Many small companies say brick-and-mortar space allows them to communicate their brand and create a seamless customer experience. But is setting up shop in a physical space right for every business?

In the last few years, some 20 online companies in the U.S. have launched a physical presence to better market their wares, forge closer customer relations, and boost online traffic and sales.

“Industry research shows that three out of four customers want to interact online,” says Bryan Gonterman, vice president and general manager of AT&T New York/New Jersey Market, “and 56 cents of every dollar of sales are impacted by the digital medium. At the same time, however, 35% of online customers actually want to pick up their purchases in the store.”

Steve Wilson of the New Jersey Business & Industry Association says common denominator can be summed up in one word: Convenience. Stores and websites should work together seamlessly to make it easy for the customer to make a purchase. It’s why Starbucks lets customers order coffee with an app. It’s why online giant Amazon is creating physical distribution centers, while successful retail stores like Nordstrom are investing heavily in digital distribution.

But those are large, billion-dollar companies. How does the small business owner determine when to make the move to a brick-and-mortar location?

Is Brick-and-Mortar the Next Step?

Choosing between offline and online retail is a challenge, but the key is to understand who your target audience is and how best to reach them. That should help guide your business development and always be at the forefront of any major decision.

When making such a monumental decision, the staff at ShipStation offer these key questions to ask:

  • Can you give customers a sensory, in-person experience, such as touching a cashmere sweater, trying out an antique sofa, or listening to music?
  • Would customers enjoy trying things on, such as clothing, shoes, or makeup?
  • Would a face-to-face conversation make the purchasing decision easier for the customer?
  • Can the use of social media, a new app, or in-store promotions build the brand on a local level, while also enhancing customer loyalty and reaching new prospects?

If you answer “yes” to these questions, perhaps you should consider the practical aspects of opening a traditional store by analyzing the market and developing a solid business plan.

But what does the process of moving an online store into a physical space look like? What are the legal and business considerations to be aware of when expanding?

Now What?

A number of business, legal, and taxation issues will need to be considered. Among them: The type of business formation; federal and state income tax issues; sales and use tax issues; company terms and policies; privacy policies; data protection policies; geographical limitations; and other rules and regulations.

LLCs are the most popular business formations and the process is something only an attorney will be able to execute for you. Working with an attorney is the best way to ensure your business plan is up to date on the various real estate regulations, legal rules, and necessary permits ahead of time so when it comes time to open your store, you don’t run into any serious hurdles. Good legal expertise will be invaluable throughout the process, especially when it comes to negotiating, preparing, and entering into any contracts.

If managing your financials is not your strong suit (and, if it isn’t, know you aren’t alone), work with an accountant to help formulate a budget and have him or her go over your business plan.

Merging Physical and Digital Stores

Online stores should be positioned so that they complement a physical store—not replace it. The key lies in bringing together the best of two worlds to offer a unique shopping experience. Brick-and-mortar stores can create mobile apps, which can make locating the store easy when a potential customer is looking for options in the area. The app should also offer details such as the clothing range, prices, working hours, etc.

Statistics indicate 55% of buyers like to interact with both the digital and physical world when shopping. Being able to pick up an item ordered online from a physical store results in more shopping, at least for 23% of shoppers. Also, 20% of buyers are likely to buy at a physical store if they can return a product bought online at the particular store.

Set in Stone

Having a physical presence allows you to curate a unique environment for prospective customers, as well as your existing fans. It doesn’t necessarily have to be huge endeavor, but a brick-and-mortar location can provide the opportunity to offer something that resonates with consumers more than any online discount code ever could—value beyond the transaction. Just remember: As you build your physical space, don’t neglect your website.

Oliver & Cheek, PLLC, is ready to help your small business get a strong start. We can be your partner, offering expert legal and business advice. Our attorneys are excellent problem solvers and highly skilled at developing and selling ideas. Our team will work to help you solve problems, recognize emerging problems, and set your company on the path to success. For more information, call (252) 633-1930 or visit www.olivercheek.com.  

(Sources: Rutgers University School of Business; Forbes Magazine; ShipStation; New Jersey Business & Industry Association; Bond Street Marketplace, Inc.; Grand Rapids Opportunities for Women; and The Guardian.)