How To Start a Convenience Store?

A convenience store is a small retail shop that typically sells the items that we use in everyday life. It includes groceries, beverages, toiletries, snacks, ice creams, dairy products, etc.

Convenience stores are generally present along busy roads. Such stores are also located near petrol pumps, gas stations, shopping malls, etc.

Why Start a Convenience Store?

A convenience store is one of the best business models to start. There is high demand for convenience stores all over the world. In this business model, you can start making a profit quickly if you have the right location.

Convenience stores get customers all day long and also at night. So, it’s the right business to start as you will acquire steady customers.

Convenience Stores Market Analysis:

Convenience stores capture a considerable part of the market. Many factors contribute to this growing business including increasing population density, strong economic growth in the emerging market, and investment expansion in retail business in developing nations.

Market size: 2.23 trillion dollars in 2022

Revenue forecast in 2028: 3.12 trillion dollars

Growth rate: CAGR of 5.6%

Forecast period: 2022 – 2028

Source for the above information: https://www.grandviewresearch.com/industry-analysis/convenience-stores-market-report

Convenience Store Start-Up Analysis:

Equipment	$20,000 – $40,000
Supplies	$10,000 – $20,000
Insurance and legal fees	$500 – $1000
Permits and licenses for the business	$1000 – $8000
Business Software	$300 – $500
Small business insurance	$400 – $600

 

Disclaimer: These costs may vary, depending on location, competition, supplies, sources, market share & your personal decisions, but they offer a good idea of what you will spend to start. Our Data are purely informational and should not be taken as legal or financial advice.

 

Start A Convenience Store in These 11 Steps:

1. Creating A Convenience Store Business Plan
2. Legalize Your Convenience Store Business
3. Setup Your Convenience Store Business for Taxes
4. Setting Up Your Convenience Store Business Bank Account and Exploring Funding for Your Business
5. Convenience Store Business Accounting and Invoicing Setup
6. Acquire The Necessary Permits and Licenses for Your Convenience Store Business
7. Get Required Convenience Store Business Insurance
8. Grow Your Convenience Store Business Brand: Helpful Tips
9. Create An Online Convenience Store Business Presence
10. Getting Leads and Calls for Your Convenience Store Business
11. Get To Know Your Convenience Store Business, Research Local Competition

Step 1: Create A Convenience Store Business Plan:

Without a proper plan and infrastructure, it would be hard for you to run your convenience store. You need to make an appropriate plan that includes your store budgets, startup costs, location determination, pricing, security, how you spend money, etc. It must contain your future goal and achievements. A typical business plan work as a road map for your business.

As you put all this information in your plan, you will better understand your competitors and customers.

Essentials of what a convenience store business plan contains are:

• Executive summary of the overall business
• General description of the company
• Introduction
• Organizational structure
• Market research and competitor analysis
• Description of your products and services
• How you plan to market and sell your products
• Financial projections and funding plans
• Sales & Marketing Strategies
• Roadmap for your business
• Projected growth based on your business plan
• appendix

What are the costs involved in opening a convenience store?

The estimated average cost to open a convenience store is between $50,000 – $100,000. The biggest of all the expenses is inventory. According to the Small Business Chronicle, the startup costs of the inventory can be about $20,000.

Other costs include additional equipment like a refrigerator, freezers, shelving, and security cameras.

Common convenience store equipment requires:

• Food display: $400 – $800
• Refrigerator: $1000 – $2000
• Freezer: $500 – $1000
• Oven: $100 – $300
• Refrigerated Merchandiser: $1000 – $2000
• Refrigerated display case: $800 – $1400

Other Required Costs:

Other required costs include furniture which is used to make shelves for your store. In your store, will need packaging materials like bags, shoppers, flyers, and boxes to pack products for the customer.  These are also included in other required costs.

Other costs include inventory, insurance, license and permits, and shipping.

Some minor costs include garbage bins, clocks, signage, and security.

What Are the Ongoing Expenses for A Convenience Store?

