Do you want to start a hardware store company? If YES, here is a detailed guide on how to start a hardware store business with no money and no experience plus a sample hardware store business plan template. Hardware Stores are businesses that provide huge profits and revenue when planned and ran well. This industry which was once dominated by small independent businesses has now been overrun by large enterprises.
It should be noted that today’s hardware consumers now understand the limitations of chain retail hardware, thus creating opportunities for independent startups to capture market shares. Reports have it that 60% of hardware shoppers intend to increase online purchasing as a way to compensate for their disappointment with brick-and-mortar ventures, which spotlights the importance of having a quality business website.
Starting and running this business to the point of financial stability won’t be an easy task. A business plan helps to organize the direction of the hardware store. In your business plan, you will have to extensively state the mission of your hardware store and how you plan to market to the community.
We strongly recommend that you establish a budget that reflects the size of the potential location, along with a map of the store including the type of inventory you plan to maintain. Also if you don’t have access to the needed funds to start and run this business, then you need an investor or a small business loan.
Have it in mind that an investor might be family, friend or a local angel investor. It will take more than just being a good entrepreneur to run a hardware store, you need to possess excellent communication skills and have patience to listen and serve the needs of your clients.
19 Steps to Starting a Hardware Store Business
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Iron-clad Competitive Strategies to Help You Win
- 18. Brainstorm Possible Ways to Retain Clients & Customers
- 19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
Businesses in this industry primarily retail a large range of new home renovation equipment and supplies. Hardware, plumbing, electrical and paint-related tools are the most commonly stocked goods.
Reports have it that this industry has steadily built up over the five years to 2017, and with the housing market strengthened and consumer confidence revived; people have started spending money on home improvement projects that had been put on hold during the recession.
We also believe that the mortgage rates experienced during the period have also encouraged individuals to buy and renovate new and existing homes. With this growing need and the steady construction activity, demand in this industry has been boosted.
Experts believe that within the five years to 2022, industry revenue will grow at a slower rate and external competition will slightly dampened both industry revenue and profit growth. It’s very important to state that the Hardware Stores industry is in the mature phase of its life cycle. Also have it mind that the industry experiences low levels of technological change, also indicating its maturity.
According to industry reports, the industry’s contribution to the overall economy, as measured by IVA, is expected to grow at an average annual rate of 0.9% within the 10 years to 2022, compared with expected GDP growth of an annualized 2.1%.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
We believe that this business is usually exciting for handymen, tradesmen, and those who enjoy home improvement activities, especially since the owner of a hardware store should be able to advise customers on purchases and have experience with the products being sold in the store.
Have it in mind that long hours aren’t always needed, but weekends might be. Having a flexible schedule helps, especially during the first few years of operation. Note that a hardware store makes money by charging customers for tools and supplies. Usually, there are fixed prices for the items, but in the case of items like rope or chain, the store may sell an item by the foot or priced by the yard.
A lot of your customers will pay by credit or cash, which is why it’s very crucial to the health of your business to offer customers a variety of ways to pay you as some volume customers may need credit terms in order to do business with you. Volume orders/clients also allow you to include finance charges or terms in your purchase price.
We believe it’s not uncommon for a hardware store to offer terms of 30 to 60 days for a well-established client. However, these terms can be extended with or without interest. Also, note that you can create a policy of charging interest after 30 days to collect more money from customers who need more time.
3. Decide Which Niche to Concentrate On
Have it in mind that small hardware stores, just like their counterparts in every industry, face cutthroat competition, not just from other local businesses but big box stores like Home Depot, and e-commerce giants like Wal-Mart and Amazon. But with good expertise and passion for operating a hardware store, you can grow it to become very successful.
