Figuring out which small business to start can be a daunting task. After all, there are plenty of options to choose from and deciding which venture is ideal for you can be a stressful process that is further complicated by excessive overthinking and hesitance. Luckily, there are a myriad of evergreen business ideas that require simple management processes and generate decent profit margins - a convenience store is a perfect example of such a business.
There are many reasons to consider owning a c-store. Besides their profitability, these businesses attract customers across all demographics and yield predictable cash flow. In this article, we will show you how to open your own store and share with you some tips to get you started on the right track.
Plan Your Convenience Store Business
Meticulous planning is one of the prerequisites for building a solid foundation for any business. This is especially the case when it comes to businesses that involve a lot of moving parts, convenience stores being a prime example. The section below will delve into some key considerations you should make when planning your convenience store business.
Decide Which Type of Convenience Store You Want to Start
The first thing you need to determine is the type of convenience store you want to open. These days, your options aren't limited to traditional stores, as there are many new formats to choose from. Here are three of the most common types of convenience stores in today's market:
- Traditional convenience store: This is the standard type of convenience store found virtually everywhere. Traditional stores are usually around 2,500 square feet in size and offer hot food, produce, dairy, snacks, a bakery, beverages, grocery items, and tobacco products. These stores tend to operate 24/7 and are usually part of large convenience store chains.
- Mini convenience store: As the name implies, these are smaller versions of traditional convenience stores. The range of products offered by these stores is fairly narrow and consists mostly of basic grocery items and prepackaged food. Mini convenience stores are usually found in gas stations.
- Kiosk: This is the smallest type of convenience store you can open. Kiosks are generally less than 800 square feet in size and offer fast-moving items, such as tobacco, beverages, and snacks. Kiosks rely on foot traffic to drive store sales and operate in flexible hours depending on the owner's needs and preferences.
Keep in mind that there are other types of convenience stores not covered here. Examples of such store formats include expanded convenience stores and hyper convenience stores. These businesses are significantly larger than the examples listed above and require a substantial amount of capital to develop and operate.
Check Out Industry Trends
Like any sector, the convenience store industry is shaped by a host of trends that change on a regular basis. Keeping up with some of the trends that are currently dominating the market will allow you to gain a competitive foothold from the get-go and avoid the trial-and-error method employed by most new business owners.
One particular trend that you should keep an eye on is the increased number of customers who purchase food products from convenience stores. According to a study by the National Association of Convenience Stores (NACS), 58% of retailers plan on emphasizing prepared food service meals for the foreseeable future.
Figure Out Your Startup Costs
Opening a convenience store requires sizable initial costs. The specific amount will vary depending on several factors, namely location, size, and the range of products you're planning on selling.
When you are just starting out, real estate will make up most of the initial expenses. This includes the costs of leasing the space, decorating it, and equipping it with the systems and technologies that are needed to operate a retail store. Once again, the cost and type of equipment will differ according to the type of convenience store you set up. Expect to pay for various fixtures and furniture that include but are not limited to shelving, cash registers, counters, and refrigerators.
Estimate Operating Costs
Startup expenses are not the only variable you have to factor in when estimating the costs of owning a convenience store. The ongoing costs associated with running a convenience store have to be taken into consideration as well when drafting a business plan.
The two consistent ongoing costs that you can easily account for are the lease and monthly utility bills. Other operating costs like labor and inventory vary depending on various factors and might make up a significant portion of your overall ongoing expenses.
Establish Relationships With Wholesalers and Vendors
A major component of owning and operating a convenience store is having a great working relationship with wholesalers and vendors. This is especially important when operating as an independent convenience store. Whether you want to work with a full-service distribution business broker that supplies all of your items or with several different vendors that provide specific products, you should consider reaching out to the suppliers to discuss your plans and inquire about crucial details, such as payment structure and delivery times.
It's also worth noting that wholesalers may require certain conditions for an independent convenience store - some of these conditions might include thorough credit checks and minimum startup capital requirements.
Starting the Process of Opening a Convenience Store
After completing the planning phase of the process, it's time to move ahead with your convenience store project. Below is a detailed look at the steps you should take when setting up your own business.
Pick a Store Name and Form a Legal Entity
Picking the right name for your convenience store is a simple yet critical step of the process. As you surely know from your own experience, the store name is the first thing customers interact with. If the name of your business is off-putting or not memorable enough, you might miss out on the opportunity to leave a good first impression on potential customers. Take some time to brainstorm and explore different names before making your choice.
After settling on a name, the next step is forming a legal entity. Most convenience store owners prefer limited liability companies (LLCs) due to their simple creation procedures, comprehensive asset protection from liability, and pass-through tax benefits. You also need to open a business bank account and obtain a credit card - this is essential for separating personal and business finances and building business credit, which could open up more financing options and favorable interest rates down the line.
Get Permits and Licenses for Your Convenience Store
The permits and licenses you need to operate your convenience store will vary from one jurisdiction to another. However, there are a few licenses required in most states:
- Liquor license: Liquor stores and businesses that plan on selling alcoholic beverages must obtain a liquor license from the relevant local or state agencies.
- Tobacco vendors license: The tobacco industry is tightly regulated and any business wishing to sell tobacco products is required to get a retail tobacco license from the concerned local department.
- Lottery retailer license: Lottery tickets are a fixture in convenience stores. If you're planning on selling them, you will have to obtain a lottery retailer license issued by your state lottery agency.
- Seller's permit: Most states require retailers to have a seller's permit. This allows business owners to collect and report sales tax.
Start Promoting Your Convenience Store
Unlike many other types of businesses, traditional marketing strategies don't play a pivotal role in drawing the initial influx of convenience store customers. This is due to the fact that stores rely primarily on high traffic in their location to attract new business. With that being said, you should not completely neglect your marketing efforts - you still need to convert store visitors to loyal customers, and this can only be achieved via a detailed marketing approach.
One of the most effective ways to keep customers coming back is to leverage loyalty programs - offering all-purpose coupons and occasional free conveniences will go a long way toward promoting recurring store visits.
Improve Your Workflow
As your convenience store grows, you'll want to implement a smooth workflow process that enables you to stay on top of every aspect of your business. The main point that should be addressed is how your finances should be tracked. Fortunately, you don't have to look very far for a solution.
Skynova's accounting software was specifically designed to accommodate the needs of businesses like yours. This all-in-one invoicing and accounting module streamlines all your financial tasks in one place, allowing you to handle everything from deposits and customer payments to operating expenses and taxes in the most efficient way possible.
Skynova Can Help You Take Your Business to the Next Level
Owning and running a good business is a full-time commitment that requires a lot of hard work and an undivided focus on core activities. Practical solutions like Skynova's accounting software and business templates help you achieve that by relieving you of all the tedious administrative and financial tasks.
Learn more about what Skynova can do for your convenience store.