A retail business plan is a document that gives you and your potential investors a roadmap on how your new retail business intends to get started and deliver its business goals over its initial few years (usually 5 years).
It is usually broken down into sections about the company, the industry it operates in, the competition it will face and a plan that covers marketing, financials and operations over the first few years in business.
Retail Business Plan Components
This is a sample of the components that will get into a retail business plan and you can download the template for free from the button below. You will be able to edit the file and export it into PDF format afterwards.
We recommend writing the executive summary at the end of the process, after you have filled out all the other sections.
In the executive summary you will cover the following points briefly:
- Types of products sold at the store
- Customers served by the store
- Company mission & vision
- Market share to be captured
You will also mention the total amount you will need to start this business, backed by the financial plan you prepared as part of this business plan.
The total amount that you want to borrow or have invested in your business will be the sum of pre-opening costs (initial inventory, equipment, rent,..) and the maximum negative cash flow as per your cash flow plan.
If you are writing this retail business plan for a financial institution to get a loan, mention how you expect to repay the loan, and you should have already included the loan installments in your financial plan.
If you are writing this plan for investors, mention how much equity they will receive in return for this investment and the expected return on investment, and expected cash distributions (dividends) based on your financial plan.
An investment of 100,000$ in the business will result in the investor receiving 20% equity. We plan to distribute 50% of the profits every year, and based on our financial projections this will be a xx,xxx$ in the first year, xx,xxx$ in the second year, and xx,xxx$ in the third year,..etc.
Here you will write about your business and give a brief overview about the type of store you will be starting.
You can cover the following points:
- Store category (e.g. beauty store, toy store)
- Store location and brief description of the area
- Product categories carried
- Company legal structure
Write an overview about the industry (retail/ecommerce) as a whole and the most recent trends specific to this industry.
Cover areas such as:
- Total retail sales
- Contribution of your retail category to the total sales (size of the market)
- Online vs. Brick & Mortar trends
- Recent industry trends and shifts in terms of products you are selling
You can find the most recent insights about retail in our Retail Statistics page.
Read Also: What is Retail ?
Write about your target customers that you know will be interested in your products. Mention demographic and psychographic details in this section. This will help afterwards in drafting your marketing plan.
You can cover the following details:
- Age bracket
- Income level
- Educational level
- The specific needs that your products will fill for them
List the current competition in the market that are serving your target customers. Mention your top 3 competitors in your area.
You can also include indirect competition, such as online stores or marketplace sellers, if you think this might affect your business.
Cover information about:
- No. of stores
- Size of stores
- Product categories they sell
- Pricing level
- Sales per day estimates
- Strengths & Weaknesses
You can also create a summary table like the one below
|Name||# of Stores||Avg. Size||Categories||Price Level||SPD|
|Retailer A||5||2000||Fashion, beauty & accessories||$$||10365$|
|Retailer B||3||1300||Fashion & accessories||$$$||5432$|
What will make customers leave the competition and come to you? Use the weaknesses areas that you mentioned about the competition in the previous section, and mention how you will improve on them.
This could be by:
- Superior quality
- Better prices
- More variety
- Better shopping experience
Describe your marketing strategy for your store and which channels you are going to use.
Cover the following areas:
- Brand Positioning
- Branding Strategy (Persona, tone, language,..)
- Product Strategy (Key products and product features that will attract your customers)
- Pricing Strategy
- Promotional Strategy
- Marketing Channels
Write how you will operate your store and include details about your manpower plan.
This will include the management that you will hire for the store, visual merchandisers, sales staff and cashiers.
Cover the following:
- Management structure (store manager, supervisor,..)
- Staff plan (3 sales associates, 2 cashiers, etc.)
- Brief role descriptions
- Compensation structure
Read Also: Retail Scheduling
List estimates for the capital you will need to start and financial projections for the following years.
Start with how much capital you will need to start the business
This will include:
- Initial rent
- Initial product order (Inventory)
- Initial staff salary
- Store fixtures
- Store equipment
Include a 5-year financial projection for the business based on your forecasted sales and costs.
This will include:
- Monthly income statement (P&L) for the first year
- Yearly income statement for the following 4 years
- Monthly cash flow projection for the first year
Read Also: New Store Financial Projections
Break Even Point
Include a snapshot of the 5-year P&L plan here and mention the SPD (sales per day) you need to breakeven, based on your P&L numbers.
We have created a sample table with data in the business plan template and you can fill it with your own numbers.
|1||1,000,000 $||55%||-134487 $|
|2||1,200,000 $||56%||-74587 $|
|3||1,380,000 $||56%||-10324 $|
|4||1,518,000 $||55%||150234 $|
|5||1,593,900 $||55%||183454 $|
Mention the assumptions you used for creating your financial projections.
For example, you assumed that sales per day for the first year will be 1000$ and then will grow by 20% in the second year, 15% in the third year and 10% in the fourth year, etc.
Retail Business Plan Tips
We recommend being very realistic about your initial sales per day projections, as your entire financial plan will be directly affected by it.
When you then forecast your growth for the coming years, you should also be realistic about how much you will grow year-on-year.
From our experience, retail stores typically see higher growth after the first year and then this starts to level off from the third year onwards.
Having said that, there might be other growth drivers that can affect your business and accelerate your growth in the following years. This could be for example that your new store is in an area that is still under development and will be fully developed by the third year.
What we want to say is, do your due diligence thoroughly and based on that set realistic expectations.
The biggest asset you will hold and the biggest part of the investment/loan you will need to start your retail business will go for inventory.
So it is important to calculate your inventory needs correctly.
For example, if your inventory turnover target is 2, this means you maintain a 6 months cover. If your inventory turnover is 3, you maintain 4 months stock cover,..and so on.
We recommend checking out the benchmarks we have listed for different retail categories for inventory turnover and reading our complete Open to Buy guide to get started with calculating exactly how much inventory you will need.
Good luck in your new venture!
Learn more about retail & ecommerce management
Retailer & Founder of Retail Dogma, Inc.
Rasha has 14 years of retail & ecommerce experience. She has started an ecommerce business in 2008, and later worked at H&M, Bath & Body Works, Victoria’s Secret and Landmark Group. She’s lived in 4 different countries, speaks 3 different languages and holds an MBA in Strategic Management & Marketing.
You can connect with her on Linkedin.