Sporting goods is a big global business market and will continue to grow in the coming years. McKinsey’s WFSGI 2021 report shows the total sales of the global sports equipment retail market to be $149.6 billion in 2020 and is predicted to reach over $200 billion by 2024. So, if you have a sporting goods store business idea, you’re ready to get started. However, there is more to it than just knowing how to purchase and sell sporting goods. It involves market research, business registration, and the expertise to run a retailer. To keep you from overwhelming, we’ve put together the following 11 steps to guide you through how to start a sporting goods store profitably and legally.
You should constantly update the latest sports trends. For example, work-out at home during COVID-19 or extreme outdoor sports in the ecozone could bring new sportswear and equipment demand in 2022 and 2023.
Research your competitors
Before starting a sports business, it’s essential to know who your competitors are and how they’re doing. So, visit other sporting goods stores in the area to see what’s good and bad about the goods and services they offer. If there is a sport that consumers are interested in but underserved, this could be your opportunity to capture the market.
You should find out popular sports activities and hobbies in your area. For example, a nature reserve or park is a lucrative market for popular outdoor activities like kayaking and hiking. If your city has a lot of bike paths, the demand for bicycles is likely to increase. You can open a sporting goods business specializing in bicycle rental, sale, and repair.
Step 2. Identify the target market
If your sporting goods store caters to all kinds of sports interests, you can start with sporting goods products like camping, fishing, hiking, hunting, baseball, soccer, basketball, hockey, golf, and tennis. Be aware, however, that no one can cover a general sport or market as there isn’t a strong enough customer base to back it. So, instead of a mass-intensive approach that requires a lot of money, focus on specific sports like golf, fishing, or hunting to become a professional sports retailer and make a difference. Focusing on a niche market helps you cover every aspect of a particular sport without thinning your resources.
Select by customer group
Alternatively, you can focus on customer groups, such as amateur athletes, teenagers, or products aimed at children. Conversely, you can also go to the other end to cater to the professional market only and offer only high-end sportswear and equipment. A distinct niche from sports equipment is sports memorabilia and apparel.
To stand out from competitors, you need to be at the forefront of a new style or innovation. For example, if your store specializes in sports souvenirs, find and sell unique pieces that you can’t find elsewhere. That is the mechanism of success and sustainable business development in the long run.
Shape pricing strategy
Some sporting goods stores prefer to sell to coaches of sports teams because they often buy sports equipment in bulk for players on the team throughout the year. Besides, customers who prefer high-end sports equipment are often willing to pay a premium for high-quality items. Therefore, it’ll bring a more significant profit margin and determine your pricing model. Since sportswear comes in a wide range of prices, set your prices in line with your competitors, and your customers will remain loyal.
Step 3. Develop your business plan
A clear plan of how to start a sports business is essential to map out the specifics of your sporting goods store. A business plan is a document describing the path you plan to take with your business and how to achieve success. Imagine what you want to achieve in 3–5 years and develop specific strategies to accomplish these goals. You can begin with:
The mission statement
The most prominent features or unique strengths of the business (What will set you apart from the competition?)
What specific products and services will you offer?
The biggest question is probably “What are the costs involved in opening a sporting goods store?”. According to Starter Story, the average cost for starting a sports business is $39,237. However, it should include start-up and ongoing costs to make it up and run in at least 2 months.
Initial cost of a sporting goods store
The first is rent, as you’ll need to buy or rent retail space for your sporting goods business. Also, you’ll need to build a website for starting a sporting goods store online. Finally, the overhead costs include applying for a business license, business registry, initial inventory, stocking shelves, insurance, and utilities such as software and hardware.
Step 4. Register your business
After doing all the research and planning, make your dream come true by registering your sporting goods business legally. Depending on your local requirements, this process can be different. For that, you should hire an attorney to help with the necessary legal documents to register your new business and name your business.
Establish legal entity
Establishing a legal business entity as a limited liability company (LLC) saves you from being personally liable if someone sues your sporting goods store. However, the most popular type of business structure is the sporting goods franchise. In addition, there are many other types of businesses, such as partnerships and sole ownership.
You’ll need to register for taxes before opening a sporting goods store. To register for taxes, you can apply for an Employer Identification Number (EIN) through the IRS website. Once you’ve registered your business, you can continue to apply for the permits required by your state or with your rental space.
Open a business bank account
You should open a business account to separate your personal assets from business assets. In addition, it also makes tax returns and accounting easier.
Set up business accounting
Documenting your various expenses and sources of income is crucial to understanding the financial performance of your business. Keeping accurate and detailed accounts also helps to simplify your annual tax return.
Step 5. Apply for the necessary licenses and permits
If you run a business without the necessary permits, you could face hefty fines or even close your business. Business licensing requirements to operate a sporting goods store can vary from state to state and local to locality. Resources to find information about business licenses include:
Your county, town, or city clerk’s office
SBA’s Reference to State Licenses and Permits
Certificate of occupancy
Sporting goods stores are often required to obtain a certificate of occupancy (CO) to confirm that all government regulations, building codes, and zoning laws have been complied with. You need to apply for a CO with your local authorit
y before making any changes to your home. If you only use the rented premises, the landlord will be responsible for applying for a CO.
Step 6: Sign up for business insurance
Just like a business license, your sporting goods store needs insurance to operate legally and safely.
General Liability Insurance
The most common coverage small businesses need is General Liability Insurance (GLI) is the most common coverage small businesses need. If you’re unsure about farms how to start a sporting goods store and the risks you may face, GLI is a great choice.Other notable insurances
Step 7. Create an omnichannel shopping experience
With store closures due to COVID-19, many sports retailers develop online sales, and first-time online customers will stick with their new habits. As a sportswear retailer, you’ll need to put digital commerce at heart and provide a seamless omnichannel experience to retain old customers and reach your target audience.
The peculiarity of sporting goods stores is to manage items with multiple attributes such as style, color, size, color, or sports brand and multiple categories simultaneously. Therefore, it’s important to configure them quickly when opening a sporting goods store. A POS system for sports and outdoor business can help you do that easily. You can set up multiple locations from an all-in-one system, including:
POS working on desktop and iPad:
Allow your employees to move around and sell at the consulting floor, pop-up stores, skills workshops, or offsite events
Quick item selection:
Use the barcode scanner, search by SKU or product name to advise customers quickly
Check inventory instantly from the POS screen in each location, report real-time inventory, and allow items to be moved between stores
No interruption when creating orders, even without an internet connection
Fulfill orders from online and various offline locations right on POS
Customer and sales data:
Provide customer profiles, order history on your website and all your offline sporting goods stores
Supplier management: Procurement from multiple suppliers on database