Business plan for the retail industry

Starting a “seasonal affected business”? If you’re in the retail business – that’s probably the case

Note that you’ll probably at some point need to find working capital to fund seasonal inventory changes between high sales and low sales months

How do you get Working Capital? Here are Some options

Equity – If the business has just started to run and not yet profitable, you’ll have to rely on equity funds. These funds can be derived from your own resources / family members or from a private investor

Factoring – a financial transaction whereby a business sells its “accounts receivable” to a third party (called a factor) at a discount. In “advance” factoring, the factor provides financing to the seller of the accounts in the form of a cash “advance,” often 70-85% of the purchase price of the accounts.

Short Term Loan – a loan for less than a year. In this case, good relationship with your banker is a necessity

Trade Creditors – Good relations with your trade creditors (and a history of on time payments from your behalf) might help you solicit them in extending terms to enable you to meet a big order

Line of Credit – Only if your business is well capitalized you might qualify for short-term line of credit from the bank

A business plan before starting a business will help you predict the extent of the needed working capital