The most significant ongoing expense for a convenience store is inventory costs. Inventory contributes up to 70% of total ongoing expenses. Inventory costs include the items and products you bought for your store. You cannot overlook these expenses because they will keep popping up in your business.

You will require either part-time or full-time employees. They will receive a salary for working in the store. Thus, salaries are also one of the ongoing expenses.

Other ongoing expenses are:

Utility costs: Utility costs include electricity bills, water bills, and heating costs.

Rent and facilities: If you do not have your own land for the store, you will obviously need to rent one.

Shipping costs: Shipping costs are the costs you pay for shipping your product from the wholesaler/manufacturer/factory/industry to your store. With time you will have to import more products as the existing ones get out of stock.

Equipment Maintenance expenses: Equipment in your stores like freezers, refrigerators, displays, and merchandisers are liable to damage and defects. Equipment maintenance is an ongoing expense that will cost you a lot of money.

Who Is the Target Market?

when opening a convenience store, your general target market is all people who live or work near your store. However, you can also target a specific market segment, such as college students or busy professionals, and tailor your products and services to that group. If you want to open a convenience store that caters to college students, for example, you would carry items that are popular with that demographic, such as energy drinks, snack foods, and study supplies. You would also make sure to have extended hours during peak times for studying and exams. And if you’re targeting busy professionals, you might offer grab-and-go breakfast and lunch options, as well as coffee and other beverages.No matter who your target market is, it’s important to do your research so that you understand the needs and wants of that group. This will help you make sure your store is stocked with the right products and that you’re offering the right services to meet your customers’ needs.

How Does a Convenience Store Make Money?

A convenience store makes money by selling the products and items bought from the wholesale marketplace. In this business, you have to purchase items at lower prices from a wholesaler. Then you will have to sell them at a markup price to gain a profit.  The profit you gain is the earnings of the store.

How Much Can You Charge Customers?

You cannot charge for the products and items unless you have not studied the market prices. Understanding the competition in your target market is important when setting the product’s price.

To determine your own prices, it can be helpful to do some research on the goods and retail costs of your competitors. You won’t be aware of their wholesale prices or operating expenses, so it will only give you a retail price point rather than a markup calculation.

How Much Profit Can a Convenience Store Make?

The amount of profit a convenience store can make depends on many factors, including the location of the store, the type of products sold, and the operating hours. A well-run convenience store can generate a healthy profit margin, but there is significant competition in the industry and stores must be carefully managed to be successful.

According to a study conducted by the National Association of Convenience Stores, the average profit margin for convenience stores in the United States was 3.3 percent in 2017. This means that for every $100 in sales, the average store made $3.30 in profit. However, this figure can vary significantly depending on the individual store.

There are a number of ways to increase profits at a convenience store. One is to focus on selling higher-margin items such as prepared food or gasoline. Another is to keep operating costs low by carefully managing inventory and controlling labor expenses. Additionally, stores that are open longer hours or located in busy areas tend to generate more revenue and therefore more profits.

Despite the challenges, there is still potential for success in the convenience store industry. With careful planning and management, a store can generate a healthy profit margin and provide its owners with a good return on investment.

How Can You Make Your Convenience Store More Profitable?

First, you must conduct thorough research to identify the best wholesaler from whom you can purchase items at a lower price. In contrast to other sellers, you will make more money by selling the items at an open market rate.

Secondly, having a happy customer experience means profitable business. Relatively categorize all the items in the store to make it easy for the customers to find the item of their choice. Having top-notch employee and management service plays an essential role in making your convenience store successful.

What Will You Name Your Business?

Your business name will give recognition to your business in the market. Finding the best name for your convenience store can be challenging. To get a better idea regarding the name of your business consider the following:

• Search around the name of the other businesses
• Ask family and friends about the name
• Make a collection of them and choose a unique name for your store
• Make sure the name should be simple, shorter, memorable, catchy, and relevant to the store

Step 2: Legalize Your Convenience Store

To legalize your convenience store is necessary to protect it from liabilities. This is a crucial step as it would impact the tax structure of your business.

