If you are considering starting a convenience store business in 2021, you’ve definitely not made the wrong business decision. The c-store industry observed a record growth during the year 2020 despite the decline in the retail industry during Covid-19.
According to the National Association of Convenience Stores (NACS) Industry Report, in the United States, the total gross sales in the c-store industry grew by 3.3% and the sales per store improved by 4.2% that is a record high of $1,619 of sales per store in 2020. Therefore, your initial decision of choosing the type of business and the niche is absolutely perfect.
Since you’ve made the right choice, how should you get started?
Just like any other business, starting a convenience store requires money (capital), proper business planning, and time. Convenience stores are more and more in demand all around the world because of the rising population and rapid urbanization. With proper planning, the right location, stock items and inventory, pricing structure, powerful convenience store back office software solutions, and efficient management, you may have a profitable convenience store business right from the start.
This guide will help you step by step start your own convenience store business from scratch and make it profitable right from the start.
Convenience Store Business Plan
Every business needs a business plan and A clear plan is essential to be a successful entrepreneur. During the initial planning process to start your c-store business, make sure to consider a few important questions:
With a solid business plan in hand, it is time to choose the ideal location. Location plays an important role in your c-store business. In order to make your convenience store successful, you have to choose a location with a good amount of traffic and minimal competition and that is very convenient for your customers to reach. Ideally, a convenience store should be highly visible, easily accessible, and must also have convenient parking options.
Stores that are on streets that are frequently traveled have a stronger local customer base. More importantly, the stores that are located near society and get frequent customers from the neighborhood are more likely to make a loyal customer base. Whereas the c-stores that are located on highways might have higher daily sales but most of the customers are one-time travelers that are most likely not visiting the stores again.
Naming and BrandingNaming and branding are important for your convenience store just like for any other business. Branding makes your business unique and helps customers remember your store by name and logo.
Finding the perfect business name for your convenience store can also be challenging. Not only does the name have to match your niche and resonate with your customers, but it must also be available to use legally.
Branding your convenience store is equally important. It portrays what your business stands for as well as how your c-store business is perceived by your customers. A strong brand will help your business stand out from competitors.
Form a Business EntityForming a business entity means organizing a business legally. There are four types of business entities that you can choose for your business depending upon the business structure you have.
They are the sole proprietorship, partnership, limited liability company (LLC), and corporation. Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements. Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your convenience store business is sued.
Register for Business Licenses, Permits, and TaxMost notably, c-stores that are selling regulated items such as alcoholic beverages and cigarettes are required to register federally with the Alcohol and Tobacco Tax and Trade Bureau (TTB) along with securing similar licensing from the state and local municipality. To sell lottery tickets and fuel you are most likely to require some additional state licenses.
Additionally, there are generally local, state, and federal business registrations that may be needed, such as a sales tax permit, Employer Identification Number (EIN), and Occupancy Permit, among others.
Stocking Up and Store LayoutIt is quite important to plan the layout of your store shelves and how to display products items. Use a method that will make ordering and restocking easy. Use certain methods to place your higher-priced or high-return items strategically to increase sales of such products. Similarly, make sure you place easy-to-steal product items within the view of the clerk or a security camera.
It is also important to understand who your primary customers are and adjust your product offerings accordingly. For example, if you are in a residential area, it would be beneficial to stock necessities like milk and bread so that locals will not need to go all the way to the grocery store.
For complete control over your inventory, it is important to invest in a convenience store inventory management system in order to have complete control over your stocks in real-time data, automate purchase and also help you in demand forecasting.
Financial ManagementA c-store earning depends on product sales and profit margins. It is important to develop a strong pricing strategy by studying individual product sales and margins and tweak your pricing accordingly.
Adapt various methods and techniques to improve profit margins on products. Such as negotiating with vendors and fixing a better price at a lower cost. Convenience stores businesses are based on high sales volume and lower profit margins. Therefore your c-store pricing strategy should focus on higher sales volume using certain offers and promotions.
Invest in Good Software SolutionsEvery convenience store should rely on the perfect convenience store back-office systems with an advanced built-in inventory management system. The inventory management system should offer complete control over your inventory that enables you to forecast merchandise orders, manage shrinkage to cut down on your losses.
Hire EmployeesYou need trustworthy employees in this convenience store business that are trained properly to handle single stores of a chain of stores. Employee theft is quite common in the c-store business and neglecting this may lead to the loss of both money and merchandise. Be thorough in your interview, check the candidate’s references, and conduct a background check. Provide proper training to develop their skills and prepare them to manage different activities of a convenience store.
Open your C-store BusinessOnce you’ve followed all these basic steps, you are finally ready to open your c-store business for the public. Consider doing a grand opening with promotions and special deals to attract customers.
Always keep adopting new methods and techniques to improve your business and increase your c-store profit margins such as customer loyalty programs, theft control, automated POS, foodservice, and much more.
