With the emergence of e-commerce, online businesses have become increasingly popular, but sometimes starting a solid brick and mortar business is your best bet for reliable long-term success.
After all, people will always shop locally for food, gas, and other essentials, and in many cases, there is no substitute for the convenience of a local shop around the corner. You can see and touch the items for sale. You know the owner in many cases and have confidence in the quality of the products and services they offer.
So, if you are interested in learning how to start a brick and mortar business, you are in the right place.
In this article, we are going to cover 14 essential steps to starting your physical storefront business, including the legal, financial, operational, marketing and other requirements involved with creating this type of business.
Here’s a table listing the topics we will cover. If you want to skip ahead to any of these steps, just click on the desired link.
We’ve got a lot to cover so, let’s get into it!
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The information contained in this post is for informational purposes only. It is not a recommendation to buy or invest, and it is not financial, investment, legal, or tax advice. You should seek the advice of a qualified professional before making any investment or other decisions relating to the topics covered by this article.
Step 1: Find the Right Brick and Mortar Business Idea
The first step in starting a brick and mortar business is finding the right type of business for you.
If you already know the type of physical storefront you want to run, you can skip ahead to Step 2. But for those of you looking for inspiration, we have put together some great business ideas you may want to explore.
Finding the perfect business for you is not easy. After all, it has to tick a lot of boxes. It should be one that (i) is interesting to you, (ii) plays to your strengths, (iii) works within your budget; (iv) fits with your current lifestyle and situation; and (iii) has the potential to grow and generate strong and reliable profits.
If you need some help deciding on the right idea, check out the bulleted list below for inspiration (each link will take you to my guide on how to get started in that particular business). Of course, there are many more brick and mortar businesses to choose from, but I wanted to create a concise list of businesses that generally are easy to set up, have high success rates, and are going to be easy to operate once set up (in fact, most can ultimately be structured to generate passive income).
I also like franchises because of their built-in brand recognition and robust operating manuals (which makes running them easier). Because of these reasons, you can reduce your risk of failure by going with a well-known and successful franchise. For some great ideas on brick and mortar franchises that can also provide the benefit of passive income, check out the list below.
If you’re still stuck and want to learn how to get your creative juices flowing, check out my article on How to Start a Business When You Have No Ideas [9 Tips That Work].
If you are intrigued by the idea of businesses that run themselves, check out my article on 12 business that are well suited to do this.
“There’s no shortage of remarkable ideas, what’s missing is the will to execute them.” – Seth Godin
Step 2: Conduct Market Research
Once you’ve settled on a promising business idea for your brick and mortar business, you don’t want to dive in blind. If you do, you might waste a lot of time and money on an idea that won’t work because the market is too small, too competitive, or in a state of decline.
Identify Your Market
The first step to market research is accurately identifying your market. You need to know who your customers are and whether there are enough of them.
Try to imagine your target customer. Is the target customer male or female? Older or younger? Wealthy, middle class, or lower income?
Once you have that knowledge, conduct research on the demographics of your target location and plan accordingly. Find out who is living there (city-data is great for this task). It’s free and has tons of useful demographic information for a given city.
Conduct Competitive Analysis
You also want to research the competition. If you live nearby, you probably know who your major competitors are going to be. But to get a more complete sense of the competition, you can do some simple research on Google.
If you want to start a car wash, for example, you can simply type in “car washes near me” (or whatever city you are researching) and Google will pull up a list of local businesses that match your search along with a map that has pins on where those businesses are located. You can also go on Yelp and type in a similar search. Between the two, you should be able to get a very good sense of the competitive landscape in you area.
If you want to dive more deeply into market research, check out my full article on the topic: How to Do Market Research For Your New Small Business in 5 Easy Steps.
Step 3: Establish Your Business
Select Your Business Name and Logo
When setting up your business, one of the first things you want to do is choose a name and logo.
