E-commerce – offers products for sale online (e.g., Amazon)
In addition to explaining the type of retail business you operate, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to question such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new store openings, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
Industry Analysis
In your industry analysis, you need to provide an overview of the retail industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards local retail businesses with online counterparts, it would be helpful to ensure your plan calls for a significant online presence.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section:
- How big is the retail industry in terms of dollars, and what is its specific valuation within your local service area?
- Is the market currently experiencing a period of growth or is it in a state of decline?
- Who are the key competitors in your local market, and how do they position themselves within the industry?
- Who are the essential suppliers in the market, and what are their relationships with key businesses?
- What major consumer and technological trends are currently affecting the industry, such as shifts in consumer behavior or the adoption of new platforms?
- What is the projected growth rate for the industry over the next 5-10 years?
- How large is your relevant market in terms of potential customers, and how does your local population compare to the national market size to help define your niche?
Customer Analysis
The customer analysis section of your retail store business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: college students, sports enthusiasts, soccer moms, techies, teens, baby boomers, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of retail business you operate. Clearly baby boomers would want a different atmosphere, pricing and product options, and would respond to different marketing strategies than teens.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most retail businesses primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
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Competitive Analysis
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other brick-and-mortar retail businesses. They are most likely local businesses who sell similar items to you.
Indirect competitors are other options that customers have to purchase from you that aren’t direct competitors. You most likely will have online competitors; companies that sell the same or similar items to you, but which operate online.
For each direct competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What is the demographic profile of their customers, including age, income level, and specific interests or lifestyles?
- What specific products do they specialize in, and what is the overall breadth and depth of their inventory?
- How is their pricing strategy positioned relative to the market, such as a premium brand with high prices or a budget-friendly option?
- What are their key strengths, such as exceptional customer service, a strong brand reputation, or a unique in-store experience?
- What are their primary weaknesses, such as limited stock, inconvenient hours, or a confusing store layout?
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will your retail shop provide a superior product and service experience through a curated selection, knowledgeable staff, or unique offerings that set you apart from competitors?
- Will you offer exclusive or unique products that your competitors do not carry, establishing your store as a destination for specific items?
- Will you make it easier or faster for customers to purchase your products through convenient services such as a user-friendly website, in-store pickup, or express checkout?
- Will you provide better customer service through personalized attention, flexible return policies, or a loyalty program that rewards repeat business?
- Will you offer more competitive pricing or value through discounts, promotions, or a loyalty program that provides customers with a clear financial advantage?
Think about ways you will outperform your competition and document them in this section of your plan.
Marketing Plan
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a retail business, your marketing plan should include the following:
Product: Here, you should reiterate the type of retail business that you documented in your Company Analysis. Then, detail the specific products you will be offering.
Price: Document the prices you will offer and how they compare to your competitors. In this sub-section, you are presenting the items you offer and their prices.
Place: Place refers to the location of your retail business. Document your location and mention how the location will impact your success. For example, is your retail business located next to a heavily populated office building, or gym, etc. Discuss how your location might provide a steady stream of customers. Also, if you operate or plan to operate kiosks, detail the locations where the kiosks will be placed.
Promotions: In this sub-section, you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
- Make your brick-and-mortar retail shop extra appealing with dynamic window displays and clear signage to attract customers and communicate your unique value proposition.
- Leverage social media platforms like Instagram, Facebook, and Pinterest to showcase products, engage with your audience, and run targeted advertising campaigns.
- Optimize your website and Google My Business profile with relevant keywords to improve local search rankings and capture organic traffic from potential customers in your area.
- Collaborate with local influencers, community bloggers, or neighborhood websites to get featured listings and reviews that drive traffic to your store.
- Build strategic partnerships with local organizations, charities, or complementary businesses for cross-promotion and joint marketing events.
- Run targeted spots on local radio stations during peak commute hours to reach listeners who live or work near your location.
- Place banner or digital ads at local venues like sports arenas, community centers, or event spaces to increase brand visibility and attract a diverse audience.
Operations Plan
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your retail operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your retail business such as serving customers, inventory management, keeping the store clean, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 5,000th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new store location.
Management Team
In this section of your retail store business plan, explain the management structure as this demonstrates your store’s ability to succeed as a business. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in the retail business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in retail businesses and/or successfully running retail and small businesses.
Financial Plan
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
Income Statement: an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you serve 100 customers per day or 200? And will sales grow by 2% or 10% per year? As you can imagine, poor financial planning will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets: While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your retail business, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement: Your cash flow projections will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, you may need to purchase inventories now that you can’t sell (and get paid for) for several months. During those months, you could run out of money.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a successful retail business:
- Location build-out including design fees, construction, etc.
- Cost of fixtures
- Cost of initial inventory
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Appendix
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your store design blueprint or location lease.
Retail Business Plan Summary
Putting together a business plan for your retail store will improve your company’s chances of success. The process of developing your plan will help you better understand your target market, your competition, and your customers. You will also gain a marketing plan to better attract and serve customers, an operations plan to focus your efforts, and financial projections that give you goals to strive for and keep your company focused.
Download Our Retail Business Plan PDF
You can download our retail business plan PDF to help you create your own business plan.
Finish Your Retail Business Plan in 1 Day!
Don’t you wish there was a faster, easier way to finish your business plan?
With SHI & COMPANY INC.’s Ultimate Retail Business Plan Template you can finish your plan in just 8 hours or less!
OR, Let Us Develop Your Plan For You
Since 1999, SHI & COMPANY INC. has developed business plans for thousands of companies who have gone on to achieve tremendous success. See how a SHI & COMPANY INC. business planning consultant can create your business plan for you.
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