If you are starting a convenience store, it is likely that you will require a business plan at some point in time. The experts at Pro Business Plans have helped dozens of convenience stores start and grow with professional plans for investment and strategy. This article provides information on what a convenience store business plan should include and how it is structured.
Convenience Store Business Plan
Convenience Store Business Plan
There are several things to consider when planning to start a new convenience store that investors will consider when analyzing your investment. Among the most important are where the store is located, what it will sell, how it will start ( be purchased or built), and if it will be a franchise. Each of these factors will be weighted into the decision by investors and ultimately determine the degree of success that your store will have over a five to ten-year period. These unique factors are reflected in your convenience store’s business model, which shape the marketing strategy and define the financial projections.
The business model section of a convenience store is designed to outline what is unique about the store and how it compares to others. To a large degree, most convenience stores have identical business models. However, one of the largest factors that is determinant of success is where the store is located and what it sells. A convenience store located in the Upper East Side of Manhattan would be entirely different than one along a major commuter route in rural Iowa. The other major differentiator is whether or not the store will be acquired from a purchase, renovated from a pre-existing building, or constructed entirely from scratch.
The market positioning of a convenience store is based upon several factors. Some stores are located soley for the purpose of convenience, but others located nearby similar stores generally attempt to acquire some positioning that will assist in their competitive edge. For instance, having organic or locally sourced products or more competitive prices.
The operations structure for a convenience store combines a traditional convenience store model with a lean modern supply chain. Some convenience stores operate several locations nationwide, whereas others operate just one location and stock in the back room rather than having a separate warehouse.
The common belief is that the nature of convenience stores being convenient, removes the need for marketing. Unlike restaurants and hotels, consumers are very likely to intentionally go out of their way to visit a convenience store. It is also common for these stores, especially along major commuter routes and dense tourist areas, to place a low emphasis on customer loyalty . This is justified to an extent, spending excessive money on digital ads is likely to show little marginal change for most stores. However, the marketing should be done internally be ensuring that each customer experience meets their expectations. This is done by hiring the appropriate staff and having policies in place to ensure that your customers are satisfied. Otherwise, what little loyalty you may have is immediately gone and your reputation will slowly catch up with you.
When it comes to promoting a convenience store, it is often mass advertisements located in the vicinity that are most effective. People rarely actively travel far for a convenience store, but are often enticed by regionally targeted ads that draw them in when they are already within the proximity.
The business development approach for a convenience store is most important if it is located in an area that will likely develop into a loyal customer base. In this event, it may form partnerships with other nearby stores to drive referrals and establish a customer reward program either through recognizing its customers or by some other incentive.
The financial forecast section of the business plan is designed to provide investors with clear information about the potential risks and opportunities that the investment entails. This is typically done with the preparation of a series of ProForma financial statements based either on your company’s prior operating history, or the performance in similar convenience stores. A well-structured financial model can also help you to plan internally by developing a greater understanding about how to manage costs and determining how much capital is required to enter the market.
In some cases, investors may also ask for addition information related to your convenience store. For instance, they may want to know your break-even point or how the business would perform under various scenarios. In this case, we encourage you to perform the custom models in order to satisfy investor requirements and enable them to grasp a greater understanding as it relates it the risks and prospective profits of your business.
The revenue forecasts for a convenience store can most effectively be determined based on an analysis of the historical financials, or based upon a comparison of other similar stores. However, one should note that not all stores are the same and simply a slight geographic change can substantially alter revenue.
The budget estimates for a retail store are best accomplished through quotes received from vendors, service providers, and suppliers. Because some other comparable stores may have relationships with vendors or be purchasing new equipment, it is not always possible to accurately form the budget based on those of comparable stores.