But first you will have to choose a niche to focus on. You can’t possibly decide to become a jack of all trade in this industry; you have to decide on a suitable niche for you. We suggest you go on an extensive Feasibility research and understand the best niche to focus in before you start buying or paying for anything. These niches may include…
- Tools and equipment
- Plumbing fixtures and fittings
- Electrical supplies
- Paint and supplies
- Garden products and equipment
- Urban farming
- Organic farming
- Emergency preparedness
- Rain water management
The Level of Competition in the Industry
In a more explicit explanation, hardware stores are stores that sell a wide variety of home maintenance and repair items. Hardware stores also often sell structural material and different forms of lumber for any home repair, renovation, or construction.
They buy products from manufacturers and wholesalers, and then move to retail the goods to independent consumers as well as professional contractors. You need to understand that distributors in this industry serve as liaisons between the consumers and manufacturers.
We believe that companies buy products in bulk from a lot of manufacturers, and then retail them in smaller quantities to consumers. In this way, consumers can buy different items from different manufacturers.
Reports have shown that a lot of factors help drive demand and profit in this industry: home remodeling and repair, construction, hardware retailing, new home building, and telecommunications all need products retailed in this industry. It is also believed that revenue depends on efficient management of a company’s inventory, as well as use of effective advertising strategies.
We noted that large companies have an advantage in that their distribution networks are very fast and big, giving the chance to provide consumers with a wide selection of products and services. Businesses prioritize providing specialty items, stocking products they know their consumers need, and providing excellent customer service.
4. Know Your Major Competitors in the Industry
- Do It Best Corp
- True Value Company
- Ace Hardware
- Home Depot
- True Value
- Leroy Merlin
We believe there are nearly 20,000 hardware stores in the united states today, producing about $24 billion in revenue and employing just over 148,000 people. Analysis has shown that as the economy has improved over the last five years, the housing market has grown, leading to an increase in the number of home improvement projects that needs trips to the hardware store.
Also low mortgage rates have encouraged people to buy and renovate homes. Note that ideal customers are usually DIY customers or handymen.
Have it in mind that your clients will be typically local, which is why advertising for a hardware store can be done using one of several ways, including billboards, Yellow Page ads, pay-per-click local online ads, fliers, and email marketing to an existing customer list. Also email marketing is an underutilized strategy in this industry because a lot of hardware stores depend on word of mouth and foot traffic.
But, by emailing your existing customers on a regular basis, you can generate significantly higher revenues than depending on people randomly coming into your store anytime they have a need to. Hardware stores can be run as a small local shop or as a chain store. For example, Lowes, Home Depot, and other similar stores are large chain stores that operate all over the U.S.
5. Decide Whether to Buy a Franchise or Start from Scratch
Business is all about researching and making decisions that will favour your dreams for the business. If you are a control freak who wants to make 100% of the decisions about how your business operates, then you might feel good about opening your own shop.
Also starting from the scratch is less expensive. But also you can start a hardware store with a popular franchise, which gives you access to an established name, as well as a proven operational model and efficient supply chain. Note that you can still be the owner of the store with plenty of latitude to make business decisions.
You need to know that both ownership strategies have their advantages and disadvantages. For first-time business owners, it makes more sense to buy an existing hardware store than to attempt to build one from the ground up. The benefit of buying a franchise is the recognized name and the loyal customer base that comes with it.
6. Know the Possible Threats and Challenges You Will Face
Just like we stated above, starting and running this business successfully won’t be an easy task. Your first year will be critical for your hardware store. Your success or failure will largely be determined by your ability to navigate a handful of essential issues and requirements during that period…
Have it in mind that the individual or personnel you hire at the beginning of your start up’s life will set the tone of your business. Ideally, you’re looking for hires that have both the retail and hardware experience necessary to sustain your customer service emphasis.
In the hardware store business, customer service has life and death implications because hardware shoppers expect store personnel to be able to give expert advice about a wide range of hardware projects. To stay afloat in this industry and differentiate yourself from your competitors, you need to have a good customer approach to business.
