Products and services sold to customers for their consumption and use through various selling mediums is termed as Retail business. The modes of selling products by retail business can be offline, online, over the call or via shipment. Retail business can sell a wide range of products for its customers that can be stored or displayed in shops, stores or godowns.
How to Start a Retail Business
Step 1
Documenting a business plan is the foremost task to start a retail business. Business plan should consist of all the necessary details related to business. It should contain details like products to sell, marketing and advertising techniques, types of strategies, budget, employees’ details (forecasted), credit score, existing loans, etc.
Step 2
Legal structuring is an essential practice to start a retail business, as this signifies whether the company shall be a private limited company, sole proprietorship, partnership, corporation, limited liability company, etc. The business owner first needs to register his/her business under specific company’s categories.
Step 3
Next important step is to finalize the name of the business. The name should not be identical or similar to any existing enterprise, company and organization. Unique or different name shall be considered for the registration of an enterprise or business.
Step 4
Further the applicant needs to file for Director Identification Number (DIN) and Digital Signature Certificate (DSC) in case of private limited company.
Step 5
Finalizing the location is the most important decision for any business, as the rise and fall of business majorly depends on the location/area/locality. Applicants need to thoroughly research and take maximum reviews of the location that he/she shall be doing business.
Step 6
Find a supplier: The business owner needs to source products and services from manufacturer, individual or wholesaler for his/her business. Nature of the business signifies the type and number of suppliers or wholesalers required to meet the business requirements.
Step 7
Hiring efficient and skilled employees is the key for a successful retail business. Therefore, human resource department of the retail business should be confident and convinced enough in hiring skilful employees.
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Benefits of Business Loan for Retails Store
1. Customer friendly
At retail outlets customers can see, feel and touch what they are buying making it more personal for them as compared to online stores where it is not possible. Retail stores make them compare other products as well then and there. Friendly and helpful staff of the retail stores makes the customers comfortable and helps in building loyalty for them to return again to the same store.
2. More inventory options
Wholesale market does not have all the merchandise, therefore retail sales provides customers with more inventory options. Retail business has all the options of producing goods by themselves, buying directly from the manufacturers or purchasing from wholesalers.
3. Hassle-free Shopping
Retail shopping is a lot more simplified than online shopping. In retail market the applicant directly walks to the store and purchases products that he/she requires. Whereas, in online shopping there are various things to consider, such as charging shipping cost, managing addresses database, dealing with lost goods, refund status, exchange options, order pick-up and delivery timeline, quality check and much more.
4. Enhances sales
When a customer walks in a retail store, he/she has a purpose of buying some desired products. However, seeing lot many other products on display, customer ends up buying lot many other goods which shall be of some later use for them. Retail stores have great sales potential, as it makes customers purchase more than they need.
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Eligibility Criteria for Obtaining the Retail Business Loan
- Age Criteria: Minimum 18 years and maximum 65 years
- Business existence for at least 6 months
- Annual turnover to be minimum Rs. 24 lakh or above
- Business should be profitable
- Good CIBIL score: 700 or above
- Applicant should be Indian citizen with no loan defaults or criminal background
What are the Documents Required for a Retail Business Loan
- Duly filled loan application form
- Business plan
- Passport-sized photographs
- Applicant’s identity, age, address and income proofs
- Business PAN card and address proof
- Business vintage proof
- Shop establishment certificate
- Last years’ ITR, Sales tax report, P&L statement
- Licenses and permissions
Types of Retail Stores
Speciality Stores: Speciality stores carry out limited products with deep assortments. These stores have limited products but with wide range of models, sizes, colours, style, etc.
Convenience Stores: Stores near to the residence are termed as convenience stores. These stores are stocked with everyday items and are kept open for long hours. Its range of products includes groceries, snack food, coffee, tobacco products, soft drinks, confectionery items, medicine, newspapers, etc.
Departmental Stores: As the name suggest, these stores offer products from various departments, including consumer goods in different categories. These stores are large retail establishments and some of the categories of such stores are house ware, baby care, shoes, apparel, beauty and fitness products, watches, jewellery items, books, salons, restaurants, pubs, etc.
Supermarket: Supermarket is a self-service shop wherein a large variety of household products are sold, such as food products, beverages, dairy products, vegetables, pickles and bottled products. Supermarket also sells laundry and household maintenance products. Products offered in Supermarket are comparatively cheaper, as they are in high volume with low margin.
Drug Stores: Drug stores are opened for long hours offering medicine and other medical related products. Drug stores are mostly in the residential area or nearby market of residence.
Discount Stores: Discount stores sell standard products at lower cost, as the volume is high to compensate margin. Products offered at discount stores include electronic items, books, shoes, clothes, etc.
Factory outlets: Stores where manufacturers sell their products are termed as factory outlets. Customers get big discounts on branded merchandise like Adidas, Nike, Allen Solly, Puma, Reebok, Biba, Woodland and many more.
Starting a retail business requires good amount of money and not everyone has that much amount of investment required to start a retail business. Hence, most of them require funding from financial institutions like banks and NBFCs. Paisabazaar provides all the necessary information regarding business loans and related aspects to its customers. One can check business loans offers that will best suit their business requirement.
FAQs on Retail Business
Q. Are these retail loans collateral-free?
Ans. Yes, most of the retail loans are unsecured loans and are collateral-free.
Q. What are my repayment options for such a retail loan?
Ans. The repayment option for a retail loan is through EMIs, net banking, credit cards, debit cards, UPIs, etc.
Q. What is the maximum amount that can be sanctioned through such a retail loan?
Ans.The maximum loan amount shall get sanctioned up to Rs. 1 crore or it may even exceed depending upon business requirements.
Q. Do I have any Flexi-EMI options available during repayment?
Ans. Flexi-EMI options totally depend on the lender or the financial institution offering retail loans.
Q. Can the bank increase my credit limit for the retail loan amount borrowed?
Ans. Credit limit can be increased as per the sole discretion of the bank that depends on your relationship with the bank and your CIBIL or credit score.
Q. What is the minimum turnover requirement to get a business loan for Retailers?
Ans. The minimum annual turnover required to apply for retail business loan is Rs. 24 lakh or above, if you apply via paisabazaar.com.
Q. Are there any charges other than interest rate that I have to pay to avail the loan?
Ans. Other than interest rate, you need to pay loan processing fee, foreclosure charges, documentation charges, stamp duty and various other fees and charges, if availed related services, such as loan cancellation fee or pre-payment charges.
Q. Can I apply for an MSME loan for a supermarket?
Ans. Yes, you can definitely apply for a business or MSME loan to start your own supermarket. The interest rates offered by financial institutions shall vary from bank to bank and shall depend on your credit score and financial health.