Retail Success: Enjoying Rewards and Selling Your Business

Overview

You’re no longer just thinking about starting a retail store – you’re now a business owner/manager, satisfying customers and making profits. After opening your retail business, there are two options: enjoy its rewards or selling your business to prospective buyers.

In this final chapter of our retail guide, we’ll guide you through the steps to enjoy your labors and explain what to do if you decide to sell your business.

Enjoying your retail business

1. Have a reality check

Take a hard look at your retail store. It’s not just a shop; it’s a hub for the community, a source of income for your staff, and a money-making venture for you.

Now, let’s talk issues. Scrutinize your finances, customer happiness, and overall performance. Find the weak spots and celebrate the wins. Be honest about what’s working and what needs fixing.

2. Review your goals

Regularly pause to assess your overall business strategy, helping your mindset and managerial effectiveness. Confirm that your day-to-day decisions align with your long-term vision, adjusting goals based on market trends and customer preferences to stay on track.

There are many ways in which you can review your business goals. Here are some of those examples:

• Review your business goals by revisiting your store’s business plan or executive summary.
• Initiate a retailer’s journal to document your business concept and weekly notes on how reality aligns with your goals.
• Schedule regular meetings with a trusted business adviser to discuss your business goals and track progress.

Read more: Retail Business Planning from Concept to Profit

3. Measuring your success

As your retail store expands and marks anniversaries, you might ask yourself if it’s successful. Determining success isn’t straightforward, as various ways exist to measure it.

Personal profits

Starting a retail store boils down to making money for yourself. It’s about earning a living, fulfilling a job, and aiming to create value that you can eventually turn into cash.

The profits are personal and tangible — a salary that covers your basic needs and supports your store’s essentials like inventory, overhead, and taxes. Additionally, you want to grow your business assets, including stock, fixtures, goodwill, and a financial safety net.

Customer profits

Customer success is delivering what customers want, and improving their lives through your store’s daily operation. Unlike personal profits, measuring this success is trickier.

Measure it by staying connected with customers, gathering their opinions on how the store benefits them, and quantifying results by examining sales levels. For instance, if one in six customers expresses appreciation, and your store serves sixty customers daily, at least ten customers benefit — this is customer success.

Employee profits

Some retailers are proud of what they provide for their employees. With enough money and good management, retailers can hire the best local workers who understand the value of providing real service.

Certain retailers see affordable health care and a safe workplace as crucial to their business success. Either way, measuring retail success includes offering employees better working and living conditions than big-box stores.

Community profits

Starting and running a successful retail store in your community has several positive impacts. Your store provides an excellent customer shopping destination and a top-notch workplace for employees.

Beyond that, it contributes to the community by paying taxes, improving the local business scene, donating to local charities when feasible, and boosting local pride through its helpful and successful presence.

4. Avoid retailer burnout

Burnout happens when work leaves you feeling drained, cynical, and emotionally detached due to a lack of impact or control. In September 2022, Microsoft’s Work Trend Index found that over half of managers (53%) admitted experiencing burnout on the job.

To avoid burnout, start by recognizing the signs and take action early. One crucial step is to take breaks regularly. Also, delegate tasks when you can, and seek support from your team to lighten the load.

5. Spreading the joy to others

Ensure that the joy you experience in your retail business is spread to others. Make it a point to involve your customers and employees in creating and enjoying a positive and enjoyable atmosphere in your store.

Customer enjoyment

Create an enjoyable shopping experience in your store by organizing it for efficiency and offering valuable inventory that caters to your customers’ needs.

In the face of tough competition from big-box stores, go beyond mere efficiency and value. Differentiate your store by making it friendly and helpful, traits often lacking in larger retail establishments. Here are some suggestions to achieve that:

• Give a surprise gift or certificate to a random customer daily, and watch the positive buzz spread among friends.
• Welcome everyone with a friendly smile at your store entrance for a warm and inviting atmosphere.
• Call customers by name (from credit cards or checks) to make them feel acknowledged and valued.
• Always side with the customer in price discrepancies to build lasting goodwill.

Employee enjoyment

An enjoyable workplace improves the work environment benefits current employees, and builds a pool of potential hires. Now, here are some ways to enhance your store’s environment for your employees:

• Get to know your employees as individuals.
• Reward hard work with perks like luncheons or paid time off.
• Add snacks to the break area for a more enjoyable space.
• Recognize and appreciate outstanding employee service.
• Encourage friendships and discourage animosity among colleagues.

Reasons for selling your business

Every retailer will reach a point where they consider selling their store, driven by various reasons. The timeline for selling varies widely – some stores change hands within a year of opening, others endure for generations before hitting the market. 

Let’s look into the compelling reasons behind retailers deciding to sell:

It’s not enjoyable anymore

Starting a retail store is initially exciting, but the thrill can wear off. Entrepreneurs either open more stores or look for new challenges.

People have different preferences; some like the excitement of launching a business, while others prefer day-to-day management. Recognizing these distinctions, some entrepreneurs focus on startups, while others excel in daily operations by leveraging their strengths and collaborating.