You can’t start a hardware store and expect it to be empty of good products anytime someone walks into your business. During the economic downturn, a lot of hardware retailers cut back on inventory and subsequently lost customers. Industry estimates peg the initial inventory investment at around $35 per square foot of retail space.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
The LLCs is the best legal entity when starting a Hardware store because of its various benefits. LLCs can be owned by one or more people who are known as LLC “members.” An LLC with one owner is known as a single-member LLC, and an LLC with more than one owner is known as a multi-member LLC.
It’s important to state that an LLC is managed by its members, also known as member-managed. But in some cases, the members will appoint a manager to handle the LLC’s daily operations, and this is called manager-managed. LLCs offer the right mix of personal asset protection and simplicity.
Unlike sole proprietorships and general partnerships, LLCs can protect your personal assets if your business is sued. Unlike corporations, LLCs are relatively easy to form and maintain, and are not subject to double taxation. LLCs also offer the easiest way of choosing the S-Corp tax designation, because they are simpler to maintain than a standard C-Corp.
8. Choose a Catchy Business Name
- Tools stores
- Diamond stores
- Green organic
- Green Sky
- Stratford store
- Natural Dry
- Florox Co.
- Continental stores
- Sustainable providers
- Crystal Angel shops
- Dependable enterprise
- Fenton Sew & Vac
- Simple tools Ltd
- Sycamore stores
- Flatiron Ventures
9. Discuss with an Agent to Know the Best Insurance Policies for You
Don’t be deceived into believing that you don’t insurance when starting a business. Insurance help protect your business against lawsuits and financial losses resulting from a number of situations. A customer can fall and injure themselves; property could become damaged or stolen, employees could become injured or sick. Below is the list of insurance needed for a hardware store
- Business liability insurance
- Property insurance
- Building coverage
- Business income and extra expense coverage
- Employee dishonesty coverage
- Employee Benefits Liability Coverage
- Hired and Non-Owned Auto Liability Coverage
- General Liability Insurance
- Product liability insurance
- Crime and Fidelity insurance business interruption insurance
- Workers Compensation Insurance
- Vehicle insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
The proper understanding, exploitation and protection of intellectual property (IP) rights are fundamental to the success of a lot of retailers. In the retail industry, intellectual property protection and Trademark are needed to serve as;
- Anti-counterfeiting and piracy
- Copyright laws
- Brand and image rights
- Protection and registration of designs
- Enforcement and dispute resolution
- Data and database rights
- Competition law
- Protection of technology and innovation
- Advertising and marketing issues.
- Patents laws
- Trade mark filing and opposition
- Brand audits and watching services
- Securing trademarks and passing off
- Domain name strategies and disputes
The world generally now understands the need to protect this intangible product that defines our business and struggles. Protecting your intellectual property is like protecting the values and means that provide revenue for your business. Ways to protect them may include…
Understand your ideas and properties
Have it in mind that once you have a great idea for your service, there will always be people who will want to duplicate your success and sell your ideas as their own. It all depends on individual circumstances; you can use patents, trademarks or copyrights – all of which cover different areas of intellectual property. These can be used to prevent competitors or anyone else from using your ideas for their own profit without your consent.
Guide and protect business growth
It’s important that you protect the services that you own as competitors can use your success to take away market share, resulting in slow growth or loss of revenue. Giving away market share early in a business’s development can be devastating and time consuming if trying to chase up the guilty party without any legal protection.
It’s important to remember that no one else will check to see if your intellectual property has been infringed; it’s your responsibility to ensure that no one else is using your assets.
11. Get the Necessary Professional Certification
Professional certifications are not necessarily needed to start a hardware store but it will help you in the long run if you can acquire one or two. Individuals who plan to start their own retail businesses or who are currently majoring in marketing or information systems could benefit from earning a retail certificate. These certifications include;
- Retail Management Certification (RMC)
- Retail Business Credential (RBC)
- Customer Service and Sales Certification (CSCS)
- Advanced Customer Service and Sales Certification (ACSSC)
12. Get the Necessary Legal Documents You Need to Operate
There are legal requirements for every business and it will be an offence punishable by law if you choose to start a business without the complete documents. In most states, it is necessary to obtain a retail Store license. Most businesses are required to collect sales tax on the goods or services they provide.
