The convenience store industry has witnessed rapid advancements in the past ten years. This is mainly due to increased customer spending and expansion of food offerings. Do you know that the revenue of this industry grew by almost 25% in the last year? Are you, too, thinking of opening one and getting a share of this revenue? Well, to become successful at this venture, you must follow a well-defined plan. It is critical to research deeply into your target market and store location. Besides, you must also keep the necessary documents ready to ensure seamless operation. This post will give you a detailed overview of how to open a convenience store.
Read Also: Black-Owned Grocery Stores
5 Steps on How to Open a Convenience Store
1. Check out a Business Plan
Your business plan is the foundation for the success of your convenience store. Start by designating the name and structure of your business. This includes whether your business is a sole proprietorship or a Limited Liability Corporation. As a sole proprietor, you should run the business under your name. On the other hand, as a limited liability corporation, you can function under a fictitious or formal name. The latter provides better legal and debt protection. Then, find the services/products that you will provide. Deeply research the convenience store industry in your area of operation. It will help you perform a market analysis. This also includes researching your target market and the intended store customers.
Identify how many similar stores there are in your immediate locality. They are your competitors. Your store must have an element of uniqueness that isn’t present in the existing stores. Take time out to research your as well as other store’s strengths and weaknesses. While creating the business plan, you must also delve deep into how you will attract customers. This may include the usage of attractive signage or some difference in pricing.
Last but not least, consider how the store will be able to maintain seamless operation. This includes making a list of furniture, fixtures, and relevant equipment needed for uninterrupted work. Identify the cost associated with each of them. Also, list the information related to your supplier and merchandising, licensing, and vending requirements. Finally, create a profit and loss statement, cash flow analysis, as well as a balance sheet and personal financial statement. Always make realistic assumptions at this stage.
2. Find a Suitable Site
Location can make or break your business. To choose the best one, find out how accessible it is to your target customers. Pick a spot that is directly linked to the main road or is on the main road. This will ensure that your store comes into the sight of passersby or those driving past. Another thing worth considering is the competition. For example, if you open your store in an area with a few large chain stores, chances are that people will prefer those established services over yours. In this case, you can only forge ahead of them if you offer something they don’t. It is also a good idea not to choose a location where there’s a construction project in progress. It can hinder you from seamless offering of services.
3. Obtain the Relevant Licenses
Before opening the store’s doors to people, you need several licenses and permits. These ensure that your work complies with legal regulations. If you are wondering what permits I need to open a convenience store, we have listed the five most important ones below.
Retail Seller Permit
Most states need a seller’s permit to authorize sales tax collection within that jurisdiction. This permit mainly includes a state tax ID number. It is necessary to obtain this permit to ensure compliance with local and state laws. To get it, you need to fill out an application with the Department of Revenue for your state. The exact process varies according to your state.
Business Operation License
This license lets you carry out business operations legally. The exact fees and requirements for a business license depend on the location and government rules of your business. The purpose of the business license is to register your convenience store with the administration for tax purposes. It is also used to ensure that you adhere to the industry regulations.
Doing Business As (DBA) License
DBA is a formal method to officially register the business name of your convenience store with a county or a state. This license is necessary if you operate your business with a fictitious name. It is also important for convenience store owners who are functioning as sole proprietors but do not want to use their real names. Depending on your state, you may be required to renew your DBA filing at regular intervals to prevent it from expiring.
Federal Employer Identification Number (EIN)
This is a 9-digit number assigned by the IRS in the format XX-XXXXXXX. EIN is used to identify the tax accounts of employers and business owners with no employees. For a single convenience store, you will have one EIN only. EIN is also known by other names like tax ID number, business tax ID, business taxpayer identifying number, and federal business tax ID.
Certificate of Occupancy
This license is to identify how many people your business can safely accommodate. You get this license only after your store building is thoroughly inspected by state-licensed inspection professionals. During the inspection, they look at things like the structural integrity and electrical wiring. The septic systems of your unit are also checked. The exact inspections depend on the kind of equipment you have installed.
4. Equipment for Smooth and Efficient Operation
A majority of convenience stores carry a mix of personal products, beverages, and snacks. Although the exact equipment you need in your store depends on your specific requirements, here is a list of things that a properly running store usually has.
- Cold Drink Dispenser
- Coffee dispenser
- Microwave
- Coffee Airpots
- Coffee Condiment Organizers
- Coffee Cup Sleeves
- Hot Water Dispenser
- Coffee Straws
- Paper Cups
- Refrigerated Merchandiser (Beverage)
- Refrigerated Bakery/Deli Cases
- Hot Food Display/Warmers
- Displays Shelves/Racks
- To-Go Bags/Take-Out Bags
- POS system
- Napkin Dispensers
- Security/Surveillance camera system
- Plastic Cutlery
- Condiments
- Commercial Ice Cream Freezers
- Janitorial Disposable and Supplies
- LED Signs
5. Make Your Convenience Store Profitable
Let’s be honest. No one wants to sit in a convenience store that gets no customers. The entire point of opening it is to make a decent amount of profit every month and year. Now that your store is set up use the tips below to get it flowing with customers.
Pay Attention to the Signage
Usually, digital signage is the most effective in luring customers in. Never underestimate the importance of bright, colorful signage. Also, position it strategically. Some of the best places include near the store entrance, On the street curbs, on the windows of the store, and inside the store in areas receiving high footfall.
Stock Up on Specialty Products
Specialty products are high-value items that are hard to find. Look closely at your competitors and study your target customers. Do you find a gap somewhere? Maybe your target consumers want a certain product(s) they cannot find in existing stores. Once you know about them, waste no time in getting them inside your store and providing them to your buyers.
Optimize the Store’s Layout
Did you know that a majority of people turn right after entering a store? Use that to your advantage to direct the traffic flow. The best layout exposes your customers to as many items as possible but does not interrupt the traffic flow. Place the most popular products at the front of the store to increase sales. Study the requirements and preferences of your customers, and do not shy away from revising the layout based on that.
Offer Discounts
Who dislikes paying a little less for the same product? Discounts, promotions, and coupons are some of the best ways to attract buyers. You can use price-based promotions, wherein you offer some discount on the purchase of a specific amount of a product. Another option is a discount on the purchase of a certain food pair. Limited-time discounts are another effective alternative as they push people to buy product(s) before the discount ends. Finally, offering coupon discounts is another thing you can look into to increase overall profit.
Read Also: Fundamentals of Marketing
Wrapping up
Opening a convenience store demands careful planning and execution. From creating a business plan backed by solid research to choosing a location and marketing your store, every step requires much thought. But the effort is worth it as it will take you closer to your dream of running a profitable store. With adequate research and strategic decisions, your venture can capture a lion’s share of the industry’s revenue.
