Do you want to start a convenience store and want to know the cost? If YES, here is a cost breakdown for opening a convenience store and the profit margin/ROI.
These types of retail stores are often characterized by their late hours, which is convenient for customers who may be passing through the area as they travel. These stores vary in size, ranging from small kiosks to deluxe convenience stores. But irrespective of the size and what is sold on the inside of the store, many convenience stores rely heavily on selling gasoline as a source of revenue.
The customers that patronize convenience stores are individuals who only pop into the store when they need a particular item, such as when a significant other requests certain food or drink and the customer doesn’t want to deal with the hassle of a full – size Grocery Store.
As such, the preferred convenience store customer is the neighbourhood regular who comes in every day or two and sees himself as supporting the neighbourhood. Convenience stores make money by buying goods and selling those goods to customers. They sell things such as snacks, soft drinks, car accessories, lottery tickets, tobacco, and sometimes alcohol.
To determine the exact amount you need to start your business, you need to Develop a business plan. The research you put into your planning should include realistic calculations for startup costs and monthly operating expenses. The plan will also show how long it will take until your business reaches its break-even point (BEP). The BEP is the point at which cost or expenses and revenue are equal—there is no net loss or net gain.
Cost Breakdown for Starting a Convenience Store
Starting a convenience store, requires money, planning and time. Convenience stores are in demand all over the world, making them a good business to get into. With the right location, items in stock, and pricing structure, you can start turning a profit quickly after opening your convenience store.
Meanwhile it can cost up to ,000 to start a convenience store in the united states. This amount represents the cost of leasing an appropriate space, decorating the interior, installing a point-of-sale system and any other technology you may require.
You may also need to buy additional equipment based on any additional conveniences you wish to offer customers, from pay phones to fax machines and photocopiers. Depending on your state, lottery tickets often sell well, but carry an additional equipment cost. You will also have to pay for licenses and permits.
For instance, an Employer Identification Number (EIN) for tax purposes, state, and local licenses as indicated by the SBA, a Resale Certificate (if you are not selling exclusively independent products), a seller’s permit, and a certificate of occupancy. These costs can vary from $200 to $2,000 depending on your business and the state in which you are operating.
Depending on the size of your business, you may need shelving, display racks, cases, and furniture. If you want a website, you need a website builder and a host. Free builders and hosts are available, but their capabilities are limited and may reflect poorly on your brand.
Instead, expect to invest a minimum of $30 to $200 a month for a website. If you choose to hire a cleaning service, you can expect to spend between $50 and $200 a week. Handling cleaning in – house will likely cost $500 to $1,000 for an initial investment in supplies and heavier equipment such as vacuums.
Also consider necessary things like property insurance, including the liability to workers’ compensation and any coverage required for employees or yourself. You may also choose zero-cost word-of-mouth advertising including working any social media platforms you are familiar with, or you may want to hire an ad agency, which will run you anywhere from $1,000 to $10,000 a month.
However, the type of signage you choose will dictate the price but expect to spend from $500 to $1,000 for interior and exterior branding. Working with a lawyer to incorporate your business or an accountant to set up your books and file your taxes can cost anywhere from $1,000 to $10,000 or more.
Note that some of the primary ongoing expenses for your convenience store will include your monthly lease and the cost of utilities. Aside that, the biggest chunk of your expenses comes from inventory (which some research estimates may be up to 70 percent of your monthly spending) and labour. However, the exact cost of all these expenses vary due to location, store size, exact inventory, and how much you choose to pay your employees.
Is Opening a Convenience Store Still Profitable in This Age of eCommerce?
Despite the growing popularity of internet shopping coupled with the rapid home delivery of grocery and convenience items, starting and running a ‘mini convenience store’ is still a good business idea that has the potential to generate respectable profits.
To succeed in this highly competitive retail industry, the store is expected to be convenient. This means an easily accessible and highly visible business location, stocked with the most popular convenience products, and fast and friendly service.
Have it in mind that if a customer’s shopping experience at the store is not convenient, then there won’t be any repeat business. In addition to the usual supply of convenience products, such as milk, eggs, bread, snack items, and soda pop, be sure to add other products and services to attract customers to the store and keep them returning.
These products and services can include lottery ticket sales, tobacco products, newspapers and magazines, a fax service, photocopying, calling cards, postal stamps, and even fresh – cut flowers. The somewhat open secret of a convenience store is that you are able to successfully mark many items up by a higher percentage than your local grocery stores or supercenters do.
You potential customers will be paying for the convenience of not having to spend the extra time and effort to visit the larger store. Additionally, you can charge customers about eleven percent more than an independent grocery store does and about 20 percent more than a mass store like Wal – Mart does.
Starting a convenience store isn’t cheap and you will have to do things right if you hope to achieve success. Some of the best ways to make your convenience store more profitable are to find ways to reduce costs. This includes reducing the amount of staff necessary and trimming your hours down to what is reasonable for your town (for instance, you should avoid being open 24 hours in most cases).
Offering some kind of drive-through to sell food and coffee will give you an edge over the competition. Finally, always consider things that will save your customer time, such as providing an ATM in the store.