Location and Licenses, Permits and Insurance

Experts say location can make or break a business, so it is the most important decision and relates to cost in a major way. If you choose less expensive space, but the area has less traffic, it can be detrimental to your sales unless you have a specialty item. However, if choosing an expensive mall space, it requires planning how much volume must be sold to turn a profit. Costs can range from $300 to more than $10,000 a month, depending on size and location. Licensing, insurance and permits all are relative to the store's location. Some states have little requirements besides zoning restrictions, but other states have detailed requirements. Check with city and state governments or SCORE agencies.

Franchise or Independent?

Costs can increase dramatically if you choose a franchise instead of an independent store. Depending on the company you choose to franchise, it will have financial requirements to become an owner. These fees can range from $25,000 to more than $750,000. Entreprenuer.com and franchise companies are good places to find this information.

Size and Lease Agreement

The size of the retail store also affects the cost to open and what maintenance costs are included in the lease agreement. If the rent is based on square footage, there might be additional cost for common area maintenance, or CAM. These charges usually include exterior maintenance and cleaning charges.

Fixtures and Layout

Fixtures in the store also affect the total cost. A store-supply company can help with the layout, or you can hire a designer. Once a layout is determined, fixtures can maximize inventory or hide space where inventory is limited. Typical items you might need include displays, cash registers, office supplies and equipment to process credit cards..

Inventory and Advertising

Inventory requirements will be based on the store size and layout, plus vendor requirements. Some vendors have minimum orders, so inventory might have to be scaled to meet these requirements. Advertising costs for opening a retail store vary depending on budgets. Getting the most people through the door during the opening is crucial to building a customer base. For a small retail store, expect to budget about $3,000 in advertising your grand opening, but this can be adjusted based on location and built-in clients.

Final Costs and Totals

Employees will add to your costs, unless you plan to start out on your own. So what is the total cost? Depending on all these factors, a retail store can open for as little as $10,000. A business plan is a good place to start and gather more information. It also can help you set up a specific budget.

Source:

Entrepreneur.com Business Guides

EHow

SCORE