About half of all sole proprietorship retail stores are profitable. This 50/50 benchmark is the difference between a stagnant retail market and one that is successful. Moving from sole-employee to employee to medium sized retail business is essential to a small business’ life cycle but keeping the business safe can be a challenge.
Do A SWOT
Before you begin the expansion process, do an analysis on your store’s strengths, weaknesses, opportunities, and threats. (SWOT) Though the concept is the same for all SWOT, the retail industry has some of its own standards. The SWOT analysis is a planning tool to help you find your best direction of expansion while identifying and hedging against risk. The strengths of your company and the opportunities that it can explore will point you to the best path of growth while your weaknesses and threats will pinpoint areas of risk that you need to protect against.
Think Globally
The moment that a business expands into e-commerce, it enters the global market. This will bring a lot of new attention to your business, some of which will be good and some will be bad. Under globalization, cultures become threatened. Some will embrace change while others will push back. For a small retailer, this pushback can be surprising and potentially detrimental. Before launching any expansion, do a few test runs in smaller community markets and measure the results. Advertising using Facebook or Google is highly scalable. You can tell Facebook to only show ads in a small geographic area. Use this to function as your test runs then expand from there.
Watch Your Data
It may sound like a page out of a spy novel but expanding any boundary, whether global or local, can earn you some enemies. As part of your threat assessment, look for the places where your personal and company information may be vulnerable. Since most small retail businesses are home based, your laptop most likely holds all of your customer information and is the probable target for business espionage.To keep your data safe, use a two fold strategy. First, use strong security software, being certain to keep it up to date. F-Secure is one of the best. Second, make sure to monitor your digital presence so that you are aware of breaches before they become a danger to your business. If you find an anomaly, address it immediately with a cyber security company or law enforcement.
The Double Edged Employee
To be able to expand your business, you will invariably need to hire employees. Having someone to work on your behalf opens up the opportunity for you to explore and sell to new markets as well as create new lines of revenue. Unfortunately, employees come with built in risks. On the malicious side, an employee will have the greatest opportunity to steal products, inventory, and clientele. They also become the face of the company in many cases which means that an angry employee can crash your marketing efforts. Some store cameras and a lot of communication can go a long way in mitigating this risk. The benign risks associated with employees have a lot to do with your knowledge base. The IRS and federal labor laws have strict standards on employee’s hours, pay, and tax reporting. A mistake on any of these can, at the least, cost you significant fines and, at the worst, land you with a lawsuit. Consult your accountant to do employee payroll properly.
