One of the best parts of my job is getting to work with people starting their first retail business. There’s a unique passion that a new retailer has for the products they’ll curate and what they hope to offer their customers, and it’s amazing to be a part. Some things about opening a new retail business are pretty obvious; we all know to get the branding right, building a beautiful website, curating the right products, and starting a social media strategy. However, there are some more subtle things that can often cause big problems down the road.
When opening your first retail business, I want to give you a heads up on a few common mistakes a new retailer often makes and what you can do to avoid them. Will you go out of business if you already made one of these mistakes, probably not, but if you are in your planning stages then it’s worth trying to avoid these mistakes?
Mistake #1: Starting with a disconnected POS + eCommerce platform
It’s pretty easy to build a website these days. Platforms like Shopify make it easy to pick a theme, customize with your branding, load products and start selling. Other cloud-based POS systems like Lightspeed or Vend make it easy to add products, print some labels, and start selling. Altogether, having a system to start selling is the easy part; having a way to manage inventory and customers across the places you sell is a different story.
To be clear: You can’t scale a retail business with disconnected sales channels.
Your brand will suffer because you’ll sell products online that you just sold in store and that call to tell someone “we don’t actually have it” will ruin the hard work you’ve put into building your brand. You could have a customer that spent thousands on your site to be told you don’t have them in your system and you’ll need to add them. What was an exciting time to visit the store they’ve been so loyal to online turns into a disconnected experience?
What can you do? I wish I could tell you about a one-size-fits-all approach to doing this but every business is different and has unique needs. Whether it’s special orders, embroidery, services or other nuances of a business, it’s important to find a system that fits your operations.
A good place to start is with a completely integrated platform like Lightspeed Retail + eCom or tools that have built-in integrations like Shopify + Vend, or Springboard POS + Bigcommerce.
A note about Shopify POS: Shopify is an amazing ecommerce platform and their POS is beautiful and easy to use and loaded with amazing features like the ability to send an in-store customer a “cart” with the items they looked at in store. What Shopify POS does not do is effectively manage inventory. So, though you can use Shopify + Shopify POS, you will need to find apps in their app store to track your cost, purchasing, and inventory turnover.
Mistake #2: Choosing credit card processing before your POS solution.
When you finally take the first steps in opening your retail business, you’re going to drive to your local bank or credit union and open a checking account. It makes sense, you need to keep the finances separate. While sitting with the banker, they’ll ask you about credit card processing and tell you why theirs is great. It sounds nice to have your banking and processing in the same place to remove complication and have one less person to talk to. What they don’t tell you is that it’s actually way more complicated and expensive this way.
Let me explain.
Credit card processing involves a few things. First, you have your POS solution that scans barcodes and gives the customer their total. Next, there is a gateway that integrates with your POS solution and approves the transaction. The actual processor takes money from their bank and puts it in yours. So what’s the problem?
POS companies typically have either their own credit processing or they integrate with a small number of gateways/processors. So, if you sign up for processing with your bank, you’ll end up needing a separate gateway that will charge their own fee to prevent having a disconnected payment terminal.
So what should you do: Hold off on the processing until you’ve figured out who your in store point of sale solution will be. From there, find out which processors they work with and get quotes from all of them. Not happy with the pricing? Go to your bank and get a quote and send it to the compatible processor to see if they’ll match it.
Mistake #3: Not focusing on inventory control + planning
When you first start, you have one goal: Buy the right products, sell it for the best margin you can, as fast as you can, and get that customer to come back and buy more. It’s the right goal to have and should be your number one, two, three, four, and five focus (maybe your spouse and tacos are in there somewhere).
At some point, ideally as soon as possible, you need to take the next step and take your inventory control seriously. I’m not talking about anything complicated here, I really mean some things that are the bare necessities of a retail business but will give you amazing data you can use to scale your business. At a minimum, you need to track your categories and your cost so you can understand where you make your money and how much you make.
Here’s some first steps:
- Spend time learning your inventory tools and use them to the best of your ability.
- Create purchase orders for all your orders or create them to match packing slips. You should be able to match the total of your purchase order to the amount that came out of your bank/credit card.
- Create a category structure that lets you understand what you’re selling quickly or slowly and what pieces of your business are the most profitable.
Mistake #4: Trying to do everything perfectly
I know, I know…. This contradicts everything I just said. Here’s the truth, you have so much to do and it’s not easy and you can’t do it all perfectly. At the end of the day, you need to hustle to grow your business to the best of your ability and get better every day. If our advice helps you avoid some costly mistakes then we are stoked but, truthfully, you’re going to make a few mistakes and that’s ok. When those mistakes happen, adjust and move forward. Don’t let yourself get so bogged down with the details of running a business that you don’t grow a business. It’s like the out-of-shape person obsessing over their running shoes and outfit but having a decent pair of shoes in the closet and they just need to get out there and run. Same applies, get out there and run.
Streamline Retail is a retail consulting business focussed on inventory planning, point of sale, ecommerce, and the technology that ties it all together. We work with modern retailers wanting to launch on the right foot or take the next step in growing their business.