A lot of people get stuck here for some reason. If you are having trouble, check out Shopify’s business name generator. It’s free and you can get tons of ideas.
As for a logo, you can go on canva.com and play around with some of their logo templates (it’s a free option too). If you just prefer to outsource this task, you can.
You can go one Fiverr and get people to create logos for you. Many offer to do this for $5. For that price, you can just hire a few of the most promising people and select the best one.
Note: Make sure your name and logo are original. You don’t want to violate someone else’s intellectual property. If you are unsure, you can check the USPTO’s trademark search tool as a starting point.
For more great strategies and tips on how to select the right name and logo for your business, check out my full article on the topic: How to Choose a Company Name and Logo [16 Key Strategies and Tips].
Create Your Business Website
In this day and age, your business needs a website, period. Even if you are operating a local storefront and even if you have no interest in expanding beyond your local neighborhood customers.
That’s because people search online for goods and services near them. If you have a website that shows up prominently when people are searching for a business like yours, you can take full advantage of that demand.
The good news is that your website doesn’t have to be fancy or cost a lot of money to set up.
In fact, Google allows you to build your first business website for free. You can have your basic website up and running very quickly. That being said, if you want to generate meaningful traffic through Google search results, you probably should devote some time and energy to developing a great website that is optimized to rank high.
If you are a do it yourself-type, you can Google “optimization for local SEO.” There will be tons of articles on how to do this.
If you prefer to hire a pro, there are plenty of options. I suspect if you run the same search on Google, you will see a lot of ads from companies who are willing to do this for you (for a fee, of course). You can also hop on sites like upwork and fiverr and search for “local seo” – you’ll get plenty of options.
List Your Business So Customers Can Find You
You should also list your new business on Google. Do this with Google My Business. It’s easy and absolutely essential. It’s how people who are searching online for local businesses like yours can find you.
If you want to learn more about how to do this, check out this tutorial from Google.
Set Up Your Business Entity
You may want to set up a business entity like an LLC, corporation, or partnership for your new business. Doing this can help shield some of your assets held outside the business entity if there is a claim against the business.
But it costs money and could have tax implications, so I would recommend checking with your lawyer and accountant before taking this step.
Make sure as part of your efforts to set up your business entity, you do the following:
- Obtain a Federal Tax ID (Known as an Employer Identification Number or EIN). You want to do this so you can pay taxes for your business (an EIN is like a social security number for your business). Here’s a link to the IRS site where you can apply for one. There are services that will do this for you, but it’s actually not too hard to do it yourself.
- Register Your Business. Most states require this (at least for corporations, LLCs, etc.). You usually need to do this with your State’s Secretary of State, State Corporation Commission or Business Bureau.
- Appoint a Registered Agent. You will need someone who can accept service of process for your entity. There are services you can hire or you can appoint yourself to this role in live in the state and meet the other requirements for being a registered agent.
For more information of registering your business, check out the SBA’s helpful article on the topic here.
Step 4: Create a Brick and Mortar Business Plan
A business plan is essentially a roadmap for your business.
It organizes your thoughts relating to your business into an actionable plan. For a brick and mortar business, some of the key things to include in your business plan are:
- Budgeting (how will you fund your business, what are the initial start up costs, what are ongoing expenses, what is expected income, etc.)
- Identifying your market (specify the local area you are targeting)
- Analyze competitors (identify who they are, their scope of operations, and how you plan to compete against them)
- Marketing strategy (how you plan on marketing to your customers)
- Pricing strategy (analyze the pricing in your area and come up with a good plan to succeed based on your pricing strategy)
- Operational plans (who are your suppliers, will you have employees, how will you business operate day to day, etc.)
- Growth projections (lay out your plans for the business’s future, including growth and expansion plans)
In addition to being a roadmap for your business, a well-developed business plan can help you raise money from banks and investors, so definitely create a polished and professional business plan if you plan on getting funding from these sources.
Don’t know how to get started? The Small Business Administration has a great tool to help you write your business plan.
