Starting a brick-and-mortar business is a rewarding venture, blending skills like customer service and product curation with business savvy. The appeal is clear: you get to build a real-world community and offer a tangible experience that online stores cannot match. While this makes the market attractive, it does not guarantee an easy path to success.
This guide will take you through the practical steps of validating your business concept, selecting the right location, securing funding, and obtaining necessary permits to help you launch a successful brick and mortar business in the U.S.
Step 1: Plan and validate your business idea
Begin by analyzing foot traffic in potential neighborhoods. Spend a few weekdays and a weekend observing different blocks at various times. You can also review local demographic information from the U.S. Census Bureau to confirm your target customers live or work nearby.
Next, identify your competition. Your local library may offer free access to databases like ReferenceUSA for a list of businesses. However, the best approach is to walk the area yourself to see who your direct and indirect competitors are and what they offer.
Estimate your startup costs
A common misstep is to underestimate build-out costs. It is wise to get quotes from a few contractors early in your process. This helps you create a more realistic financial plan and avoids surprises down the road.
Speaking of costs, here is a typical breakdown. A security deposit on a lease can run $5,000-$20,000. Initial inventory often ranges from $20,000 to $150,000. Renovations and store fit-out can vary from $10,000 to well over $100,000.
You will also want to budget for technology and legal paperwork. Set aside $1,000-$5,000 for your point-of-sale hardware and software, and another $500-$7,000 for business licenses and permits.
Here are four immediate steps to take:
- Draft a one-page business plan that outlines your core concept.
- Use local census data to create a profile of your ideal customer.
- Walk through three potential neighborhoods to scout competitors and foot traffic.
- Create a preliminary budget spreadsheet with the cost ranges mentioned.
Step 2: Set up your legal structure and get licensed
Choose your business structure
Most new owners choose a Limited Liability Company (LLC). It protects your personal assets from business debts. As you grow, you might consider an S Corporation for potential tax savings, but it requires more paperwork. It is a good idea to consult a CPA on this decision.
Register your business and get permits
First, get a free Employer Identification Number (EIN) from the IRS website. You will need this for taxes and hiring. Next, check with your state's Secretary of State to register your business name and with the department of revenue for a seller's permit to collect sales tax.
Your city or county will require a local business license. The most important local permit is the Certificate of Occupancy (CO). It confirms your space is safe and zoned correctly. Expect this to cost $100-$500 and take several weeks. Do not open before you have it.
Here are four immediate steps to take:
- Apply for a free EIN on the IRS website.
- Consult a CPA to decide between an LLC and an S Corp.
- Check your state's requirements for a seller's permit.
- Contact your local building department about the CO process.
Step 3: Secure your business insurance
General liability insurance is your first line of defense against claims like customer slip-and-falls. A standard policy provides $1 million per occurrence and $2 million in aggregate coverage. Expect annual premiums to range from $400 to $1,500 for a small retail business.
Key insurance policies to consider
You also need commercial property insurance. This protects your building, equipment, and inventory from events like fire or theft. Premiums often run from $1,000 to $3,000 annually, depending on your location and the value of your assets.
If you plan to have even one employee, workers’ compensation insurance is a legal requirement in most states. It covers medical expenses and lost wages for work-related injuries. Some owners try to save with lower coverage, but this can be a costly mistake if a major claim occurs.
You might want to contact providers that focus on small businesses, such as The Hartford, Hiscox, or Next Insurance. An agent who understands retail risks can help you secure the right coverage without overpaying. They are more familiar with your needs than a generalist would be.
Here are four immediate steps to take:
- Get quotes for a $1M/$2M general liability policy.
- List your inventory and equipment to get an accurate property insurance quote.
- Check your state’s website for its workers' compensation requirements.
- Contact an agent from a provider that specializes in small business insurance.
Step 4: Find a location and buy equipment
Secure your physical space
Look for spaces between 1,200 and 2,500 square feet, which is a good size for a small retail shop. Confirm the property has a commercial zoning classification, often listed as C-1 or C-2. You can verify this on your city’s planning department website before you even contact a broker.
