What You Need to Consider Before Opening a Brick-and-Mortar Store
According to the latest data from the U.S. Bureau of Labor Statistics, the U.S. has 1,081,474 private retail establishments. That’s compared to a massive 11.9 million online stores.
The digital boom has absolutely pushed brick-and-mortar stores to the background, but good old traditional physical stores do pop up. Globally, brick-and-mortar retail sales amounted to roughly $24.2 trillion in 2024. So, yes, they might not have the same opening numbers as online stores, but the profit potential is there.
Read on for our advice on what to consider when opening a brick-and-mortar store.
Average Cost of Opening a Physical Store
Let’s get the numbers straight first. Opening a brick-and-mortar shop isn’t cheap.
Total startup costs typically range between $40,000 and $80,000 for a mid‑sized retail space. Some small boutiques can launch on as little as $20,000. Large or premium stores can cost well over $200,000.
Rent and Lease
Rent usually takes the biggest slice of the budget. In the US, average retail rent sits around $23.98 per square foot annually, but in Midwest America, that dips to $18.26. In Western states, prices average at $29.01 or more.
Fit‑Out and Renovation
Renovating and fitting out a new store can cost from $4,000 up to $50,000 or more, based on the complexity of fixtures, shelving, lighting, counters, flooring, signage, and decor.
Typical costs average around $56 per square foot, so a 1,000 sq ft space would range near $56,000, especially for an advanced design.
As an example, a 1,000 sq ft space at $24/ft²/year equals about $24,000 annually—or roughly $2,000 per month.
Point‑of‑Sale System
Setting up a POS system can cost anywhere between $79 and $300 monthly, not counting hardware like registers or tablets. Hardware might add several hundred to a few thousand dollars upfront.
Inventory and Stock
Initial inventory expenses depend heavily on your niche. Often, the inventory budget is 25–35% of the total startup cost. Many mid‑sized stores begin with $10,000–$100,000 in products, scalable by product type and store size.
Licenses, Insurance & Utilities
Licensing and permit fees typically range from $50 to $550, depending on the city and business type. Insurance and utility expenses vary, but utilities tend to run around $1.47 per ft² for electricity, plus $0.29 for gas.
On average, accounting and cleaning services add a few hundred dollars a month, depending on usage.
All that adds up to expensive.
The Different Types of Business Protection You Need
You need protection once you’ve secured the location.
Start with public liability insurance. If someone slips on your freshly mopped floor, this keeps you covered. Well, to an extent. If there was no wet floor sign and they can prove it, they can still ask for compensation, but your insurance covers it.
Workers’ compensation insurance is also mandatory if you have staff, even part-time ones. If you have more than one member of staff, you need it.
Next up is commercial property insurance. It protects your building and contents in case of damage or theft. Protection often includes fixtures, fittings, and any on-site inventory. The cover you require depends on the extent of your commercial property. Calculate your commercial property insurance online for an estimate.
You might also need business interruption cover if an incident, such as broken machines or personal matters, forces you to close.
We’d also recommend product liability insurance if you’re dealing with products that could cause harm or go wrong—like cosmetics, food, or electronics.
Managing Stock and Cash Flow
Retail works in cycles. Some months will keep you on your toes, and others will drag.
You should never buy more than you can sell, but you also shouldn’t run out of bestsellers. That balancing act only works if you track what’s moving and when. Seasonal trends, local events, and even weather can affect what sells and what stays.
You can use inventory management apps to help you manage the flow. You don’t need big software if you’re running a small space. A spreadsheet and a stock count every week can work just fine, but why put in the hard work when an app can do it for you?
Then there’s cash flow. You might have money tied up in stock or rent while your customers are still deciding. You’ll need a buffer. Keep enough in the bank to cover at least two months of costs.
A physical store can be exciting and profitable. If you build it right from the start, it can give you something no online shop ever will—a space that’s fully yours.