How to Start a Sporting Goods Store

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Our guide on starting a sporting goods store covers all the essential information to help you decide if this business is a good match for you. Learn about the day-to-day activities of a sporting goods store owner, the typical target market, growth potential, startup costs, legal considerations, and more!

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Start a sporting goods store by following these 9 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your sporting goods store. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

STEP 1: Plan your Business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

  • What are the initial costs?
  • Who is your target market?
  • How long it will take you to break even?
  • What will you name your business?

Luckily we have done a lot of this research for you. Skip on ahead to the Business Overview for more detailed answers to all your questions.

Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

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STEP 2: Form a legal entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your sporting goods store is sued. Consider using a registered agent service to help protect your privacy and stay compliant.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

STEP 4: Open a business bank account

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

STEP 7: Get Business Insurance

Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.

STEP 8: Define your brand.

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

STEP 9: Establish your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Business Overview

Just about everyone who engages in athletics requires sports equipment of some sort. From little league baseball to street hockey, junior varsity teams, and the weekend golfer, there is ample demand for sports equipment. Sporting goods stores stock the necessities for sports participants, whether it is baseball bats, hockey sticks, basketballs, golf clubs, ice skates, footballs, or hockey pucks.

Who is this business right for?

This is the perfect business for individuals who have a sports background or are interested in athletics. Those who are particularly knowledgeable about sporting goods brands and the merits of particular sports equipment will thrive in this business.

What happens during a typical day at a sporting goods store?

Sporting goods store business owners perform varied activities throughout the day. The morning is spent preparing inventory for the day's sales, opening the store, and preparing cash register drawers. Mid-day activities include assisting customers, fielding phone inquiries from prospective customers, researching potential purchases, and placing orders for new inventory.

What is the target market?

Sporting goods store business owners typically prefer selling to coaches of youth sports teams, junior high school teams, and high school teams. These coaches buy sports equipment in bulk so each player on the team has enough gear to make it through the year. Customers who prefer high-end sports equipment are also coveted as they are willing to pay a premium for high-quality items. Such items usually carry a larger profit margin for the business owner.

How does a sporting goods store make money?

Sporting goods stores make money by selling sports equipment at a profit. Once inventory is ordered, the price of these goods is then marked up so the business can make enough profit to cover overhead expenses and continue operations.

What is the growth potential for a sporting goods store?

Sports have never been more popular. An entrepreneur who sets up shop in a bustling suburb or urban environment will undoubtedly enjoy a steady stream of customers. This business has fantastic growth potential, especially if it is located in an area where families reside. A large portion of sporting goods are sold to youth sports participants.

What are some skills and experiences that will help you build a successful sporting goods store?

The entrepreneur must have knowledge of sports, excellent people skills, and they must enjoy the presence of youngsters. If the sporting goods store owner is unable to discuss the nuances of particular sports equipment, customers might opt to do business with a businessman who understands the intricacies of his inventory. The entrepreneur should also be a savvy marketer. He should understand marketing strategies that will connect him to target customers, with a special focus on developing a rapport with coaches and players of local youth leagues. As noted above, young athletes purchase a larger portion of sports equipment in comparison to other types of customers.

What are the costs involved in opening a sporting goods store?

The entrepreneur must rent a retail space for his sporting goods store. Alternatively, he could purchase a website for his store. Additional costs include purchasing the initial inventory, paying employees to man the registers and stock the shelves, obtaining a business license and insurance, and connecting/running the utilities. A computer and high-speed Internet connection will also be necessary for inventory research purposes.

Where can I find a business mentor?

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

What are some insider tips for jump starting a sporting goods store?

It is prudent to load up on youth sports equipment as many of those who visit sporting goods stores participate in little league baseball, pee wee football, youth tennis and other sports leagues. Inventory should be wide-ranging in terms of price, style and utility. Your inventory should also cater to the sports seasons. For example, displays in early spring should cater to baseball and softball plays, and football equipment should be your main concern as fall approaches.

