Flying up and down the east coast of Australia this month, and talking with property developers, real estate agents and financial advisers, it’s really brought home just how big our east coast building boom is.
But funnily enough, whilst most people look up at the top floors of these shiny new apartment developments thinking “who’s going to live in the penthouse?”, I find myself looking at the ground floor and thinking “who’s going to open the coffee shop/convenience store/nail salon/hairdresser/newsagency?” and a long list of other small retail formats. Because it’s at the foot of these new residential and office towers that many brand new, first-time small businesses will start.
Some of those new retailers will have worked in retail before, others will never have worked retail and just want to, or need to, start a business to feed themselves and their families. I include families because I have yet to meet anybody in retail who owns a store just to provide for themselves.
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A job working with somebody else is a lot less stressful and gives you a lot more down time than owning and running your own store. I digress.
Of these “new retailers” some will just wing it and most probably fail, others will struggle by on their own, and some will end up owning a chain of several small stores. Some will find support in a franchise model, an expensive, but sometimes sensible way to increase the security of your new venture via great training, systems and a strong brand to attract shoppers to your new store.
However, there are no guarantees with a franchise and some are frankly unviable when the start-up costs are taken into account. I can sadly name a number of close friends who have taken in franchises, coffee, bakery, salad and quick service restaurants (QSR), paid unbelievably large sums of money on start-up, not insignificant fees on the way through and still failed.
I once sat with a passionate young man and tried to talk him and his wife, an ex-Myer department manager, out of spending more than $650,000 on a coffee franchise for a site in a busy mall on the outskirts of one of our major cities. They were unable to pay all of this, but combining the equity in their home, a bank loan AND a loan from their parents, they could just do it. I don’t know what they did as I lost touch with them and have not been back to the mall. However, I do know that $650,000 buys a huge amount of opportunity in any business venture, whether it’s a property or share portfolio, or a pure startup on your own.
So how do we manage the risks associated with starting this new retail venture if we choose to go on our own?
Firstly, work in retail. If you haven’t done so previously then just go and work part-time in a major store chain in the sector of retail you want to work in.
If you’re starting a convenience store, work in a company-owned 7/11 store; if you’re starting a coffee shop, work in a company-owned Gloria Jeans.
And just work hard. Ask for as many different shifts at differing times of the day and week as you can. Watch, listen, take notes, and photograph and video stuff on your smartphone. You’re being paid not a lot in order to learn your new retail model. Attention to detail in retail has always been key, so learn the little things that keep shoppers coming back.
Volunteer to do everything in the store so you can learn as much as you can: how shoppers are greeted, how the front of the store is laid out, which point-of-sale (POS) back office system (BOS) and EFTPOS supplier is used, how the stock is ordered, priced and displayed, and rotated.
Learn about sight-lines, planograms, promotional displays, because when you start your own business you will need to know everything that a large retailer does in order to be, and stay, successful.
Above that, look for online and inexpensive practical retailing courses to deliver knowledge to you. The Retail Doctor is one of the best out there. There is a 1-hour interactive online course on the shopper experience via ANRA, the NRA, and The Retail Council can all help with training and support in some shape or form.
I heard a statistic last week that said 20,000 new apartments will be ready to be occupied in mid-2016 in Sydney alone. I hope there will be 1000 thriving new small stores at the bottom of these buildings.