Bargin Bargains

How to Open a Bargain Outlet Store

Starting a close-out and surplus business can easily become a reality…Not. Like most businesses it will take a lot of initial hard work and long hours. It may even take you years to learn the business. But with the right planning and guidance from those who have already succeeded, you can achieve your goals. The key is to start small and limit your risks until you learn the business. You have already taken a wise first step in learning all you can from others by reading this guide.

Let’s begin; The following steps to starting a retail business should be used as a guide before you open a store.

1. Choose a Business Legal Structure
Choosing the proper legal organizational structure for your business is one of many important decisions you will make. In most cases it is best to start with the easiest and least expensive form of structure; a sole proprietorship and later change it to a C Corp, S Corp, or LLC.

2. Choose a Name for Your Close-out Business
- Make it easy to understand, spell and pronounce and remember e.g. Bargains Ave, Wittle Bit of Everything, Round Trip Luggage
- Don’t use negative sounding words.
- Create a name you can use as a domain name on a website and eBay. The name should contain a highly used search term.
- Search GoDaddy.com Hosting Plans for domain name availability
- Search eBay Stores for user name availability
- It would be optimum if you can use the same name for all three, store, website, and eBay. - If not, try to obtain similar names.
- Don’t use a strictly generic terms, such as ‘discount office supply’ which cannot be protected as trademarks.
- Don’t use names or parts of names that will invite copyright or trademark infringement actions by owners
- Be creative and imaginative.

3. Locate and Visit Suppliers of Products You Will Sell
This section is the most important part of your close-out business. The profit is in the “buy”. If you buy at the right price you will always make money.

Start small - don’t be overcome by appearance of product loads that are offered. Be conservative and test the waters first before you leap into large loads. The only exception would be truckloads from Target stores.
Know the difference between close-outs, overstock, and store returns. Store returns (see bargains glossary)
Virtually all deals in surplus and close-outs are always cash and carry deals. That’s why it is important to know the supplier and the merchandise because once you buy it is yours.

4. Write a Business Plan
Whether it is formal or informal, on paper or on disk, the process of creating a business plan will only help your business become successful. Learn how to write a business plan for your retail store, why writing a business plan is necessary, purchase business plan software and view free sample retail business plans.

5. Learn the Laws

Understand what business licenses and permits you need to obtain by contacting your
city, county and state government offices. Before you start your own business, find
out what laws govern your type of retail store. Consider consulting with both a

lawyer and an accountant, as each will help you properly organize your business.

Federal Tax Id

An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. It costs nothing to apply for an EIN, it can be registered online, and most vendors will require a tax id before conducting business with a retailer.

Business License

How and where you register a retailing business with the state will depend on your state’s laws. To find out what is needed to obtain a business license in your state, start by visiting your state’s official website. Most states have resources on how to register a new business and all of the requirements that must be met.

If you have a retail business located within the city limits, you may also be required to purchase a local business license. Some counties and other municipalities also require a license. Call your county or city’s clerk’s office for more information. The fee varies depending on the type of business and where it is located.

Resale Certificate

In order to purchase products to resell and not pay sales tax, your business will need a resale license or certificate. Not all states require a sales license and each state has its own name for this type of license.

This type of business license will allow your store to buy goods tax exempt from a manufacturer or distributor. Then you collect the sales tax from the customer and pay it back to the state. Most vendors will request a copy of your resale certificate before doing business with your company.

Business Name Registration or DBA Certificate

If you use any name for your retail business other than your own personal name, you’ll need to file the appropriate paperwork. Some business licenses include a business name registration; others require a separate registration or a DBA (doing business as) certificate. When you file for a corporate business structure, a foreign or fictitious name application is generally included. Again, check your state’s laws for more details.

Professional Licenses

Some industry-specific retailers such as auctioneers, hair dressers, pharmacists, optometrists and other professionals may require state or local occupational licenses. If you’re not sure you need an occupational license, check with your industry’s trade association or your state’s licensing department.

Certificate of Occupancy

A certificate of occupancy may be required in some areas. After applying, the property is inspected by representatives of the necessary agencies. These may include the fire department inspector, the building inspector and the health and/or sanitation inspector.

Other Permits

There is no way to list all required permits, as the laws and regulations vary from place to place and from industry to industry. Check with local officials to find out what permits, if any, your close-out business needs. Here are a few common permits to consider.

Before you open your doors to customers, be sure you’ve done the necessary research on retail business licenses and permits you need. Start filing the paperwork as soon as you can, expect delays and provide all the necessary information to avoid any problems opening your business. Consult with a business lawyer if you have any
unusual circumstances or need further clarification on obtaining retailing licenses and permits.

6. Find a Location

Where you choose to locate your retail business will have a major impact on everything your shop does. The difference between selecting the wrong location and the right site could be the difference between business failure and success.

Lease

The lease is a critical issue that must be handled correctly. A lease is a legal obligation that could literally bankrupt you if the store fails. Two schools of thought regarding leases are long term or short term (such as month to month). Leases ordinarily run 3 to five years with renewal clauses. Prime property leases for anchor stores at malls can run as long as 25 years. ALL leases are totally negotiable. The more desirable the location the higher the rent and longer term lease will be required by the landlord. In the close-out business it is best to manage risk by entering into short  term leases. As a mom and pop operation is will be difficult at best to compete with all the large discounters and outlet stores. A month to month lease gives you wide open options.

Traffic & Parking

Make sure your location has two features; highly visible to traffic and plenty of parking spaces. If you are not visible to traffic you will have to spend money to advertise and pull traffic to the store. If you have plenty of traffic you will have to have parking or else customers will find it inconvenient to shop there.

Fixtures

Fixtures are costly. Find a local fixture dealer that buys and sells used fixture to keep your costs down. You can always upgrade later on.

Insurance

The landlord will require liability insurance for potential accidents that happen on his property. If you use a van or truck in the business you should consider commercial auto insurance.

Signs

Start out with a low cost static sign and a simple lighted open sign in your window. Check with city requirements before putting up a sign because there may be size and conformance restrictions.