Finding the right location and staff are crucial before opening the doors, says consultant Zac de Silva.
Going from wholesale to retail is always a big move for a small, young business.
Huge risk is involved and your wholesale customers may not approve, but it can be a great way to introduce your brand the way you want.
Zac de Silva runs Business Changing, which specialises in business consultancy, coaching and training. He was previously managing director of Barkers Menswear.
We have a range of products which we have been wholesaling very successfully. At what point do we look at having our own store?
There is no magic formula, and gut feel will be important. If your brand has built a true presence, not only in your own biased opinion, there is potentially more money in retail.
If your best wholesale customers are quickly and constantly selling out of your supplied product, it might be time for a store. You need to consider which wholesale customers you may lose - some will react negatively at the thought of you opening your own store - and do the maths on store profit potential with conservative retail sales.
If the sales you have to do in your potential retail store to cover the lost profit from losing your best customers seems low, it could be worth the risk. I would suggest online sales before a bricks and mortar retail store to test the market.
Auckland doesn't have a central hub like Wellington. How do you find the next hot spot in Auckland for a store?
If your brand is strong enough, it could work as a "destination" store. Most brands are not. Look at where your potential competitors have stores - there could be some up-and-coming locations there.
Sit outside their stores on several occasions in different places, noting customer flow to their stores. You are better off as a new retailer being in a retail hub close to your competitors than some lesser non-main retail area. It does come down to your target market, though, and where they shop. Take advice from a retail expert.
How does a small business obtain the finance for its first retail operation? If you have a strong wholesale business, is a bank likely to come on board?
If your profit in wholesale is strong, the bank might come on board.
But banks are so risk-averse that it will have to stack up so if your store doesn't fire, your wholesale business can handle the loan re-payment.
You'll probably have to secure any borrowings on your house. If you don't have equity in a house, the bank will probably not lend. Remember you'll need to fund stock for your store too and your first order or two will be tricky, as you could lose wholesale customers once they know you are opening a store.
How do you train staff for your first retail operation so they are conveying strong brand messages to customers? What sort of information should you be looking to gain from your first store?
The store and staff need to exude your brand. Pretty simple. No mismatches allowed.
I'd suggest you personally work a day or two in the store to ensure you are happy with the team and customer interaction.
Owners should work on a Saturday, the best trading day by far, to maximise sales and the team's training by observation - 78 per cent of training is on-the-job "watching", not formal. Beyond the look, simple customer service goes miles.
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