When you negotiate your lease, ask for a Tenant Improvement (TI) allowance. This is money from the landlord to help pay for your build-out. It is also common to get one to three months of free rent at the start of your lease. Do not be afraid to ask.
A mistake some owners make is signing a long-term lease without flexibility. You might want to push for a three-year term instead of five, or negotiate a break clause that allows you to exit the lease early if your sales targets are not met.
Purchase your store fixtures and systems
With your space in mind, you can budget for equipment. A point-of-sale system typically runs $1,200-$2,500. Shelving and display fixtures can range from $5,000 to $20,000, while a basic security system may cost $500 to $2,000. These figures are a significant part of your budget.
For fixtures, you can check suppliers like Store Supply Warehouse. For general operational items, Uline is a popular option. When you contact them, ask about their minimum order quantities to make sure they align with your initial inventory needs and budget.
Here are four immediate steps to take:
- Check the zoning for two potential locations on your city’s planning department website.
- Ask a potential landlord about their Tenant Improvement (TI) allowance.
- Get a quote for a complete point-of-sale system.
- Request a catalog from a retail fixture supplier like Store Supply Warehouse.
Step 5: Set up your payment processing
Choose your payment solution
Your customers will expect to pay with credit, debit, or digital wallets, so your payment system needs to be flexible. When you review solutions, look beyond the advertised rate and focus on the total cost. Many providers charge 2.5% to 3.5% plus a flat fee per sale.
A common mistake is to get locked into a long-term contract with hidden monthly fees for things like PCI compliance or statement processing. Always ask for a full fee schedule before you sign. This helps you avoid surprises on your monthly statement and protects your profit margins.
For businesses that need to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone. Just tap and you are done. It is a simple system without extra hardware.
At just 1.99% per transaction with no hidden costs, it is particularly useful for sidewalk sales or pop-up events. This rate is lower than the average commission rates from other providers. The setup is straightforward and designed for mobile use, getting you ready for sales quickly.
Here is how to get started:
- Get Started: Download JIM app for iOS
- Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone
- Access Funds: Your money is available right on your JIM card as soon as the sale is done - no waiting for bank transfers
Here are four immediate steps to take:
- Compare transaction fees from at least two payment processors.
- Ask potential providers for a full fee schedule to check for hidden costs.
- Download the JIM app to test its interface on your phone.
- Confirm your chosen solution accepts all major credit cards and digital wallets.
Step 6: Secure funding and manage your finances
Find your funding
The SBA 7(a) loan is a popular choice for retail startups. These loans go up to $5 million and can fund equipment or working capital. Expect interest rates around the Prime rate plus 2.75% to 4.75%. You will need a strong business plan, a personal credit score above 680, and a 10-20% down payment.
You should also talk to local community banks. They are often more invested in local success. A common mistake is to rely only on large national banks. Local institutions may offer more flexible terms for a new business with strong community ties.
Calculate your working capital
With funding in mind, map out your working capital. This is the cash reserve that covers your operating costs until you become profitable. You should aim to have at least six months of expenses covered. This includes rent, payroll, utilities, and inventory.
For example, if your monthly burn rate is $20,000, you need $120,000 in the bank on day one. Many new owners focus only on one-time startup costs and run out of cash within the first quarter. Do not let that be you.
Here are four immediate steps to take:
- Review the SBA 7(a) loan requirements on the SBA website.
- Schedule a meeting with a loan officer at a local community bank.
- Create a spreadsheet detailing your operating expenses for six months.
- Prepare a down payment of 10-20% for potential loan applications.
Step 7: Hire your team and set up operations
Your first hires will likely be a Retail Sales Associate and perhaps a Store Manager. An associate handles sales and customer service, typically earning $15-$20 per hour. A manager oversees scheduling and inventory for a salary of $45,000-$65,000.
To decide how many people you need, aim for $100,000 to $200,000 in annual sales per full-time employee. Some owners try to cut costs by understaffing, but this often leads to lost sales and burnout. It is better to ensure you have coverage during peak hours.
Set up your daily operations
With your team in place, you can organize daily tasks. Use scheduling software like Homebase or When I Work to manage shifts and track hours. For payroll and HR compliance, a platform like Gusto can automate the process and keep you compliant with labor laws.
