What Does It Cost To Start A Retail Store?

You’ve created your business plan, have your product offerings picked out, and now you’re ready to pick a location and open a new retail store downtown.

Before you start stocking your display racks and shelves, carefully plan ahead for the many costs involved. Operating a bookstore or boutique requires a hefty budget, and every dollar you invest should be well spent.

Costs to Expect When Opening a Retail Shop

Make sure you’ve covered all the bases in analyzing what expenses you’ll incur opening a new shop. The following are the most common new business owners face when first opening their doors:


Just about every city in the U.S. requires local retail shops to get a permit for operation and business licensing. The cost can vary, depending on the type needed. However, failing to comply with these requirements can result in fines and even shutting down your operations.

Below are the most common permit/licensing requirements retail stores require to operate legally:

Business License – As mentioned earlier, just about every business in the U.S. must have a business license. These are usually provided by the city or county where your store is located.

Seller Permit – Another frequent legal requirement for retailers is a seller’s permit which enables the collection of sales tax on sold merchandise.

Employee Identification Number – An EIN is a federally required identification number for businesses to use when filing their business taxes with the Internal Revenue Service (IRS). It costs nothing to get.

Signage Permit – Some cities and municipalities have stringent zoning laws and will require retail businesses to get a permit for their outdoor signage. Typically, the building and zoning department in your local government provides these.

Resale Certificate – This certification is handy if you plan to buy inventory and want your purchase to be tax-exempt. The supplier will need to see it to verify your status.

Certificate of Occupancy – Believe it or not, there is a limit to how many people can be in your store. This certificate will state the occupancy limit and ensure your establishment is up to code for this requirement.

Many states, county, and city governments often have different regulations regarding these licenses and permits, so verify what you need and how to comply.


Mortgage application

Another significant part of your budget will be dedicated to making a monthly rent, lease, or mortgage payment. If renting or leasing, expect to pay a deposit upfront when signing a rental agreement.

Business Insurance

Your retail store is off to a great start with all of your hard work and dedication. But, how do you plan to protect your investment? Business insurance is crucial to protect you, your employees, customers, and assets from unexpected events that cause financial damages.

Even better? There are insurance coverages specifically designed for retail stores! A retail insurance quote is simple to get online here. Retail insurance typically bundles together several policies:

General liability

This insurance is essential to protect your company against property damage, third-party injury claims, and more.

Workers’ Compensation

If you have one or more employees, you will be required to carry this important insurance coverage. Should a team member get sick or hurt while working, their medical costs and lost wages are covered.

Commercial Property

Whether you own or rent your property, commercial property insurance can pay for repair costs and replace ruined inventory if it sustains damage because of a fire or faulty sprinkler systems. It can also help cover lost income if your business gets interrupted after a covered event, like a fir, shuts down your operations temporarily.

Commercial Auto

Companies offering delivery services, such as a flower shops, need a comprehensive commercial auto policy. Personal insurance rarely, if ever, covers accidents if you’re traveling for business.

Store Decor and Fixtures

Finding the right location to open a shop is just half the battle. You still have to design it to look like your brand. This means new paint, installing lighting, laying down flooring, and more. Plus, you still have to figure out how you will display your products and buy the necessary equipment to do that. Research how much such renovations will cost and impact your available budget when first opening.


While you won’t need to buy several years of inventory for your initial opening, you need to make sure you have access to enough supply for the first few months. Eventually, you will be able to gauge how much stock is necessary to keep stocked and meet demand.


Everywhere you go, it seems stores are becoming more and more technologically advanced. While you don’t need to immediately invest in a kiosk for customers to use to place orders, you will still need some tech to run your retail store efficiently. This means needing a point-of-slaw system and payment processing for credit card payments.

Also, don’t forget reliable accounting and product management software, so your inventory is always up-to-date and easily accessed by you and your staff.


Much like insurance protects your business if something goes wrong, you should also find out what type of security the property management company provides or what level you need to hire for your business property. Taking steps to ensure the safety of others while in your shop is a smart investment and can deter thieves from taking your goods.


Opening a new retail store is an exciting experience filled with research, careful planning, and high-level decision-making. Creating a sound business plan and protecting it with adequate insurance can help you minimize your financial risk.

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