Hardware Stores may also wish to look into applying for a resale certificate, which allows retailers to purchase goods intended for resale without paying sales tax. Other legal documents you may need include;
- Business license
- Employment agreements
- Federal license
- State license
- Local license
- Proof of Insurance
- Intellectual property protection right
- Federal tax identification number
13. Raise the Needed Startup Capital
If you lack the funding to run this business successfully, then we suggest you identify potential sources of funding, make sure you meet all their requirements, and prepare your applications or pitches to be able to land funding to grow your retail business. The retail industry just like many industries require adequate funding to be able to flourish. Sources for funds available to a retailer are:
- Asset-based lending
- Cash advances
- Bank overdrafts
- Family loans
- Community schemes
- Peer-to-peer loans
- Micro loans
- angel investors
14. Choose a Suitable Location for your Business
Whether you believe it or not, the competitive landscape of the hardware store industry offers a great opportunity, especially if you are going into a conventional brick-and-mortar business. Don’t let higher lease or rent payment scare you.
If a location truly offers prime foot-traffic, walk-ins and easy access for your customers, it may be well worth the investment. In this context, your lease is simply part of your overall marketing spending to get people in the door. Rather than going solely by price, here are three important factors to consider when choosing a location for your hardware store:
Location as a marketing tool
Facts have proven that one of the most expensive ways to get a new customer is advertising. You can use what could have been outside marketing or advertising money to fund internal rewards and referral programs.
Store space and accessibility
What does your target buyer look like? What do they do? Where do they live, work and play? You need to have a space that’s easy to see and get to. In choosing a location, an entrepreneur needs to put himself/herself in the customer’s shoes and decide what fits in and what doesn’t.
First we suggest you become conversant with local laws, zoning ordinances and potential highway or shopping centre constructions that might affect you. You also need to consider rules that might inhibit you on everything from signage to your ability to hold special events to operating during certain hours.
15. Hire Employees for your Technical and Manpower Needs
Just like in every other retail business, your customers might impatient and frustrated when they have trouble getting served. Even after they buy something, they may leave dissatisfied with the quality of service they got at your store.
It won’t do you or your store any good if you start losing customers due to inadequate manpower or inventory. Satisfaction and convenience are very crucial aspects of starting up and running any retail business. It’s your duty as the owner of the hardware store to make sure that you make purchasing easy for your customers.
Also note that a hardware store just like other retail businesses need managers and supervisors to make sure that everything runs smoothly. A hardware store depending on the size and services needs essential manpower to run smoothly.
These workers may include a retail manager, a customer care assistant, retail security, sales assistant, store manager, night manager etc. A hardware store has no pronounced number of employees or technologies but we strongly advise you employ individuals who are well experienced with tools and industry equipment.
The Services Delivery Process of the Business
Hardware stores just like almost all retail businesses perform a number of operational processes on a continual basis. Knowing and understanding the basic operational processes and workflow of a hardware store can help you to structure operations and lay a concrete foundation for your own retail business. The service processes of hardware stores are systematically outlined as follows;
Buying of inventories
It’s the job of a store manager to regularly take stock of the inventory they have at hand as well as inventory in storage areas. Managers place orders with manufacturers either on a regular basis or when they reach an optimum re-order point for a specific item.
It’s very important to state that this is a part of everyone’s job in a hardware store. Have it in mind that it begins with receiving shipments which includes unpacking boxes, sorting received items, and disposing of boxes and packing materials.
Indeed the key purpose of a hardware store is to provide an avenue for customers to view, handle and purchase items, which means all activities in a hardware store definitely revolve around customer service.