• Sole Proprietorship
• Partnership
• Corporation
• S Corporation
• Limited Liability Company

 

Step 3: Setup Your Convenience Store for Taxes

To pay federal and state taxes, you need to register your business. For registration, you will need to apply for an EIN. EIN is mandatory for a sales tax ID.  It is also required for setting up a business bank account.

It ensures your personal assets are safe and secure. You will need licensing and permits for your business; for that EIN is necessary.

If you want to apply and get further details, click here.

Step 4: Setting Up Your Convenience Store Bank Account and Exploring Funding for Your Business

Setting up your business account is very important as it will keep your personal finances separate from your business ones. If your company is sued and you don’t have a business account, your personal finances could be at risk.

You can get a loan and pay your taxes more conveniently with a business account.

On the other hand, the business credit card will keep track of all your business expenses. In the same way, you can get credit from it with ease. It is simpler to use and more convenient to carry in the pocket than large sums of cash or a checkbook.

A Most Common Type of Funding to Start Your Convenience Store:

Step 5: Convenience Store Business Accounting and Invoicing Setup

It’s better for your budget’s financial stability to keep track of your business expenses. You will be aware of frauds and errors. You can comfortably determine the profit by saving your expenses.

In short, creating and maintaining your business records help you to realize your business performance, profitability, and financial management.

Invoicing

An invoice is a document containing the details of the product and payment details the customer needs to pay. The most significant advantage of having an invoice is it keeps a legal record of the sale. If you have an invoice, you will know when and who purchased a product.  An invoice ensures a professional image of the business. It enhances the customer’s satisfaction and trust. It also provides you with legal protection.

We would recommend QuickBooks for the best accounting of your convenience store. QuickBooks lets you look at your purchases, sales, and expenses in one spot. Through this, you can easily share your company accounting task with others.

Step 6: Acquire the Necessary Permits and Licenses for Your Convenience Store:

In Addition, you may need:

1. Sale tax permit
2. Employer identification number (EIN)
3. Occupancy permit
4. Lottery license
5. Alcohol and tobacco license
6. Business operation license
7. City or county business license
8. Health and safety permit
9. Gas Permit

You may need some additional licenses and permits also. For more information, you can check out the state and local websites.

State And Local Business Licensing Requirements

Every state and city has different business license requirements. It varies depending on a number of factors, including location, business type, products sold, etc. You can check small business administration in your state for more information.

Step 7: Get Required Convenience Store Business Insurance

As the convenience store has thousands of dollars of inventory, so it must be protected. For this reason, you will need insurance. You will also need General Liability Insurance to get your business license or to provide coverage if the customer is injured for some reason on-site.

Business insurance protects your company from liability in the event that someone is injured on your premises or if you are sued for damages.

There are many types of business insurance policies available, so it is important to speak with an insurance agent to determine which type of coverage is right for your business.

some common types of business insurance include:

• general liability insurance
• product liability insurance
• property damage insurance
• business interruption insurance
• worker’s compensation insurance

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Step 8: Grow Your Convenience Store Business Brand: Helpful Tips

Knowing your audience is essential for the growth of your business. You need to understand who your target market is and why they want your brand. Think out of the box and make your brand unique by adding new and latest products.

Introduce an advanced selling option in your store. On Google Maps, indicate your location. Create attractive signage and a logo for your brand.

How To Promote Your Convenience Store

Like other businesses, convenience stores generally do not need many promotions. However, making eye-catching displays and banners outside the road or crossroads can benefit you. Use social media as a marketing tool for promoting your store.

How To Retain Your Convenience Store Clients

The best way to retain your customers is to give them rewards like discounts. Build their trust and communicate with them well. Understand your customers and adopt the problem-solving technique.

Step 9: Create an Online Convenience Store Presence

To take your business to the next level, make sure to create an online presence of your business. One way is to make a website for your business that should contain full detail of your store. An advantage of having a website is that it makes your store 24/7 accessible, even if it is closed.

