Many people will play with the idea of opening a store at some point in their lives. No wonder, having your own business means professional self-realization. The daily contact with people can be a lot of fun. The selection of the right products feels a bit like playing a shop once more like back in childhood – being a boss yourself is of course also tempting. But what about reality?
Retail is booming and is one of the strongest economic sectors in Germany, that’s for sure. If you start with the right idea and give your business a personality of its own – your personality – you will succeed too! However, the path to success is through business thinking and customer-centric alignment of your business. And how you get that so that you can soon even dream of other branches, we’ll look at now in detail!
First, of course, comes the dry matter. Business policies are set at the state level, so you should first familiarize yourself with which rules you must follow in your state. Face competition law and if you want to offer food, you’ll need to be concerned with food safety and hygiene.
The price regulation is also important. It all seems a lot in the beginning, but it will soon be fleshed out if you work daily in your business. And another very important tip: Before you fall in love with a shop and sign a contract, you should definitely contact the relevant construction office. Let the premises only checked by the building inspectorate, to protect you against subsequent conversion measures that can go into the money powerful!
The basic requirement for you as a retailer is to be enthusiastic about your offer and to love the personal contact with your customers. Your tasks also include such dry topics as purchasing, accounting or tax revenue. If you are unsure in any of these areas, you should close your knowledge gaps in the run-up to your creation, be it through guidebooks, seminars or start-up courses. Later, you can get help from experts, such as your accountants office, and you’re guaranteed to learn more and more. But as a businessman, a certain basic understanding is essential for all sides of your independence. As you can see, in order to run your own shop you have to have a lot on the box to start. But many have already done that!
offer When you talk about opening a store, many will question you and ask if this is the right time. After all, commerce is increasingly migrating to the Internet marketing and not a few assume that you have to choose an option: for brick-and-mortar retail or for e-commerce. However, this assumption is not correct, because the boundaries between online trading , online marketing and stationary trading are becoming increasingly fluid.
From the very beginning, be aware that you will also be using the Internet to maintain relationships with your existing customers and attract new customers to your store. And to do that with enthusiasm, you have to give all other considerations the question of what added value you can offer your customers.
unique selling point
Put yourself in the position of your future clientele. Why should she take the road to shop in your shop? What products do you want to offer, what do your customers have to offer to buy those products? How do you want to differentiate yourself from the competition in your city? Shopping today is more than the exchange of goods for money, it is the consumer for the experience! What experience can you offer them to make your business unique? And which target group do you want to address at all?
All these questions must be the cornerstone of your thinking before you open a store – because that will depend on your success. The clearer your customer-centric orientation is, the easier it will be for you to defend yourself against old-established “industry giants.”
Our example entrepreneur Marie has run a store with a special focus for several years: “Unpacked”, the shop for packaging-free shopping. In the following video she talks about her concept and her experiences as an entrepreneur:
Products and prices
You should also be concerned about the price and product policy at this point. Of course, as a retailer, you can not offer many products as cheaply as large chains that make incredible discounts in shopping. But you can open a store that is just because of its independence in a position to offer very special products. Much of what the big chains can offer you can offset by individual ambience, personal service and a unique branding.
The question of the location is directly linked to the question of financing, because of course you should keep the fixed costs as low as possible. Being able to save on price, but in the long term is not a solution, because it is crucial to your profits.
Do the district where you want to open the store and your target group fit together? In a suburb of many single family homes, a gardening and decoration business would certainly be easier to establish than a hipster record store or a student antiquarian bookshop. The infrastructure is important too.
The best locations are often really expensive – and then the high rents must be restored only through sales. Outsourced and hidden shops in turn stagnate sales and are not a solution, even if they appear at first glance as a bargain. The secret is finding a balance and opening up spaces that you can afford on the one hand and that are still well enough attained by your target audience on the other hand.
A shop in a pedestrian zone promises a lot of patronage, in a particularly good location but also the rental costs and especially the competition are greater. So also pay attention to the environment. It pays to spend a few hours in the environment of your future store before signing the lease, and watching closely how many and what people are there. The mood of your clientele at the chosen location can also influence your business. At the train station, for example, you’re more likely to be in a hurry with customers, while the nature park is more likely to have a relaxed audience. A simple tally at different times of day, supplemented by accurate observations of the audience give you a good basis for decision-making.
