How to start a retail business in 9 simple steps (with examples)

• To become a retailer, you need a business that sells products or services directly to consumers.
• Most retailers buy items in bulk from manufacturers or wholesalers and sell them individually for a profit.
• To get started, choose a niche, create a retail business plan, and set up your operations.

Whether you dream of a neighborhood boutique, a thriving e-commerce shop, or a hybrid, retail offers plenty of opportunities.

But learning​ ​how to start a retail business takes more than picking a product and setting up a storefront. It’s about creating a business that feels like your own, one that resonates with customers and stands out in a competitive marketplace.

Our guide gives you a practical, step-by-step roadmap for starting your retail business. From early planning to ongoing management, we’ll cover​ how to become a retailer and successful business tips so you can launch with confidence.

Table of contents

• Step 1: Decide what kind of retail business to start
• Step 2: Write your retail business plan
• Step 3: Secure funding for your retail business
• Step 4: Register and legally set up your business
• Step 5. Find your location and/or build your online store
• Step 6: Build your supply chain
• Step 7: Set up operations and technology
• Step 8: Build your brand and market your business
• Step 9: Launch and maintain your retail business
• Retail made easy with PayPal Open
• FAQ

Step 1: Decide what kind of retail business to start

Before anything else, it’s important to pick the type of retail business you want to run. This is where you will define your purpose and set the foundation for your success. It influences your costs, your marketing strategy, and the kind of customer you’ll attract.

Start fresh or buy into an existing business

When starting a retail business, you can either create a new one from scratch or buy into an existing one, like a franchise.

Starting a business from scratch gives you full creative control. You get to decide everything from your brand identity and products to your business operations. But this also could mean more upfront work and higher risk.

You are responsible for creating your brand, building customer trust, and designing your entire supply chain and management systems from the ground up. You are also navigating an untested business concept, which can lead to a higher risk of failure since there is no proven model to follow.

Buying an existing business or a franchise can reduce your setup time and provide a proven business model. Franchises often come with established brand recognition, a successful training program, and expert support, which can lower your risk. You also benefit from a ready-made supply chain and marketing materials.

However, this can also limit your flexibility. You must follow the franchisor's established systems and may have to pay ongoing fees, which can reduce your profits.

Pick your niche and products

What you sell will shape your store and how customers see it. To help you decide, look for the overlap between your personal interests and market demand. Consider what your customers need and what problems you can solve for them. Researching competitors can also help you spot gaps in the market and chances to offer something unique.

Retail business examples:

• Fashion apparel and accessories: This is a broad category that includes clothing, shoes, jewelry, and bags. It can allow you to focus on a specific style, price point, or demographic.
• Home goods and décor: This category covers everything from furniture and kitchenware to art and decorative items. It can be a profitable niche, especially with the rise of online sales.
• Specialty food and beverage: You may specialize in organic products, imported snacks, or locally sourced goods. This niche may appeal to customers who want to support local businesses or find unique items.
• Health and beauty: This includes everything from skincare products and cosmetics to wellness supplements. There is a lot of opportunity here, especially if you focus on natural or ethical products.
• Online-only niche: You may focus on a specific product that is hard to find in physical stores, like vintage video games or niche hobby supplies. This may help you build a loyal community around your brand.

Choose how you’ll sell

Deciding on your sales channel is a key part of your business. It impacts your startup costs, daily operations, and customer experience. Before you commit, consider the benefits and potential drawbacks of each option.

Step 2: Write your retail business plan

A business plan is a living document that will serve as your roadmap. It helps you secure funding and make informed decisions about your business model. This plan should be detailed but also flexible enough to evolve as your business grows.

