Evaluating startup costs can be difficult for new retailers. If several of the steps to planning a business require you to have a retail business license, how will you obtain the necessary information to determine whether or not your retailing business plan is a viable one? The bottom line is many of the figures for the business plan will need to be estimates.
Finding the right vendors and suppliers generally only send catalogs with dealer price lists to established businesses and building the trust relationship along the way. For established and in good repute business, you can ask for terms of payments such as 30 days payments terms up to 120 days term, this way you can revolve your capital and have multiple turn overs and repeat orders before making the payment to your suppliers.
Luxury items and hand-crafted merchandise generally allow for higher markups, while your basic and essential products may have a smaller profit margin. Retail markup typically runs between 30 and 40 percent, depending on the industry segment. For most direct importations, you can add an additional 10% mark up margin to your selling price.
Let's say you plan to sell a Php 19.95 item to your customers. That item will probably cost between Php 14 and Php 15 wholesale. Industry research, especially reports from trade associations, can offer some insight on what markup your retail segment uses. Shipping, handling, and any other expenses related to obtaining the merchandise should be considered in determining inventory costs.