We believe that customer service in a hardware store can be broken down into three categories: in-store assistance, transaction processing and handling complaints. In-store assistance is about helping customers to find what they are looking for without hassle.
Transaction processing includes ringing up transaction totals, accepting payments and packaging items for the customer to take home. Handling complaints includes dealing with product returns; short-change claims, potential issues arising between customers and store staff, and general dissatisfaction with the store’s service or products.
One crucial process in any retail business workflow is regularly reporting financial information to the accounting department. Store managers send daily updates to report sales numbers, refunds, lost inventory, hourly payroll data and information on bank deposits before the workflow cycle begins again the next day.
16. Write a Marketing Plan Packed with ideas & Strategies
A lot of entrepreneurs think marketing is irrelevant in their business. That’s a mistake because without marketing, your brand messages aren’t being heard. Have it in mind that great marketing is a real possibility for a hardware store willing to adapt its strategy to the demands of the marketplace.
Diversify Your Advertising Options
When it comes to hardware stores, the challenge is understanding the advertising solutions that are appropriate for your customers. Recently, hardware stores have gotten solid marketing results from online channels. In general, if your competitors know more about promoting their business online than you, you may lose market share.
You need to have at the back of your mind that any piece of collateral your hardware store creates is a tangible reflection of your brand distinctive and core values. Those pieces of collateral can be customized for recipients, while others serve a more generic purpose.
Either way, you have a stake in making sure it gets into the right hands. A lot of entrepreneurs make the mistake of investing substantial resources in the creation of quality collateral. If you don’t invest similar resources in mailing lists and other distribution channels, your hardware store’s investment in collateral will be pointless.
Facts and reports have shown that a lot of consumers respond positively to discounts whether they are perceived or real; hardware store shoppers treat value as an invitation to buy. We believe that orchestrated discount programs communicate value because they build the perception that the customer is getting more for less. But for consumers located in the hardware store sector, you won’t get far with discounts unless you communicate clear value.
17. Develop Iron-clad Competitive Strategies to Help You Win
We discussed the level of competition in this industry, which is why you have to understand and strive to overcome the constant competition that arises every now and then. Since competition is inevitable in the hardware store industry, you need to research and implement strategies that will put you steps ahead your competitors. Here are few tips on how to stay ahead of your competitors.
- Update your image
- Look after your existing customers
- Target new markets
- Know your customers
- Differentiate yourself from your competitors
- Step up your marketing
- Explore new markets
- Be the best employer
- Look at the future
- Understand the competition
18. Brainstorm Possible Ways to Retain Clients & Customers
Experts have stated times without number the importance of existing customers and how they are the best asset a hardware store can have. This is because they already know the brand, they know the products and they know their service.
We suggest you focus your time and energy on these individuals as opposed to always trying to find new customers. We believe this can be a powerful way to supercharge revenues for your store, especially over the holiday season. You can use;
- Help desks and support systems
- Customer feedback survey
- Loyalty and reward programs
- Light personalization
- Satisfy your customers
- Patronage discount and coupons
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Having an excellent brand awareness will help your store attract good and loyal customers. It will also encourage your existing customers to trust you more. To be able to achieve a good brand awareness in this business, your brand awareness campaign needs to be flexible enough to grow with the company and adjust if needed.
You may start by holding an event, exhibiting yourself, sponsor something, create an experiential stunt, take to social media, organize a public relation campaign, invest in promotional merchandise, join forces with other businesses etc.
Cementing a good corporate identity through good brand awareness strategies with a little imagination and an understanding of your customers, the sky (and your budget) is the limit when it comes to getting in front of your competitors. You should;
- Attract and engage your target market
- Enhance and reinforce your brand
- Quantify the Value of Client Satisfaction to Your Firm
- Deliver what’s important to your clients
- Find and Fix Problems with Client Satisfaction
- Position yourself as a trusted advisor and go-to resource
- Generate and identify leads for more business
- Develop more profitable relationships with clients, prospects and referral sources