Step 5: Obtain Funding
Most businesses need some money to start.
Brick and mortar businesses are no different. In fact, these types of businesses often cost more to start than online businesses because the physical storefront may have significant have leasing costs (including deposits). You will also likely need equipment, supplies, employees (if applicable) and a host of other items that will add up.
Funding is a critical step in starting your business, so make sure you are really focused on it.
Here are some of the ways you can fund your brick and mortar business:
- Personal savings. You will often need some skin in the game before lenders will work with you, so having some personal savings is important.
- Credit Cards. Due to high interest rates, credit cards are probably not an ideal choice, but if you can snag a 0% teaser rate on a credit card, you can put some of the start-up costs onto that card at a ultra low interest rate (at least until the teaser rate period expires). Try to get one that lasts at least a year so you have some time to get your business off the ground.
- Friends and family. Although these people may be willing to lending you money, you have to weigh that against the risk of souring your relationship with them if things go sideways.
- Banks. Banks are a traditional source of funding for new businesses, but they will often conduct extensive due diligence and underwriting before lending to a brand new enterprise.
- Online Funding. This includes includes getting a loan using peer-to-peer lending, funding through kickstarter campaigns, using online lenders, etc.
- SBA loans. Another funding source for your new business can be a loan guaranteed by the Small Business Administration. SBA loans are provided through a bank, but since the SBA guarantees a portion of the loan, qualifying for an SBA loan is often easier than qualifying for a traditional bank loan.
- Retirement Accounts. If you have funds in a Roth IRA, you can withdraw the contributions portion at any time without penalty or taxes. If you are withdrawing from a traditional IRA or 401(k), you may be subject to early withdrawal penalties and taxes if you do so before you reach a certain age. As a general rule, retirement accounts should be earmarked for retirement, so you may not want to pursue this as your first choice.
Step 6: Find a Great Location
The three most important things in real estate are location, location, location. A similar thing can be said for any brick and mortar retail business.
Finding a great location is one of the most important factors in determining the success of your business.
Here’s why. Visibility and traffic (both foot traffic and road traffic) are crucial because you make sales when customers see your store and decide to shop there. If your store depends on walk-in sales (e.g., retail establishments), being located on the ground level of a busy street with tons of pedestrian traffic is a huge advantage.
If road traffic is more important to your business (i.e., gas stations, car washes, etc.) you want to make sure you are visible from the main road and that plenty of cars pass by that road everyday. You will also want a location that is easily accessible from the main road and has plenty of parking.
Of course, rents will be expensive for a high visibility location with tons of traffic and great accessibility, so bear that in mind when budgeting for your business.
Step 7: Purchase Equipment, Supplies and Other Needed Items
Once you have secured funding and a great location for your business, it’s time to buy your equipment, supplies, inventory, furniture, and all of the other miscellaneous items you will need to operate your business.
Obviously, if you can find inventory at a great price, your profit margins will improve, so shop around and find good, reliable vendors and suppliers.
Step 8: Obtain Licenses and Permits
Before you start your business, you should check with your state and local municipalities to make sure you have all of the required licenses and permits you will need to operate it.
In most cases, you will need to get a general business license, but there may be other, more specific, permits or licenses required, depending on where you live and the type of business you are starting.
Step 9: Protect Your Business With Proper Insurance
You are doing all of this work to build a valuable business. So it only makes sense that you protect it against unforeseen claims. That’s where business insurance comes.
These are common types of coverage that brick and mortar business owners get:
- General liability coverage (protects against third party claims for property damage and injury).
- Professional Liability Insurance (protects against claims based on your professional negligence)
- Workers compensation insurance for your employees (covers injuries sustained by your works). This may be legally required coverage if you have employees, depending on your state’s requirements.
As you can imagine, there are even more specialized forms of insurance that are targeted for specific types of business, so you may want to consult with a qualified insurance specialist to make sure you are appropriately covered.
