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Updated Oct 24, 2023

Retailing on a Budget: 8 Brick-and-Mortar Alternatives

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Nicole Fallon, Business Ownership Insider and Senior Analyst

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You created a great product or service and have built your home business into something bigger than you ever envisioned. You discover that retail stores are available, but the cost to rent those spaces exceeds your budget. Still, your business is becoming too big for your home, and you simply need more space. What’s the next step?

Traditional commercial storefronts are not for every small business owner. Most retail spaces cost a few hundred thousand dollars to rent for a year and require significant capital, investment and time for many small business owners who are looking to expand.

However, brick-and-mortar stores aren’t the only option. There are plenty of scaled-down possibilities that require less upfront investment and are more budget-friendly for your small business. [Related article: 7 Smart Budgeting Tips for Small Business Owners]

Financing your retail startup

Even on a budget, financing a retail startup can be difficult, especially when you don’t know where to begin. Don’t worry, though. There are many ways to secure capital for your startup. For those with an understanding of basic loan concepts, check out our best picks for small business loans. You also have several other options to obtain a small business loan.

  • Friends and family: If you have a product or service, chances are that your family and friends have already purchased or tried it. Not only do they believe in what you’re doing, but their investment will generate less interest than a small business loan. 
  • SBA loans: Small Business Administration loans are guaranteed by the federal government. The SBA backs the small business loans issued by approved lenders, guaranteeing up to 85% of the loan value. This reduces the risk to the lender if the borrower defaults, which is why they are popular with lenders. [Follow our guide to getting an SBA loan.]
  • Angel investors or seed equity: Angel investors finance startups usually in exchange for a percentage of ownership in the new company. Angel investors are a better fit for slow-growth companies because they have different return-on-investment requirements compared to other private funding alternatives like venture capitalists. 
  • Term loans or lines of credit: A term loan is a loan where the borrower pays a fixed amount each month to the lender, which can be a bank, a credit union or an online lender. A line of credit is where you draw the money from the lender on an as-needed basis. Both are popular with small business owners. Credit score, years in business and sales revenue are some of the major factors that determine the amount you can borrow and the interest rate you can borrow it at. 
  • Crowdfunding: Crowdfunding used to be the least traditional way to raise money, but with the popularity of social media and crowdfunding websites that enable entrepreneurs to raise money for their ideas, it is now common. Platforms like Kickstarter, Patreon, GoFundMe and WeFunder bring investors and entrepreneurs together. The companies asking for money usually offer rewards in exchange for contributions, which provides a unique opportunity to sell to the potential investor or main consumer of your product. 
Key TakeawayKey takeaway

You have various options to secure financing for retailing on a budget, including government-backed loans and crowdfunding platforms.

Start small and grow from there

If you are looking for a storefront but don’t have the capital to rent a traditional space, there are plenty of options to establish a physical presence for your product or service. To gauge interest, start small at a farmer’s market or a street fair. As you expand your customer base, you can start looking at financing options for bigger alternatives, including crowdfunding from your customer base or getting an SBA-backed loan to expand your business into a physical space.

Tejas Vemparala contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

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Nicole Fallon, Business Ownership Insider and Senior Analyst
Nicole Fallon is a small business owner with nearly a decade of experience overseeing day-to-day business operations. She and her co-founder self-funded their company and now lead a team of employees across multiple disciplines. Fallon's first-hand experience as an entrepreneur running a staffed business has given her unique insight into startup culture, budgeting, employer-employee relationships, sales and marketing, and project management. Fallon's business expertise is evident in her work with the U.S. Chamber of Commerce, where she analyzes small business trends. Her writing has been published in Forbes, Entrepreneur, and Newsweek, and she enjoys collaborating with B2B and SaaS companies.
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