Formal certifications are rare in general retail, but you should create your own training plan. Document your opening and closing procedures, POS system instructions, and customer service standards. A simple, clear guide ensures everyone provides a consistent experience.
Here are four immediate steps to take:
- Draft job descriptions for a Retail Sales Associate and a Store Manager.
- Calculate your target sales per employee to guide your staffing levels.
- Demo a scheduling software like Homebase or When I Work.
- Outline a one-page training plan for new hires.
Step 8: Market your business and acquire customers
Your first marketing move should be to claim your free Google Business Profile. Fill out every section with photos, hours, and your address. This makes you visible in local search results and on Google Maps, which is how most local shoppers find new stores.
Launch your opening marketing campaign
Plan a grand opening event for your first or second weekend. Promote it in local Facebook groups and with flyers in nearby cafes. You can also run a simple social media giveaway. Ask followers to tag a friend for a chance to win a $50 gift card to build early buzz.
A mistake some new owners make is spreading their budget too thin across many channels. Instead, focus on one or two that reach your local audience directly. Track where your first 100 customers come from. This tells you where to put your marketing dollars next.
Measure your customer acquisition cost
You need to know what it costs to get a customer in the door. This is your Customer Acquisition Cost (CAC). If you spend $500 on Instagram ads and get 50 new customers, your CAC is $10. Aim for a retail CAC below $25, but this will vary by industry.
Here are four immediate steps to take:
- Claim and fully complete your Google Business Profile.
- Plan a grand opening event and post about it in three local Facebook groups.
- Calculate a target Customer Acquisition Cost for your first quarter.
- Create a small sign for your checkout counter that asks customers how they found you.
Step 9: Price your products for profit
Most small retailers start with keystone pricing. This is a simple formula where you double the wholesale cost to get your retail price. For example, a product that costs you $25 is sold for $50. This 100% markup gives you a 50% gross margin, a solid target for general retail.
Another option is to use the Manufacturer's Suggested Retail Price (MSRP). Some owners adopt MSRP without a second thought, but this can hurt your profits if your overhead is higher than average. Always calculate your own break-even point first to ensure the price covers all your costs.
Research your competition
Before you finalize prices, visit at least three direct competitors. Note their pricing on 5-10 items that overlap with your inventory. You can use a simple spreadsheet to track this. This exercise shows you what the local market will bear and where you can position yourself.
You do not have to match their prices. You can price slightly higher if your store offers a better experience or service. You might also use psychological pricing, like setting a price at $49 instead of $50, to make it feel like a better deal to shoppers.
Here are four immediate steps to take:
- Calculate the keystone price for your top 10 products.
- Visit three local competitors and log their prices for comparable items.
- Determine your target gross margin percentage (e.g., 50%).
- Decide if you will use psychological pricing, such as ending prices in .99.
Step 10: Control quality and scale your business
Measure your performance
A good habit is to track your sales per square foot. For many small shops, a healthy target is $300-$500. Also, monitor your Average Transaction Value (ATV). You can boost this by training staff to suggest complementary items at checkout.
To gauge customer satisfaction, you can use the Net Promoter Score (NPS). Send a one-question survey asking customers how likely they are to recommend your store on a scale of 0-10. This gives you a clear quality benchmark over time.
Plan your growth
With performance data in hand, you can plan your next move. Revisit the sales per employee metric. Once you consistently exceed $200,000 in annual sales per employee, it is a strong signal that you need to hire your next team member.
Some owners get excited and expand to a second location too soon. A better approach is to wait until your first store is consistently profitable for at least a year. For managing a growing inventory, look into systems like Lightspeed Retail or Shopify POS.
Here are four immediate steps to take:
- Calculate your sales per square foot for the last quarter.
- Create a simple one-question NPS survey to send to customers.
- Review your sales per employee against the $200,000 benchmark.
- Demo an inventory management system like Lightspeed Retail.
Building a physical store is about more than just sales; it is about community. Your unique local insight is your strongest advantage. You have the plan, now it is time to execute.
And when you make that first sale, you will need a simple way to get paid. JIM lets you accept payments on your phone for a flat 1.99% per transaction, no extra hardware needed. Download JIM and you are ready.