Growth has stunted

External factors beyond your control may hinder your retail store’s growth. If your sales aren’t increasing as expected, your store might be healthy but stunted.

If your store isn’t growing despite your best efforts, it might be time to sell. You’ve worked hard; now someone else could take on the challenges. Even if it doesn’t fetch top dollar in a fast-paced market, your store still has value as long as there’s potential.

You have enough equity

If your goal was to sell your store after building up its value, check the financial health of your business. If it’s in good shape, search for prospective buyers willing to exchange their cash for your fixed assets.

Equity can convert into cash, exchange for assets like property or equipment, or generate a steady income.

A really good offer

Imagine a deal that not only meets but surpasses your financial expectations — a buyout that brings substantial profit or terms that make selling your business a smart financial move. 

Every retailer hopes for that perfect moment when a prospective buyer comes in with an unbeatable deal, whether a customer, a retiring executive, or a lucky lottery winner. When faced with such an offer, some might decline if they still enjoy managing the store, while others may take a few days to weigh their options.

How to value a retail business?

Selling your business is like selling your products: it’s about having the right mix, setting the correct prices, and making it easy for customers to purchase. Unlike fixed-price merchandise, determining your store’s value requires a different approach.

To get an idea of your retail store’s worth, consider these factors:

Valuation

Assessing a retail business’s value is crucial — it’s like thoroughly examining its financial well-being, performance, and future potential.

Different methods come into play to determine a fair and accurate business value, such as annual gross sales, annual net sales, and the balance sheet. This evaluation considers historical financial data, growth possibilities, market conditions, and the competitive environment.

Entity sales

In an entity sale, the buyer takes over the whole daily operations, from business assets and contracts to debts and legal matters. The price is usually determined by the total enterprise value (TEV), considering tangible and intangible assets and outstanding debts.

Once the purchase is complete, the buyer takes over normal business operations, and the purchase price reflects their perception of the ongoing business value.

Asset sales

In an asset sale, the prospective buyer picks and buys particular things from the retail business, like inventory, equipment, customer lists, and intellectual property. The fair market value of each business asset determines the value of this type of sale.

This way, buyers can choose what they want without taking on unwanted debts or responsibilities. Asset sales can affect the overall value compared to a sale where the entire business entity is transferred.

GOOB sale

A GOOB sale happens when a store is shutting down, selling everything. In these sales, prices are usually lower because they’re based on the urgent need to get rid of everything, not the usual market value.

Buyers in a GOOB sale are after cheap deals on inventory and assets, taking advantage of the seller’s rush to sell everything quickly.

Finding prospective buyers for your retail business

Once you’ve decided to sell your store, determine the business value, and choose between equity or asset sale, it’s time to search for potential buyers.

There are four primary sources of store buyers: 

• Customers
• Suppliers
• Competitors
• Entrepreneurs

Let’s dive into each one and discuss practical methods for approaching them.

Customers

Many customers may dream of owning a store like yours, especially if it’s successful and unique. The challenge is finding a way to share your business without jeopardizing your existing customer base; here’s how:

• Determine your business value and sale terms.
• Craft a thoughtful pitch, like, “I’m retiring soon and seeking someone to take over the store. Interested?”
• Select customers wisely based on their potential as good retailers.
• Be mindful of what to disclose to customers before a non-disclosure agreement.
• Maintain a log or calendar to track discussions with customers.
• Follow up with interested customers, especially if there are changes in price or terms.

Suppliers

Consider contacting your primary suppliers, as they could help you find a prospective buyer for your store. They might be in search of retail outlets or have connections with business owners of similar stores who are open to expanding, swapping, or buying extensive inventories.

To discuss your store with a supplier, contact your sales representative. If you don’t have one, contact the supplier directly and ask to speak with the sales or marketing manager or an executive for clear communication about your intentions.

Competitors

Most small retailers eventually develop good relationships with their competitors, even those who own local franchises. These contacts may turn into prospects for selling your store, as they may want to expand one day.

When thinking about selling your business to a competitor, it’s essential to approach the conversation cautiously. Start with a casual inquiry, set up a verbal confidentiality agreement, and, if needed, enlist a business broker for communication with competitors.

Entrepreneurs

To sell your retail store effectively, broaden your buyer search. Look for entrepreneurs prioritizing a thriving business rather than a specific retail niche. 

Utilize a business broker or online advertising to increase your outreach and enhance the chances of finding the right prospective buyer for your profitable store.

Summary

In wrapping up our retail business guide, we’ve covered everything you need to know about starting and running a retail business, from the initial idea to being a successful business owner focused on customer satisfaction and profits. As we finish, take a moment to appreciate the rewards of your hard work in the retail world.

However, entrepreneurship is ever-changing. An exit strategy may bring new opportunities if joy fades in your retail venture. Whether relishing success or seeking a new path, may your retail journey stay fulfilling.

References

Ramsey, D., & Ramsey, J. (2010). The Everything Guide to starting and running a retail store: All you need to get started and succeed in your own retail adventure. Adams Media.