How to Start a Sporting Goods Store
Sporting goods are always in demand for children’s sports teams, adult sports teams, and just for fun. If you are a sports lover, a sporting goods store offers a great opportunity to own your own profitable business and be involved in something that you’re passionate about.
A sporting goods store sells all types of sports equipment and sports memorabilia for baseball, football, tennis, hockey, soccer, golf, and more. Products include balls, bats, pucks, hockey sticks, golf clubs, rackets, athletic apparel, shoes, protective equipment, outdoor gear, fishing gear, exercise equipment, and more.
According to IBIS World, the sporting goods industry market size as of 2021 is $52.1 billion. It has grown .2% per year for the last 5 years. The industry is sensitive to economic fluctuations, increasing when people have more disposable income. There is a tremendous amount of competition in the industry, with large companies such as Dick’s Sporting Goods and Sports Authority, which creates a barrier to entry.
The industry was tremendously impacted by the pandemic due to many sports coming to a halt because of stay-at-home orders and social distancing guidelines. As the pandemic winds down, the industry should rebound. The home sports and exercise sector, which did well during the pandemic, is expected to remain popular.
Your target market will be adults involved in sports and parents of children involved in sports and local athletics. Organized sporting teams are an excellent market to target.
Skills, Experience, and Education Useful in Running a Sporting Goods Store
There are several specific skills that you will need to open a sporting goods store.
- Retail Experience. Working in a retail setting, particularly in a management role, will be extremely valuable in understanding how a retail store operates.
- Sports knowledge. You will need to be able to talk to your customers about sports and the equipment they need.
- Business knowledge and experience. You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
- People skills. You’ll need to build rapport with your customers so that you retain them as customers and keep them coming back.
Checklist for Starting a Sporting Goods Store
If you’re thinking about starting a sporting goods store, it’s important to do your research first. Here is a checklist to help you get started.
Step 1: Write a Business Plan
After coming up with the idea, the next step in starting your sporting goods store should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, vendors, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect sporting goods store name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a sporting goods store, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
Your location is critical. You should be in a retail location with a lot of foot and road traffic so that you have high visibility and that is convenient to your target customers. You should also avoid being near your competition.
In many markets there is competition from very large sporting goods stores, so finding a city where a large sporting goods store doesn’t exist would be extremely valuable.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
While there are no licenses specifically for a sporting goods store, there are some general local, state, and federal registrations such as a sales tax permit and an Employer Identification Number.
Step 6: Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a sporting goods store is another. In order to get a small business loan or line of credit, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
A sporting goods store will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a sporting goods store include social media marketing and online advertising, as well as sponsoring local athletics. Developing a website can be a significant expense, but it can also give your sporting goods store greater visibility online. You can also market directly to sports league associations.
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a sporting goods store. A few of these include:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
The cost to insure a sporting goods store will vary depending on a number of factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Step 10: Hire Employees
Many sporting goods will look to hire staff who have experience or certifications in a specific sport by targeting fitness centers, club sports, or college teams.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your sporting goods store is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a sporting goods store?
Here are some of the typical startup costs you will face when you open a sporting goods store.
– Space rental deposit $1,500-$5,000
– Space preparation including signage, shelving, Point of Sale system (POS), etc. $10,000 +
– Initial inventory $25,000-$50,000
How profitable is a sporting goods store?
Revenue will depend on the interest and accessibility to sports in your area, along with the level of local competition. You should be able to make several thousand dollars a month, but if you become extremely successful or even franchise, the sky is the limit.
Sales for sporting goods can be very seasonal, depending on the type of equipment being sold. Sales will drop off after the end of the season, however, holiday sales can provide a boost for out-of-season sports.
Are there grants to start a sporting goods store?
It’s extremely rare to find a grant to start a sporting goods store. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a sporting goods store?
The NAICS code for a sporting goods store is 451110.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.