Key sections of your plan may include:

• Executive summary: This is a concise, high-level overview of your entire business plan. Include your business name and location, your unique selling proposition, and a snapshot of your financial goals.
• Business description: Provide an in-depth look at your company, including your legal structure and the unique value that sets you apart.
• Market and competitive analysis: Show that you understand your industry and target customers. Include industry trends and statistics, define your customers’ demographics and habits, and analyze competitors.
• Products and services: Detail what you will sell and why it appeals to your audience. Include your product range, how you will source items from suppliers, and any additional services you plan to offer.
• Marketing and sales plan: Outline how you will attract and convert customers. Include promotional strategies like social media campaigns or in-store events. Explain how you will meet sales goals and specify your sales channels.
• Operations: Describe day-to-day operations and how they will be managed. Cover store hours, staffing, inventory management, and customer service. Explain how you will handle supplier relationships and meet requirements.
• Organizational structure: Identify key team members and their roles. Provide brief bios and explain the responsibilities of management positions. Outline plans for hiring additional staff and how they will fit into the company.
• Financial plan: Demonstrate the financial viability of your business. Include initial expenses, sales forecasts, and a projected profit and loss statement. If seeking outside funding, specify the capital needed and its intended use.

Each section of your business plan is important for internal decision-making and for showing potential investors that your business is financially viable.

Step 3: Secure funding for your retail business

Getting funding is often a primary pain point for new business owners, so it is important to figure this part out early. Your choice of funding can impact how you run your business.

There are several ways to get the capital you need. For one, you can use your own personal savings to finance the business, a method called bootstrapping. This approach is low risk but may limit your total capital.

For early-stage funding, you can also ask friends and family for an investment or turn to crowdfunding platforms to raise money from people online.

For more significant funding, you can explore loans and grants. The Small Business Administration (SBA) offers government-backed loans that are designed to support small businesses. You can also apply for loans from traditional banks or credit unions, though these may require a strong credit history and a detailed business plan.

Online lenders can be a fast way to access funds, but they may have limited favorable terms. You can often find grants, which provide money you don’t have to repay, through government websites or specialized organizations.

Additionally, you may seek out angel investors, individuals who invest their own money in exchange for equity. Venture capital firms are a similar option that provide large amounts of funding to promising startups. To show investors or lenders that your business is a good investment, it’s helpful to have a solid financial plan.

Step 4: Register and legally set up your business

To be a retailer, you need to be a legally recognized business. This step helps protect you and makes your business official. It will also help you meet the legal requirements for opening a retail store.

Choose your business name

Your business name is a key part of your brand. It should be easy to spell and remember, and it must be available across web domains and social media.

Before you finalize your name, you should also conduct a name search to ensure it's not already in use and that no one has a trademark tied to the name you are considering. You can use the US Patent and Trademark Office to help with this.

Pick your business structure

Choosing a business structure, such as a sole proprietorship, LLC, or corporation, has tax and liability implications. A sole proprietorship is a simple structure where you and your business are one entity for tax and liability purposes.

An LLC separates your personal assets from your business liabilities, offering more protection. A corporation is a complex structure that is suitable for large businesses.

It's a good idea to consult a lawyer or an accountant to make the right choice for your situation.

Register and get licenses/permits

Don’t forget to register your business with your state and get an Employer Identification Number (EIN) from the IRS. The EIN is important because it is a unique number that identifies your business for tax purposes and can also be required to open a business bank account.

You may also need to secure a business license and specific retail permits, like a sales tax or seller’s permit. These permits allow you to legally collect sales tax from customers and remit it to the state.

Get business insurance

Business insurance can help protect your assets. Without insurance, you could face significant financial loss from things like customer injury or property damage. Coverage may include liability, property, and workers’ compensation. You may also need specific coverage depending on your industry.

Step 5. Find your location and/or build your online store

This step is where you bring your business to life. Your choice of a physical location, a digital storefront, or both will shape how customers experience your brand.

Choosing a physical location

Finding the right physical location is a big part of how to set up a retail store for success. Consider visibility, foot traffic, and the size of the space you need. Think about how much room you’ll require for merchandise displays, dressing rooms, inventory storage, and back-office operations.

Your location also affects the customers you attract. Look for areas where your target audience lives or shops. Pay attention to nearby businesses that your customers frequent. For example, if your market aligns with high-end dining, explore areas with fine dining establishments.