Sometimes the solution is to settle in a neighborhood that is about to breakthrough. Rents are still affordable there, but it suggests that it’s on its way to the next trendy district or shopping hotspot. While this kind of forward-looking location choice carries a certain amount of risk, if you keep a close eye on the developments in your city, study the local press, and walk through the city with your eyes alert, you can find reliable evidence that an area is on the rise – and you there quickly secure a lease. For example, if you open stores or establishments in the neighborhood that attract a lot of publicity, or if public investment is planned to a greater extent, you can probably assume that an upturn is imminent.
Another trick in choosing a location is to start small. If you set up your store wisely and choose your range wisely, you may already have a few square meters, which you can afford in an expensive location.
Incidentally, a small store not only saves rent: the cost of purchasing goods is lower if you have less shelf space to fill. Of course, you should still have a convincing offer ready – but maybe you just stand out from your competition by offering your customers a small, but fine selection?
This leads us to a last tip in terms of location: No matter where you open your store, the location should always be reflected in your assortment. Not every concept works equally well in every location. Let the needs of your customers flow into your offer and adapt to the local conditions – without sacrificing the individual charm of your store at the same time. This is a tightrope walk, but it is important that you remain open to what your buyers want – because only by putting their needs at the center of your entrepreneurial activity will you be able to compete in the long term.
Competition near the planned business is perceived by many founders as something negative. But it does not have to be that way. While it is true that you are in competition with very similar businesses, it also means that there is clientele.
Look at the inner cities of small or medium-sized German cities alone. As bakers ranks to bakers, two supermarkets share a parking space and you are never out of sight of at least one pharmacy.
Of course, that does not mean that you should just open your store right next to the competition. Find out if your unique selling point stands out enough to coexist with the competition. The two supermarkets, which share a parking space, are usually distinguished by their prices. An upscale supermarket and a discounter can work so well side by side, as they appeal to different parts of the clientele.
Under certain circumstances, synergies can even arise here. So the fashion industry is a curious example of synergy with the competition. A dozen fashion shops with a variety of offers are lined up next door. According to classical market theory, the market would be completely oversaturated. Nevertheless, the shops continue to exist.
Reason are the fashion buyers. The majority of customers are not focused on targeted purchasing. They celebrate shopping and strolling from shop to shop. They often buy products in various shops.
Check for synergies of this kind in your business and use them to your advantage.
The choice of legal form is more of a headache than fun for many entrepreneurs. But when you focus on the most important factors, you can easily find the right legal form for your business. These questions you should ask yourself:
Do I want to be private? How much capital do I have available? What is the external effect of the legal form of financial service providers and customers? liability
Here is a distinction whether you with your entire fortune (private assets and company assets) or only with the company assets. Founders of corporations (eg GmbH, UG) generally do not have to be liable with their private assets. However, partnerships (eg GbR, OHG) already.
Cost of founding
The costs for the actual formal foundation are generally manageable with a few hundred euros. However, some legal forms require a so-called capital deposit, which means capital, which you have to prove before you can start. These legal forms are the corporations. So you have to prove 25,000 EUR of registered capital in order to found a GmbH. The UG only requires a capital of 1 EUR, but you have to pay a part of the profit until you have reached a reserve of 25,000 EUR. This guarantees that money is there to stick.
As already mentioned in the chapter location, the fixed costs are an important factor for the success of your shop. The best location will not hurt you if the rents ruin you. So you should look for a healthy balance between location and rental costs. Nonetheless, rents will be a big part of your monthly expenses.
A second big job is staff. Depending on the size of your store, it is unlikely that you will be able to do it all on your own. Sales forces are a great help here, but also cost a lot. Depending on the complexity of your products, it may be worth hiring a specialized and / or trained specialist. For some industries it is even mandatory. You should therefore weigh whether and how much support you need. Be honest with yourself here. No one is helped if you burn out after three months because you try to fix everything yourself.
Your store should look as inviting as possible and have a practical structure. This requires a good setup. Shelves, signs, cash registers and various other furnishings want to be bought or rented. Of course you have the opportunity to buy everything again, if your capital allows it. However, if your founding belt is strapped a little tighter, you should look around for used equipment. Furnishings from bankruptcies of other stores are a good way for you to acquire good quality for a narrow Taler.
At your opening you will have to advance a basic set of goods without having earned money. Order not too much at first, because you do not know which goods are going well and which are not. A warehouse full of goods that nobody wants to buy hurts both your soul and your profit.
