How to start Retail Business (Part 2)

Retail business is a good business idea for beginners.

If you are looking for small business ideas in Africa or in developing countries like India, Nigeria, Philippines, Kenya and Ghana etc, I will be quick to recommend retail business. Retail business is among the commonest small business ideas in towns because of its simplicity to start. It is easy to start and it can be started with low investment. You can start retail business at any scale based on the money you have available for you. No wonder retail business usually tops the list of small business ideas for teens. What you need most to start a retail business is decision.  As lucrative as retail business is, it is unfortunate that it is also one of the most despised small business ideas. A lot of people especially our so called graduates believe that the business is for the uneducated. But ask many of them how their parents financed their education, they may tell you that it is through their mom’s business which is retailing.

Why is it that our graduates can’t see this as self-employment opportunity for them? Can I call this pride or ignorance? If it is pride, then is there any pride in begging for money each time one needs to buy something? I think going into retail business is more dignified. Going into retailing does not turn someone into a market man or woman if you think that is not your calling. But it offers temporary employment through which one can sustains himself until he lands his dreamed job. Why I ask the question whether it is ignorance that causes people not to consider retailing as a good small business idea is that, I have heard a lot of complaints from many people about their low income. For instance, somebody was complaining to me bitterly that the school where he teaches was not paying him well. He had been there for more than five years. When I asked about his monthly salary, he mentioned ten thousand naira. This is equivalent to less than sixty dollars per month. I guess  you are probably shaking your heads as you are reading this story, . I did a further calculation of how much this comes to per day. I assume twenty two working days in a month. This means that he earned less than five hundred naira a day. This amount is less than three dollar per day. We have not talked about his expenses like daily transportation to and fro the school. I even assumed that no expense is incurred. The question now is: Does it mean that the person cannot be selling something that can earn him more than five hundred per day? Definitely, there are many small business ideas that can guarantee five hundred naira a day. A quick example is recharge card. If you can sell a recharge card worth of five thousand naira a day, you will easily earn that amount.

Another example I want to give here are those people that are engaged as sales officers. The company where they work usually gives them targets that are difficult to meet. If you come across some on them trekking in the sun, you will have pity for them. At the end of the day, the company pays them a meagre salary. The bitter thing is that the salary may not be paid on time. Except one is doing this type of job to acquire a particular skill, I don’t see any reason why anyone should go for the job. Our employers are not helping matters. They don’t value entrepreneurship. That is why some graduate will prefer taking such jobs in order for their resumé to look good to employers.

Read Also: Good Business Ideas for Teens and College Students

Having said that, I think I need to share two stories here. Probably, these may make my readers see reasons why I suggest retailing as a good business idea. There is the story of someone that went to church having no money to even give as offering. He begged for money so that he could go back home. But by the reason of the message he heard at church that day, instead of using the money to transport himself back home, he decided to use the money to buy sachet water popularly called ‘pure water’ to sell. He sold to people that came for the second and third services. On that day alone, he was able to turnover the sachet water several times and he realised about four hundred percent return. Whaoo! This was like an eye opener. This he continued. To cut the story short, the business that was started with less than one hundred naira then later grew to become a company that produces its own sachet water today.

The second story was someone that started selling “Ankara” with twenty thousand naira. Ankara is a particular type of fabrics. Within two months, the business grew to sixty thousand naira. This is amazing! If you ask the market women how much they make everyday, you will be shocked at the amount. Bankers can attest to this. I am not saying that everybody should become a retailer. But I know that retailing as a business idea thrives in the towns and cities.

Retail business can be started with any amount. So, it is not money that is actually holding people down from starting their own retail business. You can start with whatever you have. As mentioned, what you need is decision to start. If you are working and getting ten thousand naira, you can use that amount as your seed capital or call it initial investment. If you spend the money, you need to continue doing that job you grossly hate to do before you can realise another ten thousand naira. But if you invest it on something that is fast moving, what you will gain from the business will sustain you. And you will still have your capital intact with few profits ploughed back into the business. Before you know it, the business will begin to grow.

Also Read: Work from Home Business Ideas

How do you start a retail business?

Retailing is very simple to start. Unlike many other small business ideas, you can start the business without going through the process of company registration. That is why it is regarded as informal sector. The money you could have used to register a business can be invested into the business. However, as times go on, you can now register the business to legalise it. To start a retail business, you need to following these simple steps:

Identify the needs of people

If you decide to start a retail business, you need to scan your environment. What are the needs of people around you? Pick your biro and a paper and continue to list all the needs you can identify. This will form the list of your small business ideas. If you do a thorough job, the list is going to be long. From the list, identify the ones you have financial capability to start. This will reduce the idea list considerably. Furthermore, you need to consider the existing competitors. How many people are selling the same items in your areas? Is the competition too stiff? Consider if you can create a new market for yourself. This may mean you need to take your products to other areas either by hawking or visiting your target market either at home or at their offices. Meanwhile the item you will choose to sell should be fast moving item that will enjoy quick turnover.

Locate good suppliers

You need to locate a good source where you can be buying your items. Whatever you want to sell, there are specific markets for specific products where you can get them cheap. You need to locate such market for what you want to sell. However, you need to consider the distance. If the distance will make you spend so much on transportation, you may need to rethink. When you add the transportation costs to the costs of the items, there may not be justification for going that far, except you want to bulk in bulk. If you buy in bulk, you will be able to spread the transportation costs thinly on the products. You can also negotiate with your suppliers for discounts. Don’t be afraid to ask them to grant you credit. Of course, this may not happen when you are buying for the first time. It takes time to build trust.

Read Also: 17 Small Business Ideas for Students in University

Sell at reasonable price

You need to sell at a price that will guarantee you profits. Your selling price should cover your costs and then include your margin. Products that offer twenty percent margin and above will be good for you to sell. However, not all products can guarantee this rate of returns. The success secret of retail business is the ability to quickly turnover the products that you sell. The higher the turnover rate, the more profits you make and the faster you can recoup your initial investment. You must understand that sales is not synonymous to profits. Therefore, you should not sell on credits. If you sell on credits and the customer defaults, you will lose both profits and the cost of the item.

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11 thoughts on “How to start Retail Business (Part 2)

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