Some Common Mistakes Made By Small Retailer Businesses

Most people who open a new small retail business are undercapitalized.  In fact being undercapitalized is the number one reason small businesses of any kind fail.  Most new retailers more often than not have no idea how long it will take for their businesses to show a profit.  Just about all of them do not understand how much money running a business requires – especially when the business doesn’t perform the way they thought it would and the business doesn’t do what it was expected to do.

Almost all new small business owners are optimistic and generally surround themselves with positive people who believe in what they’re doing (much like political campaigns before the primaries).  One of the biggest mistakes a new small business owner can make is not planning for the bad times.  Bad times happen to all businesses over time.  The way the small business owner handles the bad times can be the difference in him/her building a solid business or shutting his/her doors.  New small business owners don’t understand how long it takes to build a critical mass of customers.

Many small business owners don’t shop their competition.  One should do this for a multitude of reasons – the biggest reason being to see what your competition is doing right – not to feed your ego by only looking at what you think they are doing wrong!

By shopping your competition you will get ideas about merchandise.  You can check their pricing and pricing policies.  You can also check the general store policies – especially their policies on handling customer returns and exchanges.  You can see what other stores are doing to “wow” their customers and what they are doing to keep their customers coming back. 

By the way, don’t limit yourself to stores in your field.  Find out how other types of small business owners in other industries are moving their merchandise.  Apply what you learn from these types of small business retailers to your own small retail business.

Don’t underestimate the power of regular customer contact.  Don’t hang out in your office.  It is imperative that the owner stay on the sales floor at the busiest times of the day or week.  Customers want to see The Boss:  they want a knowledgeable person on the sales floor.  It is only by being on the sales floor and maintaining a visible presence that the small business owner can lean what your customers do and don’t like and the all important WHY they don’t like it.  Being out of your office and visible on the sales floor will pay huge dividends the next time you are in the market executing your buying plan.

You must know your prime customer’s profile:  income level, tastes, place of residence, etc.  As a small retail business owner if you don’t know what the customer you’re trying to attract is like, how is that customer supposed to know to shop at your store?  To cater to the needs of those who are within your marketing area, you had better sell what they want to buy.  If you only buy and try to sell merchandise that you like and try to find customers with tastes similar to yours, then at the beginning of your entrepreneurial endeavor you could lose a lot of money waiting.  If you choose to wait, then as a small business owner you should know what you are committing yourself to.  Your other option is to locate your business in an area with customers who like what you like.  Being a small retail business owner can be a fun and exciting way to make a living, but as you can see becoming a successful small retail business owner can be challenging to say the least!