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If you have a passion for healthy living and want to combine it with a desire to run your own business, opening a health food store might be the right move. However, starting a business can be overwhelming, considering all the legal and commercial considerations you must make. To help streamline the process of starting your health food business, this article will consider some points you should consider before launching your business.
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General Considerations
There are a few general considerations all prospective business owners should make before launching their business.
1. Develop a Strong Business Plan
All prospective retail store owners should draft a comprehensive business plan. You can use a business place like a map to follow in the years following your business’ launch. For this reason, a business plan should cover:
- how you will finance the up-front costs of the business;
- what your target market is;
- which suppliers you will partner with and on what terms;
- where you will lease your retail premises;
- how much inventory you intend to hold and where you will hold it;
- what your sales and cost projections will be;
- how you will build, develop, and market your brand; and
- the extent to which you will need to hire employees.
2. Consider Your Startup Costs
The financial elements of your business plan are particularly important. No matter how compelling your idea might be, it will be difficult to launch your business if you have not adequately budgeted. For instance, you should consider:
- whether you will seek investments from outside investors;
- your forecasted first-year cash flow; and
- your break-even model.
Most businesses fail within the year because they do not adequately account for their up-front costs. Therefore, as a prospective health food store owner, it is essential to consider:
- how much it will cost to rent the store premises;
- what sort of supply agreements you will establish with suppliers and how you will finance them;
- licensing and certification fees;
- fees for legal or consulting services;
- websites and marketing fees;
- recruitment and training fees;
- the cost of insurance policies;
- point of sale systems; and
- phone, internet, and the cost of utilities like heating and gas.
3. What Business Structure Will You Adopt?
The four most common business structures are:
- sole-trader;
- unincorporated partnership;
- limited company; and
- limited liability partnership (LLP).
More can be said about the advantages and disadvantages of each business structure. However, as a retailer, you should be especially aware of the implications of being a sole trader versus trading through an incorporated company, particularly regarding limiting your liability.
As a sole trader, there is no distinction between your assets and your business’ assets. If you are sued because someone injures themselves in your shop, your business and personal assets will be at risk. On the other hand, if you trade through a company, there is a legal barrier between your personal and business assets.
Specific Considerations
Beyond these general considerations, you should consider specific laws relevant to health food stores.
Licensing & Regulatory Compliance
Many of your products will likely claim to be organic. However, under EU law, you must hold a certificate proving that any items marketed as organic are, in fact, organic. Likewise, it must meet EU law if you wish to use the EU organic logo.
Additional laws will likely apply, including the obligation to register your business with one of the nation’s organic control bodies. As a registered member, you may be subject to inspection.
Ultimately, your local authority will dictate licensing and trading laws. However, a commercial solicitor can help you navigate applications you may need to file to begin trading lawfully.
‘Holding Your Self Out’
Under no circumstances should you hold yourself out as having medical or nutritionist licensing that you do not possess. Moreover, you should not suggest you still have qualifications if the relevant qualification has lapsed. Otherwise, you risk severe civil and criminal penalties.
Commercial Leases
Unless you intend to buy the freehold business premises outright, you will need to negotiate a commercial lease for the premises. The lease agreement will largely govern the relationship between you and your landlord. At its most basic level, it proves your right to exclusive possession of the premises.
Because you will likely want to decorate and modify the premises to your liking, you will want to ensure the lease permits alterations and improvements. The extent of these modifications and your obligations to restore the premises once the lease ends will be something you should negotiate with the landlord.
Other common terms you can negotiate include:
- any service charges;
- what insurance provisions you and the landlord will need to have in place;
- which party is liable for keeping in repair some aspects of the premise; and
- to what extent you can sublease the premises or sell the lease to a third party.
Insurance
The three main kinds of insurance you will want to obtain are:
- public liability insurance;
- employers’ liability insurance; and
- building & contents insurance.
The table below summarises each type of insurance.
| Insurance Type | Description |
| Public Liability Insurance | Public liability insurance can help you cover the cost of any claim made against you or your business if someone is injured or killed on your business premises due to any injury they sustain on the premises. Unless you intend to run an online-only business, you will have customers on your retail premises. As a result, this makes you potentially liable for any injuries that happen in your store. |
| Employers’ Liability Insurance | By law, you must obtain employers’ insurance if you employ others. This will protect you and your employees from any injury or death that happens in the course of their employment. |
| Building and Contents Insurance | Adequate buildings and contents policy will protect your inventory and equipment from any damage caused by fire and flooding. It can also protect your building from damage, which you may not find necessary depending on your commercial lease. Depending on your policy, it can also protect you from theft and criminal damage. |
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Key Takeaways
You should have a well-organised business plan in place before you take steps to launch your health food store. This includes determining how you will fund your business to cover start-up costs. Other important things you should consider include:
- what business structure you will use;
- the essential elements to negotiate in your commercial lease; and
- the licensing and regulatory requirements for retailing.
If you need help with your health food store business, our experienced startup lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
You want to ensure you have a strong business plan and know how you will fund the first stage of your business’ growth. Additionally, you should familiarise yourself with licensing and certification requirements, what business structure is best for your shop, terms you need in your commercial lease and what insurance policies you need.
Aside from general licensing and retail trading laws, you should familiarise yourself with EU and UK laws regarding selling organic products since these regulations are strict.
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