Step 10: Hire Employees (If Needed)
When you operate a brick and mortar business, someone needs to mind the store.
If you are going to be doing it alone, you won’t need employees (at first). But if you want to share the burden, here are some things to keep in mind when hiring new employees:
- Cast a wide net to get candidates
- Interview promising candidates and select them based on their qualifications (don’t discriminate on a prohibited basis, like race, color, religion, sex, etc.)
- Have the right infrastructure in place to manage payroll (and keep all relevant records).
There are tons of payroll service providers out there, so go with someone who is reputable and offers a fair price. I use SurePayroll for my business. They are affordable, reliable and a well-known player in this space.
Step 11: Open Up a Business Checking Account
You should open a dedicated checking account in the name of your business. Make sure to run all business revenue and expenses (and only business revenue and expenses) through that account.
Why? Because if you have a business entity you may risk losing the liability protection we discussed earlier if the business entity is deemed a sham because you did not treat it like a separate legal entity.
Apart from that, having a separate account keeps things tidy from a recordkeeping and accounting perspective. It also signals credibility and professionalism when you write a check from your business account or ask someone to pay to your business account.
If you don’t know where to get started, check out Novo.
They are perfect for new small businesses because they offer no monthly fees or minimum balances, and give you unlimited ATM fee refunds. On top of that, they give you access to tons of other free perks, like major discounts on places like Stripe, Quickbooks and Google Ads.
In my opinion, they are one of the best options in the market.
Step 12: Brick and Mortar Marketing
A good marketing plan is critical to your brick and mortar business’ success.
After all, if no one knows that your business exists, you may as well pack it up because no one will be buying anything from you. So what are some of the best ways to spread awareness and keep the customers coming in?
First, make sure all of your friends and family know about your new business and ask them to spread the word.
Second, hold a grand opening and open up with a lot of fanfare. Use discounts and freebies in the beginning to get customers in the door and help spread the word.
Of course, you can’t ignore online marketing channels either.
For online marketing, you can do the following:
- We already talked about this, but set up a Google My Business, so that people looking for your type of business can find you. You want to encourage people to leave good reviews there for you if they like your business. Research has found a strong relationship between the number of online reviews a business and the revenue that it generates.
- Get a great website that draws traffic to your business. You can use the free website offered by Google that we mentioned earlier, but if you really want to draw traffic (and customers) to your website, you may want to hire an online marketing expert to help you optimize your website for traffic and leads.
- Get on Yelp for business and let your customers find you. They are an extremely well-known brand, and many people look there when searching for local businesses. Check them out below to learn more.
- In addition to advertising on Yelp, you can buy online ads from other online and social media outlets (Facebook, etc.)
If you want to go old school, you can also advertise in your local newspapers, circulars, or through direct mail, etc.
Finally, you may want to do some “boots on the ground” marketing. Walk around your neighborhood and leave flyers. Talk to folks and see if they would be willing to give your business a shot. See what your competitors are doing when it comes to marketing their products or services and learn from them.
Ultimately, you want to experiment with various marketing strategies – you may be surprised at what works best.
Step 13: Set Up Your Accounting
Ok – we’re almost there.
The final step is making sure that you don’t lose track of your revenues and expenses. When tax time rolls around you are going to need accurate records of all transactions that took place in connection with your business. Bookkeeping isn’t fun, but it’s necessary.
Step 14: Launch Your Business
Once you have completed all of these steps, there’s nothing left but to launch your business. As we talked about earlier, signal to the world (or at least your local community) when your grand opening will take place and advertise a compelling offer on that day to motivate folks to visit your store.
For example, I have seen lines around the block when a new restaurant opened and promised free or heavily discounted lunches on opening day.
So there you have it – 14 steps that take you from ideation to launch of your new brick and mortar business.
Hope this has been helpful and if you want to learn more about how to start a specific type of business, I have tons of articles covering a wide range of businesses. You can explore them here.