By Susanna Blake
Starting an independent retail business is one of the riskiest ventures you can make. Whether it is in creating businesses such as a specialty shop, a vintage fashion boutique or a corner café, many retailers who strike out on their own will likely experience failure early on. In fact, according to the U.S. Small Business Administration, over 50 percent of small businesses fail in the first five years. In the Dun & Bradstreet report, retail accounted for 11.2 percent of U.S. business failures and 13.6 percent of global failures.
The reason these retailers fail can often be linked to inexperience, such as a lack of formal business training or time spent in the industry. However, with the right vision and guidance, retailers can avoid common pitfalls and find ongoing success.
Here are five hot tips for independent retailers venturing out on their own:
Seek counsel from an independent business advisor
In most cases, we look to those close to us for guidance because we trust them, but basing your decisions on friends and family can be dangerous because they are not objective third parties. Even if your friend or relative has retail business experience, it is best to look outside of your circle and discuss your strategies with someone who does not have a personal, financial or emotional stake in your business. An independent business advisor can provide both the knowledge and clarity to make important business decisions.
Hire employees who will grow with you
When you start a business, it may seem desirable to hire whomever you think will fit your immediate business needs. This can be a key factor of failure if this person will not stick around as your business grows, or who lacks the foresight to help take you to the next stage. Seek out employees that have potential for growth, such as moving up from sales positions to management, and who demonstrate a commitment to excellence and autonomy. It may take longer, and you may have to stretch the budget a bit, but a quality employee is more than a warm body, he or she is an investment in your business’ future.
Don’t keep bad employees around
Alternatively, do not make the mistake of keeping bad employees around as it can also lead your business down the path to failure. Negative behavior or poor performance can spread from employee to employee affecting moral company- wide. When you spend eight or more hours a day with co-workers, it is hard not to notice negativity and be affected by it. Your customers will pick up on it too. It is important to address any issues early to address poor behavior and provide avenues for improvement. If these attempts do not improve the situation, then terminating problem employees can save you unnecessary strife in the long run.
Know when to delegate
Once your business has gained momentum and your team grows, your role may change too. As a budding business owner, you wear many hats, and likely feel responsible for managing, leading and executing the needs of the business. But in reality, it may leave little time to do what an owner really needs to do – define and promote the business’ overall mission and company culture.
That is why it is important to know how and when to delegate certain day-to-day responsibilities to your key trusted employees so you can keep your eye on strategic planning to evolve your business. Signs that it is time to step back include delays in operations, such as hiring new employees to fill crucial vacancies, or slowdowns in servicing your customers’ requests. It may be hard at first to let go of control of day-to-day operations, but in the end you will be able to focus on generating creative ideas that will keep your business in sync with what is happening in the industry and to blaze your own new trails. Being able to recognize this shift is a key factor to helping your business grow and succeed.
Understand the importance of compliance and HR best practices
When starting a business, the instinctive thing to do is focus on choosing a location, hiring and training staff, attracting customers and selling merchandise. Other employment matters such as setting up employee benefits and understanding employment law compliance often follow later in the plan, if at all. But if these items are not addressed early on, this approach can lead to failure and place you at risk of costly fines and litigation, e.g. not being compliant with federal healthcare legislation like the Affordable Care Act (ACA). Creating a solid framework for compliance and HR best practices, either internally or through guidance from an HR consultant, will give you peace of mind and free you up to focus on growing your business.
By following these five tips, you will be in a better position to make informed decisions and avoid common pitfalls that decrease your chances of ongoing success.