Through your own website, you can make advertisements for your business efficiently. You can also utilize online customer services.

For creating a website you will need web hosting. For this purpose, Bluehost is recommended for web hosting for your business’s website. They have got high-performance servers with fantastic security features. They have quick and responsive customer support.

Using social media to promote your business is another way to give it an online presence. Create accounts on Facebook, LinkedIn, and Instagram, and a channel on YouTube for your business. Upload posts and videos of your store.

Secondly, you can get reviews and feedback on public social media platforms. Along with it, use Yelp to get reviews. These reviews will help you get loyal customers. It will also build customers’ trust.

Step 10: Getting Leads and Calls for Your Convenience Store

As you brought your business to the online world, provide your phone number and email address on your website and social media platforms. It will make it easy for your potential customers to reach out to you. Display your phone number prominently on your company’s truck. Promote your phone number in directories, listings, newspapers, and magazines.

Make use of flyers, shoppers, and boxes. Do provide your contact details there. In addition, make a business card for your store and put down your contact details. Provide it to your customers which will help you in increasing your business leads and calls.

Make friendly relationships with other companies and businesses. They will suggest your store to their customers and, ultimately you will get leads. Such customers will reach your store by “word-of-mouth”. Due to the fact that they have heard about your store from clients who have been pleased with your services, these clients are sold customers and will buy from you without hesitation.

Also, establish relationships with the nearby store owners. If they will have some products out of stock. They will send customers to your store.

Separate Your Business Phone from Your Personal Phone

Don’t ever use the same phone for both business and personal work. As it will make it difficult for you to distinguish the business and personal calls. Having a separate phone for personal use and business purpose will keep your personal life private and separate. It will also help you in maintaining your privacy.

Step 11: Get to Know Your Convenience Store, Research Local Competition

You ought to be aware of the location of your store. You need to look into other nearby businesses to learn what makes them successful. Find out why other competitors are successful by closely examining them. Compare the collected data to your store and modify your strategies.

Education In Your Convenience Store Is Key, Learn the Market and Trends

Run your store according to the market and trend. If there is, for instance, a trend of a specific product. You need to purchase it in bulk.

Find out from market research what products are the most popular. Get them into your store.

Getting To Know Your Local Area and Competitors

It would be best to inspect the area where you are opening your store. It would help you to analyze your competitors and the local audience. You must have an idea of the price of your competitors to avoid overcharging.

Investigate local areas and find out whether in the same area your business will go successful or not.

Why Network With Other Businesses

1. It can help you find new customers and grow your business.
2. You can learn about new products and services that can help your store.
3. You can meet other business owners who may be able to help you with advice or referrals.
4. You can stay up-to-date on industry news and trends.
5. You can find new suppliers and vendors, or get better deals from existing ones.
6. You can build relationships with other store owners, employees, and customers.
7. You can get advice and feedback from other store owners about your products, services, or business in general.
8. You can share ideas and best practices with other store owners.
9. You can find discounts on products and services that you can pass on to your customers.
10. Networking can be fun! It’s a great way to meet new people and learn about new things.

Seasonal Vs Year-Long Business- What’s Right for Your Convenience Store?

Convenience stores can certainly operate throughout the year continuously and consistently. What you need to do is change the products according to the seasons. Bring summer products for the summer, winter products for the winter, and so forth.

Is Starting a Convenience Store Right for You?

Deciding if opening a  convenience store is right for you entails much self-reflection and research. While the industry has low barriers to entry, that doesn’t mean that success is guaranteed. In fact, according to the National Association of Convenience Stores, the failure rate for new convenience stores is as high as 30 percent within the first year.

There are a variety of factors to consider before taking the plunge into convenience store ownership, from your business acumen to whether or not there’s a demand for another store in your area. Here’s a look at some key things to keep in mind as you decide if starting a convenience store is right for you.