Your shop must be registered like any other foundation except the liberal professions. Different communities have different regulations for this. The costs for the business registration can therefore vary between 10 EUR and 65 EUR. Inquire at your local trade office about the current prices.
Depending on the legal form, different taxes apply to you. If you do not trust yourself to manage it yourself, accountants are an option. They completely take care of your taxes and you have your head free for other things. Whether with or without tax consultants, you should nevertheless know what taxes are there and what should be noted with them:
value added tax
In principle, VAT is only payable by the end consumer of a product. On the way there, however, it usually “flows” through several companies – and you should internalize this basic principle. So your delivery company will charge you sales tax. You yourself calculate your client turnover tax. Ultimately, however, all revenue from VAT must end up at the tax office. For this, you transfer the difference between the sales tax paid by you and the sales tax you collect (usually monthly, or quarterly or annually, depending on the size of the company). So the principle is simple – but unfortunately the tax office uses the term “input tax” for the VAT paid by you. That makes it a bit harder to understand. Important in this context are two things for you:
As an entrepreneur, you are only interested in net prices.
Sales tax, which is in the meantime in your account, does not belong to you and you must plan appropriate payments to the tax office.
Income tax and corporation tax
Income tax is a tax which both employees and self-employed persons (natural persons) must pay to the tax office and which is received by the federal government and the states.
Attention: With which tax self-employed are charged, depends on the company form. In the case of partnerships, “income tax” is due, while corporations (GmbH, AG, etc.) pay “corporation tax”. In principle, they are similar, in height and regulations they are different.
The amount of the tax depends in all cases on the earnings of the individual or the profit of the company. From an annual income of 9,001 EUR (for married people 18,002 EUR) different rates of income tax apply. The graduation ranges from the input tax rate of 14 percent over the top tax rate of 42 percent to the so-called wealth tax of 45 percent from an income of 260,533 EUR (as of 2018).
In contrast to income tax, corporation tax refers to the income of companies, ie legal persons. Legal persons include corporations, cooperatives and associations. Taxes on the profits of the company, less special expenses and extraordinary charges. If the amount is not paid, this can have serious consequences for entrepreneurs. So it can happen that they themselves have to pay for the amount and thus not even the private wealth is spared.
While corporation tax and income tax go to the federal government or the states, the business tax flows into the commune of the company headquarters (municipal tax). Basis for the calculation is the yield from the industry. For individual companies and partnerships, there is a tax allowance of EUR 24,500, for corporations this deduction does not apply.
As a shop owner * in several insurance companies are available. Which of these you want to complete for your shop is always a consideration of costs and risks. Here are a few examples of insurance that might be of interest to you.
The public liability is very similar to private liability. Instead of a private person, however, the company is insured here. The insurance covers all entrepreneurial activities, including the activities of your employees in connection with their work.
Business insurance is a generic term for a large number of insurances. On the whole, however, it serves to protect your interior and your goods. A classic variant is for example the fire protection. Check which special conditions make sense for you and your store.
The legal expenses insurance helps you, if you and your enterprise come despite all efforts in legal difficulties and legal fees arise. Depending on the insurance package, she bears the attorney’s office, procedural and other costs.
Taking over an existing store can save you a lot of headache. Depending on the situation, the acquisition allows you to continue using equipment or leases. This saves money and effort.
Takeovers, however, are not a risk-free matter. Be sure to check why your predecessors want to do business. So you make sure that your new location does not have a general problem.
You’ve probably already heard from the media that many small and medium-sized companies are looking for successors. The founders want to retire for reasons of age. Taking over an established business has the advantage that you can build on the existing customer base. And also the team in the shop and in the background is recorded. Listen to your network and your desired location, whether a store is for sale or for continuation.
franchise Franchising is an attractive option for many start-ups because it greatly reduces the planning effort. Most franchise systems dictate things like assortment, furnishing, and marketing. The founders generally demand capital and implementation.
However, a franchise store also means that you give up a lot of freedom. You may move within the constraints of fixed rules, such as marketing, pricing, or processes.
So before you open a franchise store, you should check carefully whether the rules of each franchise fit your ideas.
Conclusion Independence and self-realization are worth the adventure of starting a business. Preparation and careful planning will give you the necessary security. Whether it’s a mom-and-pop shop or a high-tech sneaker store, as long as you pay attention to the above, there’s nothing in the way of your store opening.