How to Establish Retail Store Policies When Just Starting Out Before your grand opening, take time to formulate your operating policies. These guidelines will help you decide just what rules to put in place.

In the fifth edition of his book Retail in Detail, retail business owner and consultant Ronald L. Bond offers small-business owners an updated, no-nonsense guide to the world of retailing. In this edited excerpt, the author offers advice on just which store policies to put in place and why.

There are a seemingly endless number of decisions that must be made when entering the retail business. Many of them relate to your relationships with your customers. Among them are:

• Credit or cash
• Layaways
• Damage policy
• Children in the store
• Hours of operation
• Accepting plastic

You should take time before your opening to formulate your operating policies, put them in writing, and supply copies to all your employees. You may also wish to post some of them, such as policies on layaways and on accepting checks and credit cards, for your customers. Taking the time to anticipate and formulate responses to common, recurring situations will pay off in better customer relations and more profitable operations.

The advice on extending credit to customers is short and sweet: Don't do it! A new business owner has too many problems without having to deal with accounts receivable. Most people don't expect to receive credit in a small shop and won't be offended, particularly if you accept credit cards and offer layaways, which are a good substitute for credit and without the risks. Decide in advance the dollar amounts and period of time you'll allow for layaways.

Special orders are another matter to consider. They can represent a significant source of income, since customers are often willing to pay a premium for a specific color or style of goods. If it's appropriate for your merchandise, it's probably in your best interest to try to accommodate most special orders. To do this, you should keep samples of items that can be obtained in different styles, colors, and sizes.

Be sure to get a significant down payment for special orders (usually half the retail price), before you place the order. Otherwise, you may be stuck with unique merchandise when customers change their minds, move away, or simply disappear.

You've probably seen signs in stores that say, "Lovely to look at, delightful to hold. If you break it, we mark it sold" or something equally cutesy. While this may give shop owners some satisfaction, such attitudes and policies actually cost money through ill will and reduced patronage and sales. Your best course is to grit your teeth, smile, and graciously accept your loss when a customer breaks something in your store.

Speaking of damage, Rambo himself can't inflict as much as a determined three- or four-year-old whose mother or father doesn't seem to notice or care that the child is bent on wasting your premises. Take steps to minimize the destruction. First, try providing child-size tables and chairs, along with coloring books, crayons, and children's books to keep little ones occupied. Suggest this activity as soon as parents enter the store. If a child is simply running wild, politely suggest that he or she might get hurt, hoping the parent will get the hint. If not, try to move stuff out of reach and pray that Mom leaves. People are more easily offended over their children than anything else, so take extreme caution in dealing with these situations.

You should also set your hours of operation and post them conspicuously. The hours you keep will vary depending on your location, the hours of neighboring stores, your community customs, and your lessor's rules. To determine your best hours, keep track of sales vs. time of day for several months and adjust your hours accordingly. If you're the only employee, give due consideration to human endurance. Don't try to push yourself beyond your limits, or you'll be faced with illness brought on by fatigue, and it may cost you more to pay substitutes than to reduce your work hours.

In this day of advance technology, it makes sense to start out with the best credit card technology available. Most banks can provide credit card services along with a terminal for your store. Most banks and credit card processing companies will furnish the terminals under a monthly payment plan. The discount rate -- the processing fee charged by the credit card companies -- is lower when you use the electronic terminals than when you process credit sales manually. They're also much faster and don't require telephone authorization for large purchases, as the manual charges do.

You should also arrange with your bank to accept all the major cards. MasterCard and Visa are easiest to obtain and use and are usually processed by the same financial service. American Express and Discover typically have different fiscal agents and will be reported separately, complicating your life somewhat. Your credit card processor can also usually handle debit card transactions, using the same procedure as for credit cards, although the terminal must usually accommodate entry of a PIN number for debit cards.

Shop around for the best rate -- typically 1.5 percent to 3 percent -- and a bank or organization that takes all the cards you wish to accept. Careful shopping can yield significant dividends, since a fraction of a percent difference in the discount rate can save a lot of money over the long haul.