Opening a convenience store can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful convenience store.
Importantly, a critical step in starting a convenience store is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
15 Steps To Open a Convenience Store:
- Choose the Name for Your Convenience Store
- Determine the Type of Convenience Store You Will Launch
- Develop Your Convenience Store Plan
- Choose the Legal Structure for Your Convenience Store
- Secure Startup Funding for Your Convenience Store (If Needed)
- Secure a Location for Your Business
- Register Your Convenience Store with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Convenience Store
- Buy or Lease the Right Convenience Store Equipment
- Develop Your Convenience Store Marketing Materials
- Purchase and Setup the Software Needed to Run Your Convenience Store
- Open for Business
1. Choose the Name for Your Convenience Store
The first step to opening a convenience store is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your convenience store:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your convenience store.
2. Determine the Type of Convenience Store You Will Launch
The next step is to determine the type of convenience store you will launch. The four main types of convenience stores are:
- Grocery convenience stores – These offer a variety of products, such as food items, household goods and sometimes even gasoline. These are the most common type of convenience store.
- Gasoline convenience stores – These typically only sell fuel and snacks, with some offering basic car maintenance services.
- Pharmacy convenience stores – These sell medical items and some groceries.
- Liquor convenience stores – These offer alcoholic beverages, such as beer and wine, in addition to snacks and other products.
3. Develop Your Convenience Store Business Plan
One of the most important steps in opening a convenience store is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your convenience store.
- Company Overview – this section tells the reader about the history of your convenience store and what type of convenience store you operate. For example, are you a grocery convenience store, gas station convenience store or liquor convenience store?
- Industry Analysis – here you will document key information about the convenience store industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your convenience store? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your convenience store make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
4. Choose the Legal Structure for Your Convenience Store
Next you need to choose a legal structure for your convenience store and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the convenience store and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a convenience store together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a convenience store include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a convenience store is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your convenience store, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
5. Secure Startup Funding for Your Convenience Store (If Needed)
In developing your convenience store business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a convenience store to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a convenience store that they believe has high potential for growth.
6. Secure a Location for Your Business
Having the right space can be important for your convenience store.
To find the right space, consider:
- How much space you need
- How much your budget allows for monthly rent
- How close it is to potential customers.
You should also consider whether the space has a drive-thru and adequate parking.
Next, find the right property by:
- Driving around to find the right areas while looking for “for lease” signs
- Contacting a commercial real estate agent
- Doing commercial real estate searches online
- Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space
7. Register Your Convenience Store with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
8. Open a Business Bank Account
It is important to establish a bank account in your convenience store’s name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
9. Get a Business Credit Card
You should get a business credit card for your convenience store to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
10. Get the Required Business Licenses and Permits
In order to operate a convenience store, you will need to obtain several licenses and permits. The types of licenses and permits you need will vary depending on your state and local municipality. However, some of the more common licenses and permits you may need include:
- Business License: A business license is typically required to operate any type of business. This document simply verifies that you are operating a legitimate business.
- Food License: A food license is required in most states in order to sell food products from your convenience store. The requirements for a food license will vary from state to state, so be sure to check with your local health department for specific details.
- Sales Tax ID: In order to collect sales tax from your customers, you will need to obtain a sales tax ID number from your state’s department of revenue.
- Liquor License: If you plan on selling alcohol at your convenience store, you will need to obtain a liquor license from your state government.
- Tobacco License: If you plan on selling tobacco products at your convenience store, you will need to obtain a tobacco license from your state government.
Every state, county and city has different business license and permit requirements.
Other potential requirements are:
- Zoning Approval: typically at the city or county level, this provides authorization for construction or use of a building or land for a particular purpose
- Fire Department Approval: a process by which the local fire department reviews and approves the installation of a fire alarm system.
Depending on the type of convenience store you launch, you will have to obtain the necessary state, county and/or city licenses.
11. Get Business Insurance for Your Convenience Store
When you’re starting a business, it’s important to protect yourself and your business with insurance. There are several types of insurance you may want to consider for your convenience store.
- General Liability Insurance: This type of insurance protects you from any legal claims that may arise from accidents or injuries that occur at your store.
- Product Liability Insurance: This type of insurance protects you from any legal claims that may arise from products you sell at your store.
- Commercial Property Insurance: This type of insurance protects your business property in the event of a fire, theft, or other natural disaster.
- Business Interruption Insurance: This type of insurance helps protect your business income in the event that your store is closed due to a natural disaster or other incident.
- Workers’ Compensation Insurance: This type of insurance provides benefits to employees who are injured or become ill as a result of their job duties.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
12. Buy or Lease the Right Convenience Store Equipment
When starting a convenience store, it’s important to have the right equipment. Here are some of the essentials you’ll need:
- Checkout counter
- Cash registers
- Computer with point-of-sale software
- Security cameras
- Alcohol and tobacco displays
- Chips, snacks, and other convenience store staples
- Shelving and storage racks
- Labels and signage
If you’re starting a small convenience store, you may be able to buy used equipment from a larger store that’s closing down. However, if you’re starting a larger store, you’ll likely need to buy new equipment. Talk to your local suppliers to get an idea of what you’ll need and how much it will cost.
You also must decide to lease or purchase the equipment. If you’re just starting out, leasing may be the best option. With a lease, you can get the equipment you need without spending a lot of money upfront.