Research your competition carefully. A dense cluster of competitors may be beneficial if it drives foot traffic, but it could also create too much market pressure.

Building your online store

Online platforms make it easy to build a professional-looking store quickly. This allows you to start selling without the overhead of a physical location.

Focus on elements that improve the customer experience, like:

• Intuitive design: Make it easy for shoppers to browse and find products.
• Mobile optimization: Ensure your store works smoothly on all devices.
• Simple navigation: Organize products and menus clearly.
• Secure checkout: Protect customer data and make purchasing easy.

Starting online also gives you a low-cost way to test your products before committing to the expenses of a physical store. Many successful retailers begin online, then expand to a brick-and-mortar location once they know their products and audience.

Step 6: Build your supply chain

Your supply chain is the system that gets the products from your supplier to your customers. It consists of sourcing, ordering, storing, and shipping the items you sell. Finding the right manufacturers, suppliers, and logistics collaborators ensures product quality and protects your reputation. Working with multiple suppliers can reduce the risk of delays or shortages.

Tips to pick the right vendors:

• Compare prices and terms: Look at multiple vendors to find the best balance of quality and cost. Don't be afraid to negotiate shipping rates, better terms, or contracts.
• Request samples: Test products before placing a large order to make sure they meet your standards.
• Check reputation and reliability: Read reviews and ask for references from other retailers to confirm a vendor’s track record.
• Set clear expectations and performance standards: Clearly communicate standards for product quality, delivery times, and returns to avoid misunderstandings.

Step 7: Set up operations and technology

Efficient operations and the right technology can help you run your business smoothly and profitably. These systems are central to your daily tasks and can help streamline your work.

Hire and train staff

Hire people who have the right skills and a positive, customer-facing attitude. Provide clear, comprehensive employee training and make sure you comply with all local employment laws.

Choose a POS system

When you start your business, you need a reliable way to accept payments. Your system should handle transactions efficiently and keep your business data secure with PCI compliance.

For physical stores, ​a​ point-of-sale (POS) system helps you accept payments, manage inventory, and track sales. It can also provide insights into your best-selling products and customer preferences, helping you make better business decisions.

PayPal, for example, provides in-person payment solutions that make accepting payments simple and secure. For online sales, a secure payment gateway is important. Platforms like PayPal Checkout allow you to process payments online while giving customers a fast and simple checkout experience.

Organize finances

Open a business bank account and credit card to keep your business and personal finances separate. Using accounting software can help you track expenses and manage your money. This is an important step to ensure long-term financial health.

PayPal also collaborates with QuickBooks, offering an integration that helps track expenses, manage cash flow, and maintain long-term financial health.

Step 8: Build your brand and market your business

Your brand is more than just a logo. It's how your customers perceive you. Effective marketing will connect your customers and your brand and guide them through your checkout line.

Here are a few brand and marketing tactics that can help you get started:

• Define your brand positioning to show how you are different from competitors.
• Create consistent messaging across your website, store design, and customer service. Every touchpoint with a customer should reflect your brand’s personality.
• Invest in digital marketing channels like search engine optimization (SEO), email, and social media. These digital marketing channels are important for reaching a wide audience and building a community around your brand.
• Use local marketing, such as events and community sponsorships. This is most important for physical stores as it can help you build a strong local following and create a loyal customer base.
• Encourage word-of-mouth referrals with loyalty programs or special incentives. Happy customers are more likely to share their experience with their friends and family, leave positive online reviews, or post about your brand on social media.

Step 9: Launch and maintain your retail business

Once you've completed the steps for starting a retail store, it's time to open your doors and welcome your first customers.

Grand opening strategy

A soft opening is a trial run for a new business, often with a limited number of invited guests. This allows your business to test its systems and gather feedback before a full-scale launch. A full launch can include special promotions with other local businesses to generate buzz.

Ongoing operations

Being a retail business owner means you have many daily tasks. These include managing payroll, restocking inventory, providing customer support, and marketing. Be prepared to continuously adapt and improve your business as you learn more about your customers and the market.