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Growing Your Business

How to promote & market a sporting goods store

Take advantage of a wide array of advertising methods. Establish a strong web presence with a search engine optimization (SEO) push that makes use of keyword-laden content, guest blogging efforts, social media, and a website that is regularly updated with insightful content. It is also prudent to advertise in the local paper, on the radio, and possibly even on local TV programming. Some sporting goods store owners enjoy success by sponsoring a local youth sports team. Such sponsorship places the store's name and/or logo on the team's jerseys and/or sections of the stadium in which games are played.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

How to keep customers coming back

The best way to attract customers is to provide excellent deals to your initial customers. They will spread the word to fellow coaches and athletes about your competitive prices and high-quality inventory. Regularly update your social media profiles, website, and blog to skyrocket up the search engine rankings. Spread out your marketing budget across various mediums, and you will retain customers across posterity.

How and when to build a team

You can't operate an entire sporting goods store on your own. You will need help from at least one other employee when the business launches. This individual will assist with customer service, sales, stocking the shelves, ordering inventory, and even some marketing efforts. Once the business receives a steady flow of customers and you begin to make money it is time to add more employees. Add new employees on a gradual basis as there is no guarantee the business will continue to attract new customers on a consistent basis in the months and years ahead. However, it is prudent to keep enough people on board so you don't have to work an employee more than 40 hours per week. The goal is to avoid potentially crippling overtime pay by balancing out the hours across several employees.

Legal Considerations

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a sporting goods store. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

Maintain Personal Asset Protection

Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.

Two of the simplest steps that will protect your business, and yourself, are to:

Open a business bank account

  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • It also makes accounting and tax filing easier.

Get a business credit card

  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.
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To learn more about maintaining your LLC's corporate veil, read our guide and protect your personal assets.

Certificate of Occupancy

A sporting goods store is usually run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

  • If you plan to lease a storefront:
    • It is generally the landlord’s responsibility to obtain a CO.
    • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a sporting goods store.
    • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
  • If you plan to purchase or a storefront:
    • You will be responsible for obtaining a valid CO from a local government authority.
    • Review all building codes and zoning requirements for you business’ location to ensure your sporting goods store will be in compliance and able to obtain a CO.

Earning Potential

How much can you charge customers?

Sporting goods have a wide price range. As an example, shock absorbers for tennis rackets will sell at $5 for a pack of two. A baseball mitt can sell for upwards of $150 or more. A set of golf clubs will retail for several hundred dollars. Sports drinks will sell for $1 to $3. Keep your prices in line with the competition and your customers will remain loyal.

What are the ongoing expenses for a sporting goods store?

Ongoing expenses include the cost of employee wages, workers' compensation insurance, utilities, rent, and inventory. The typical sporting goods store clerk makes around $8 to $10 per hour. If you do not want to manage the business, a sporting goods store manager will require a salary in the range of $25,000 to $35,000 per year. The monthly Internet connection will likely run between $40 and $60. If you do not want to clean the store yourself, a cleaning service will be necessary. Such a service typically costs about $120 for 1,000 square feet and upwards of $175 for a 3,000 foot space. Monthly utilities will likely run between $100 and $200 per month depending on the time of year. If you decide to rent your retail space instead of purchasing, monthly rent will likely cost between $700 and $2,000 per month depending on the size of the space and the specific location.

How much profit can a sporting goods store make?

The profit ceiling hinges on the size of your sporting goods store as well as the size of your market. If your business is operating like a well-oiled machine, it is possible to make a profit of several thousand dollars per month. If you grow at a rapid pace and reach the level of success achieved by sporting goods chains like Dick's Sporting Goods, it is possible to make several hundred millions or more in profit each year.

How can you make your business more profitable?

One of the best ways to make money as a sporting goods store owner is to purchase used sports equipment from customers and re-sell it for a profit. Accept items in decent shape, clean them up and you will eventually sell them for more than you paid. If you are particularly knowledgeable or skilled as an athlete, you can pitch your services as a sports instructor to clients. Another idea for a related side business is to set up batting cages, an electronic golf simulator or sports-related arcade games in or near your sporting goods store.

Next Steps

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