Knowing Convenience Stores generate over 532 Billion U.S dollars yearly revenue in the U.S is a great motivation to start one. But once you start exploring the nuances of considering it as a business, myriads of things hinder your way.
Profitability, Legal permits, finance management, location choice, and target audience can impact your business. Plus, personal motivation is an important factor in your success.
The best practice to open a convenience store anywhere in the USA is to look for a successful store as a base model. Use this model for products, layout, display, financing, customers, etc. Then replicate that success instead of reinventing it.
Here we will explain things you’ll need to open a Convenience Store in the USA. We took ideas from the case studies of already successful stores. You can either recreate these or modify these as per your situation.
Also, we’re going to highlight how you can buy an already successful C-store for a good cash flow. So, let’s start.
The Pros and Cons of opening a Convenience Store in 2022
More than 60% of convenience stores in the US are independently owned. This means there is enormous potential to start a profitable business in the industry.
Plus, Amazon starting the cashless c-stores as ‘Amazon Go’ proves that there is money to be made.
But like it’s said, you should never measure your credibility by someone else’s scale. Therefore, we’re going to start with the Pros and Cons of starting a convenience store. So, you should know what you’re dealing with.
- You’ll be working for yourself as a small business owner.
- A natural customer segment. You don’t have to make a new market of customers. Instead, you’ll offer what everyone is already using with more ease.
- Opportunity to set your own prices. Since you’ll be purchasing products wholesale, you ought to choose product prices yourself. Thus, you can leverage your profit margin or make the area more competitive.
- A source of economic stability. Even in times of financial recession, convenience stores remain a stable source of income. So, as a business owner, you don’t have to worry about cash flow and instead have a stable income source.
- Create Jobs. If you go with starting a traditional convenience store, you’ll provide many job opportunities. This will serve the economy well.
- Relatively easy-to-start. Unlike many other business models, like restaurants and car washes, you don’t have to go through an arduous starting process. Instead, it’s relatively easy to start a convenience store.
- The store needs to open 24/7, and that would require a workforce.
- A good amount of stuff will also require a lot of finances. This, ultimately, will decrease the profit margins.
- A lot of inventory losses.
- A high startup cost. It typically costs around $100,000 to start a convenience store. But the number can jump to 7-figures if you’re going for something big.
Now, you know what to expect. Let’s deal with how you can do it.
How to Open a Convenience Store in the US
We have divided the process into seven different steps. These will be enough to cover everything you’ll need to know about opening a convenience store in the U.S.
Start With a Business Plan
A business plan will be the foundation of the store. In this plan, you’ll pinpoint the specifics you’ll need to succeed. These include.
- Financing your store i-e bank financing.
- Analyzing products, you will sell, their prices, traffic, and revenue generation.
- Ideal Customer and Competitors.
- Financial Forecast that will cover your starting and running costs.
Your plan may vary for funding and strategy. Therefore, we suggest looking at an excellent example here.
Select the Appropriate Location
Next comes the location. As a convenience store owner, location will be among the most important things, as sales depend on visibility. So, to gauge that the location is appropriate, consider these factors.
- Foot traffic in the area. You can either manually do it or get help from the cell phone provider to know the potential customers.
- Visibility from a long distance or continuous visibility by being close to a popular building.
- Less than two convenience stores within the 5-mile radius.
- Have parking.
Get All the Necessary Licenses
Before opening the store, there are several licenses you’ll need to get. These usually vary depending on the state. But generally, you’ll need the following ones.
- Retail-seller permit.
- Business operation license.
- Certificate of Occupancy.
- Doing Business As (DBA) license.
- EIN – Federal Employer Identification number.
- Alcohol and Tobacco licenses.
- Health, Lottery, and Gas permits.
Although these are not difficult to obtain, they are time-consuming. Therefore, always plan ahead of time.
Make a Finance Plan
Having good finances not only saves you from possible trouble but impacts how much money you’ll be making. So, it’s essential to have a good financial plan.
A good financial plan covers checking the sales ratio of each product and how much profit you can generate. This will help you optimize purchase and pricing.
Maintaining a good cash flow is also a part of finance management. This can help you eliminate order insufficient, ultimately leading to good inventory management.
Controlling the retail shrinkage is also a part of financial management. And finally, optimizing the prices to provide the best value to customers contributes to a good financial plan. So, if you manage all these well, you’ll be getting a good profit shortly.
Get the Technology
Technology keeps things easier for your business and works as theft control. Here are some things your store will need.
- Cloud Based retail point of Sale system.
- Remote work management, including inventory, sales, profits, marketing, etc.
- Payment integrations.
- A good security system like cameras, alarms, and cashier monitors.
All these things will help keep a record of your data and assist in the financial management of the store.
Know Your Customers
The initial customers in your business plan may vary slightly from those who visit the store. It could be due to myriad reasons, but foot traffic, type of product, and pricing play a significant role.
In addition, once people start visiting the store, you can make appropriate changes as per the customer. You can ask questions like.
- Do customers visit the store regularly?
- Are they travelers or locals?
- How much time is a customer spending per visit?
- What changes should be made for a better customer experience?
With all these, you can make appropriate changes to run your store successfully. Your customer will also decide on your product catalog.
Here, it’s also important to judge these things in the competitors and provide a better customer experience.
Marketing and Store Maintenance
For a convenience store, digital marketing plays a little role. Still, you can optimize the store on all the local listings so customers can find you.
You can also run ads on various social platforms to spread awareness about the brand. But, the main source of convenience store marketing is word of mouth. Therefore, store maintenance is a part of marketing.
Even with a high volume of customers, the product presentation should be matchless. The inventory management, store cleaning, bathroom maintenance, etc., must be great.
All this help portray a great image of your store. Combined with competitive pricing, good maintenance will help you land many regular customers.
Many people still ask, ‘Are convenience stores profitable.’ The short answer is yes.
You can generate a few million dollars of yearly revenue. However, this will depend on your store’s financing, business plan, pricing, location, and presentation.
So, you can also be a successful business owner by paying attention to things and putting a dedicated effort into it.