How to Write a Convenience Store Business Plan
There are few businesses that are used by just about everybody in the community. Fortunately, a convenience store is one of them. Because of this amazing demand for convenience stores, the growth for these types of stores has been impressive.
Not only are there more and more entrepreneurs starting convenience stores, but if you look at business listings for sale, inevitably, convenience stores all too often dominate the listing board and are often priced higher based on revenues as compared to other businesses. Because of the high demand for convenience stores and their inherent growth rate, having a well-written convenience store business plan is critical for startup businesses and organizations seeking to sell their operation. From this, our convenience store business plan writer is here to offer up some tips and tricks for writing your own convenience store business plan.
Executive Summary for a Convenience Store Business Plan.
The executive summary section of a convenience store business plan should summarize the findings within the well-documented business plan itself. Also, our convenience store business plan writer has found that including demographics and other area information is important for the executive summary. For example, if the convenience store will be located on a cross street, then make sure to discuss this fact as well as touch on large employers and apartment complexes or subdivisions within the immediate area. Further, entering and exiting the facility itself should be included in some way, shape, or form. Just keep in mind, make sure this information is kept brief and to the point. In-depth discussions should take place in the location segment of the business plan.
The convenience store company information section should start off with an address, description of the store, and differentiating factors for the stores, such as ease of entry and exit, discounted prices, or low overhead. From this, convenience store business plan writer should then focus their attention on providing an in-depth description of the location, both internal and external aspects. For the internal aspects, touch on square footage, freezer/cooler space, and potential renovations in the near future. As for the external review, our business plan writer suggests starting by describing the parking lot and number of parking spaces and then expand to the area description, which may include the number of apartment complexes or subdivisions in the area, large employers, etc. In following the strategy, business owners are able to give the reader a detailed review of the totality of the firm’s internal and external variables.
Service Description and Competitive Advantages
The service description segment of a convenience store business plan should focus on products offered. For example, if the convenience store will carry grocery items, then give a brief description of the items like bread, milk, snacks, etc. Also, most convenience stores will carry some type of liquor. From this, outline the types of alcoholic beverages sold, such as beer and wine. Finally, an important revenue generator for some convenience stores is the sale of cigarettes and lotto tickets. Granted, the profit margins are not very big on these items. However, when individuals purchase these types of items, they all too often buy other goods, which have higher profit margins.
The target market for a convenience store can vary based on location. For some convenience stores, a target market may be residents in the local area. This target market is often selected when the convenience stores close to apartment complexes, subdivisions, or on major crossroads. Other convenience stores may have a target market focused on large employers in the area. An example of this will be if the convenience store is located near a military base, company headquarters, or medical facility.
Industry research for a Convenience Store Business Plan
Industry research for convenience stores should first start with reviewing national statistics. For example, the convenience store industry in the US has generated approximately $33 billion in revenues in the last year. From these revenues, industry experts predict that approximately $600 million were profits. This leads to a profit margin of 1.9%. This profit margin seems quite low. However, because of the number of consumers visiting convenience stores on a daily basis, profits are generated through volume as compared to per sale transactions. Finally, there are about 39,000 convenience stores operating throughout the US. The stores employ approximately 141,000 employees. Simple math leads to the assumption that the average store employs approximately four individuals. Good information for your future financial projections.
The owner and management section of the convenience store business plan should focus more on educational and personal experience as compared to the actual love of the industry itself. Let’s be honest. Not many people grow up wanting to be a convenience store owner. However, the necessity of the convenience store cannot be doubted. Because of this, make sure to focus your owner and management section on your experiences with management in general or operating other convenience stores. Further, a business background is all too often critical for the successful launch and sustainability of the convenience store. From this, document any business courses taken or degrees achieved.
Funding Request for a Convenience Store Business Plan
The funding request section for a convenience store business plan should start with specifically stating the dollar amount needed to start your convenience store. Next, discuss how much equity financing will be provided by yourself or your partners. Once this is done, then provide details about how the additional funding will be gained, whether it is through loans, grants, or investors. Once a segment is complete, the next step is breaking down funding into how the money will be spent. Common categories for convenience stores are buildout, land purchases, renovations, inventory, liquor licenses, advertising, and employee wages. At the bottom of this list, make sure to specifically state the sum of the total funds needed.
The financial projection section for a convenience store business plan should start with identifying the average sale the business owner expects from each visitor. For example, some convenience store owners may predict that each customer spends about nine dollars per visit. Next, business owners may then guesstimate the number of visitors in their shopper day. At some convenience stores, business owners could enjoy 300 to 400 individuals. Other convenience stores may only have 100 to 200 visitors. By understanding these two concepts alone, business owners can then document their pricing strategy. When the visitor count is higher, business owners are often able to exploit low-price opportunities. In contrast, a lower visitor count may require higher profit margins and greater differentiation. Regardless of the financial projection structure, make sure to keep in mind that other business models and strategies should be aligned with financial expectations. And finally, by having a good idea of the daily revenues, business owners can then create financial models to project sales for the next 30 days, 12 months, and even five years.
Hopefully, these insightful tips and tricks for writing a business plan were helpful. As always, if you need help with a business plan or financial projections, just send us an email or give us a call.
Author: Paul Borosky, Doctoral Candidate, MBA., Author