Do You Have What it Takes to Be a Successful Convenience Store Owner?

A convenience store owner is not a passive investment. As the owner, you’ll be responsible for the day-to-day operations of the store, from stocking shelves and handling customer service issues to managing inventory and keeping the books.

If you’re not comfortable with an active role in running the business, convenience store owners may not be right for you. Successful convenience store owners are typically hardworking, detail-oriented, and hands-on. They’re also good at building relationships—with both customers and suppliers.

Do You Have the Right Skills and Experience?

In addition to having an entrepreneurial spirit, it’s helpful to have some experience in the retail industry before starting a convenience store. This doesn’t mean you need to have years of management experience, but it’s helpful to understand the basics of running a retail business before starting your own.

If you don’t have any experience in the retail industry, that’s not necessarily a deal-breaker. Just be aware that you may need to invest some time in learning the ropes before you’re ready to open your doors.

Is There a Demand for Another Convenience Store in Your Area?

Before you start looking for a location for your convenience store, it’s important to do your research and make sure there’s a demand for another store in your area. If there are already a number of convenience stores competing for customers, it may be difficult to make your store profitable.

There are a number of ways to assess the demand for a convenience store in your area. Start by looking at the population density and demographics of the surrounding area. Is there a large enough population to support another store? What is the average income level in the area?

You should also look at the competition. How many other convenience stores are in the area? What types of products and services do they offer? What are their prices like? By understanding the needs of your potential customers and the landscape of the local convenience store market, you’ll be better equipped to decide if starting a store in your area is a good idea.

Are You Ready to Start a Convenience Store?

Opening a convenience store can be a rewarding experience, but it’s not right for everyone. By carefully considering factors like your own skills and experience, the demand in your area, and your financing options, you can decide if starting a convenience store is the right decision for you.

Tips For Your Convenience Store Success

There are various ways to make your store successful:

1. Select the best location

The most important thing is to open your store in the right area. Anywhere, where most people pass by could be the best location.

2. Advertise your store

Make advertisements and promotions of your store on billboards and social media sites. It is one of the best ways to boost your sales.

3. Decorate your store

Make the display of your business attractive. People take an interest in beautiful things. This way, you can grab the attention of your best customers.

4. Availability of products

Recognize your customers’ requirements and bring every item to your store which customers need.

5. Keep your store clean

Maintain a neat and clean environment in your store. It will build your reputation, and you will regain your customers back.

6. Understand customer

Customers may take suggestions from you. Some of the customers might be confused about buying their products. Solve their confusion and convince them to purchase the particular product of your store.

7. Give rewards

If you want your customers to return to your store, give them rewards. You can give them rewards in many ways, like discounts, coupons, and buy one, get one free offers.

8. Keep your store organized

Organize all the items in the store to sort out any inconvenience for the customers.  It will make it easy for the buyers to find out the things which they want.

Frequently Asked Convenience Store Questions

What are the best-selling items in a convenience store?

There are many products which can be sold best in the store like:

• Beverages
• Dairy products
• Snacks
• Cold drinks
• Energy drinks
• Water bottle

And many more…

How to manage a convenience store?

First, fill up the store with each product your customer need. Make them organized and make a separate section for every category of product. Hire employees if you have a large store or have no time. Always keep the store neat and clean.

How to secure my convenience store?

You can install security cameras inside and outside the store.  Make use of physical security gates. Use lights to enlighten your store all over around, especially at the entry point.

What are the business hours for a convenience store?

There are no specific working hours for your store. It all depends on you. Commonly, convenience stores are open 24/7.

What are the skills and expertise that will help me build a successful convenience store?

The skills that help you in building a successful convenience store are given below:

• Marketing skills
• Business management skills
• Communication skills
• Accounting skills
• Bargaining skills
• Basic computer skills

What are the possible threats and risks of having a convenience store?

As the convenience store is highly visible, your store can be subject to criminal or theft actions, which are rare. Other threats include inventory loss or injuries to employees or customers.