4 Reasons Why Retail Businesses Fail

Running a successful and profitable retail store is no easy task. Over half of all newly opened retail businesses will close up shop within just 2 years after their initial launch. Even if you "think" you have all of your bases covered, there are dozens of other factors that could send your retail business underwater. As a store owner, it's your responsibility to identify these potential problems so you can fix them in a timely manner.

Reason #1 - Theft

It's not something most store owners want to think about, but theft is a growing problem in the retail industry. Regardless of what types of products your store sells, you need to take the necessary precautions to reduce theft. Each year, billions of dollars worth of products are stolen from retail stores in the US. Unless you want to contribute to this statistic, take action to reduce theft in your store. Installing additional security cameras, locking cables, and placing your high-end products behind glass cases can all reduce theft.

Reason #2 - Not Enough Capital

Like most businesses, retail stores require capital to maintain a constant flow of products. Without capital, you simply won't be able to purchase new products for your store. This doesn't necessarily mean that you need cash on hand, but you do need credit. Before jumping into the retail business, make sure you have a proper business plan with open lines of credit; otherwise, you could find yourself between a rock and a hard place.

Reason #3 - Poor Staff Training

Having a well-trained staff of employees is critical to your retail store's success. Employees who simply show up to work for a paycheck without any real drive will have a negative effect on your business as a whole. Only hire driven, focused individuals who are enthusiastic about the job. After hiring them, take them through every aspect of their job in a full training course. You can also encourage employees to work harder and more efficiently by rewarding them with additional "perks," such as gift certificates, free lunches, etc.

Reason #4 - Hard-To-Find Location

I can't stress enough the importance of a good location for retail stores. If customers are forced to drive around in circles trying to find your store, you'll naturally lose sales and profits. Sure, some of the non-premium locations might have a lower lease price, but you'll end up losing far more money in lost sales. Don't try to cut corners by choosing a poor location for your retail store. Instead, choose one that's near a main road where people can easily find it.