13. Develop Your Convenience Store Marketing Materials
Marketing materials will be required to attract and retain customers to your convenience store.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your convenience store. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional convenience store website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your convenience store.
14. Purchase and Setup the Software Needed to Run Your Convenience Store
In order to run a successful convenience store, you’ll need some key software systems in place. This software will help you manage inventory, track sales, and handle customer data. Here are some of the systems you’ll need:
Point-of-sale (POS) software: This software helps you track sales and inventory, as well as customer data. It’s essential for any business that wants to keep track of its finances.
inventory management software: This software helps you keep track of your store’s inventory, how much stock you have on hand, and how much money you’re spending on inventory. It’s a valuable tool for ensuring that your store is always fully stocked.
Customer Relationship Management (CRM) software: This software helps you track customer data, such as contact information, purchase history, and demographics. This information can help you better understand your customers and how to market to them.
15. Open for Business
You are now ready to open your convenience store. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Open a Convenience Store FAQs
Opening a convenience store is not hard, but it does require some careful planning. You'll need to figure out what equipment you need, how much it will cost, and how to market your store. You'll also need to purchase and set up the software needed to run your store. If you follow the steps above, you should be in a great position to build a successful business.
However, if you follow the steps above, you should be able to start your convenience store without too much difficulty.
Opening a convenience store with no experience is not impossible.
There are a few things you can do to increase your chances of success:
- Join an industry organization. Organizations like the National Association of Convenience Stores (NACS) offer resources and support for new business owners. They can help you learn about the industry and how to start and run a successful convenience store.
- Get involved in your local community. Get to know your neighbors and local businesses. Building relationships with the people in your community will help you create a loyal customer base for your store.
- Start small. It's important to remember that Rome wasn't built in a day, and your convenience store won't be either. Start small, and grow your business gradually over time.
The best way to open a convenience store with no experience is to start small. Once you have a few clients, you can then start marketing your business more aggressively.
The cost to open a convenience store will vary depending on the size and location of the store, as well as the products and services offered. However, on average, it costs between $30,000 and $50,000 to open a convenience store.
The ongoing expenses for a convenience store will vary depending on the products and services offered. However, some of the most common expenses include rent, utilities, inventory, and employee salaries.
Rent is typically one of the biggest expenses for a convenience store. You'll need to find a location that offers a good amount of foot traffic and is affordable. Utilities, such as water and electricity, can also be costly for a convenience store. It's important to factor these expenses into your budget when opening a store.
Inventory is another major expense for convenience stores. You'll need to stock your store with items that are popular with customers in your area. This can be a costly investment, but it's important to make sure you have everything you need to meet the needs of your customers.
Employee salaries are another major expense for convenience stores. You'll need to pay your employees a fair wage that meets or exceeds minimum wage requirements in your area. Additionally, you'll need to budget for payroll taxes and workers' compensation insurance.
A convenience store makes money by selling products and services to customers. The most common products sold in convenience stores include cigarettes, beer, and snacks. Convenience stores also offer services like lottery tickets, money orders, and bill pay.
The key to making money in a convenience store is to offer products and services that are popular with customers in your area. You'll also need to keep your inventory stocked with items that people are likely to buy. Additionally, it's important to provide excellent customer service so that customers keep coming back to your store.
Yes, owning a convenience store can be very profitable.
The profitability of a convenience store will vary depending on the specific industry, geographical location, and other factors. However, there are a few things you can do to increase the chances of your convenience store being profitable.
Some of the key things you can do to make your convenience store more profitable include:
- Offering a variety of products and services that are popular with customers in your area
- Stocking your inventory with items that people are likely to buy
- Providing excellent customer service
- Charging a fee for the services you offer
- Investing in marketing and advertising to attract customers
- Offering add-on services that complement your main offering
- Optimizing your website for SEO to increase online visibility
- Creating a unique selling proposition
There are a number of reasons why a convenience store may fail, but some of the most common include:
- Not stocking the inventory with items that people are likely to buy
- Not offering a variety of products and services that are popular with customers in your area
- Poor customer service
- Charging a fee for the services you offer
- Investing in marketing and advertising that does not attract customers
If you want to make sure your convenience store is successful, you need to avoid these common mistakes. Make sure you stock the right inventory, provide excellent customer service, and invest in marketing and advertising that will reach your target market.
One of the main reasons that convenience stores fail is a lack of planning. This can include not having a detailed business plan, not doing research on the industry, and not targeting the right customers.
Another reason is a lack of marketing and sales skills. This can include not creating a sales process and not have a clear and strong value proposition.
The last main reason is a lack of financial management skills. This can include not having a realistic budget, not tracking expenses, and not investing in the business.
The convenience store market is made up of a variety of different players, including small businesses, large enterprises, and even individuals.
Some of the key players in the market include:
- Circle K
However, there are many other players in your specific target market, and it is important to research the market to identify the key players that may have the most direct influence on the success of your business.
Convenience store prices can vary depending on the type of products being offered.
However, some common convenience store prices include:
- Soft drinks - $1.50
- Snacks - $2.00
- Gasoline - $3.00 per gallon
The best way to determine the right fee for your convenience store products is to research the rates of similar businesses in your industry, and to also consider the value that you will be providing to the client.