With the merger of Kadmus, Homer & Company and Delphi/Ouroboros, Building Blocks is a cooperative comprised of members who are entrepreneur-retailers. Building Blocks is committed to empowering the independent retailer by setting industry and market standards with their niche businesses and unique brand of creative marketing, wide product assortment, award winning merchandising and technology, and quality training and business expertise. Building Blocks’ buying power of more than $2.5 billion annually helps pass on benefits to independent members.
Building Blocks has been a world leader in the hardware industry in product selection and customer service for do-it-yourselfers since 1948.
Vision To be the best-in-class provider of products and solution choices that drive our members’ and our co-op’s profitability. Mission To provide: Choices of retail and commercial solutions to drive members’ sales and profits Assortments to support the solutions Operational excellence in the delivery of products and solutions
Building Blocks has a wealth of experience and know-how on opening new hardware stores, with 6,567 stores worldwide. Building Blocks has become a leader in determining what factors make a hardware retailer successful.
Building Blocks currently uses a service called Yorikle. This service is used to define the demographics and the expenditure potential of new markets. For Hisarlik Hardware , the report was run on a one-, two-, and three-mile radius around the proposed location. The report showed an exceptional amount of business (only reporting households, the study does not include property managers, businesses, or commuters), especially considering that there is no direct competition in the area. The reports also get very specific as far as what the potential market is for hardware overall as well as specific categories within a store. There are also numbers reports for the expected growth in the area over the next five years.
Building Blocks supplies professional design services to maximize merchandisable space and traffic flow. Services include fixture plans, interior signage and decor, merchandising plans, lighting, basic site plans, and exterior storefront elevations. These plans are custom developed for each location and each store’s footprint. The associated costs are included in the start-up costs.
A unique plan will be done for the proposed site for Hisarlik Hardware . This process will begin as soon as the lease for the property is signed.
Building Blocks provides a variety of support to all current members as well as prospects seeking to join the co-op. The support comes to members in the form of retail consultants, knowledge, profit building programs, retail automation, training, advertising & promotion, a national brand, buying power, semi-annual markets, and an operations and distribution network.
Retail Consultant
Every member and prospect is assigned a retail consultant who works with them on an ongoing basis. There is also a retail operations specialist who helps prospects open new stores. There are regional marketing staff that are available as well as individual Building Blocks staff for individual marketing programs.
All specialists share their wealth of personal knowledge as well as having access to Building Blocks’ cumulative knowledge and experience. Building Blocks has made this model work since 1948. It works very well and enables members to be very successful business people and has made Building Blocks the largest retail hardware co-operative in North America.
Proven Profit Building
Building Blocks makes available a large number of programs that entrepreneurs can choose to participate in. They include retail pricing systems, electronic order entry systems, commercial and industrial sales, category specific planograms, and direct mail circulars, just to name a few.
Building Blocks leads the industry in automating their stores. Building Blocks has brought their stores into the future with the automation which is made available to members. This is a strength of Building Blocks and a service that is available to all of their members. This automation helps the members in many different ways including inventory control, ordering, sales, and accounts receivable, all tied together in one system called Delian .
Experienced technical support personnel work with members to ensure current retail automation capabilities are compatible with Building Blocks’ existing system. Building Blocks’ existing system is Delian, an industry leading software program based on Triad Eagle for Windows platform. Delian is an easy-to-use, easy-to-learn tool that contains up-to-the-minute ordering and inventory accuracy, point of sale, accounts receivable, and much more. It contains all the daily business tools needed to manage Hisarlik Hardware .
There are five core programs for new store owners which make up the initial training. They are:
When a member opens a The Tool Room Rentals business there is also required training that applies only to The Tool Room Rentals . There is also a wide range of do-it-yourself programs that are on CD-ROM and video.
Building Blocks’ marketing programs are second to none in the industry. They include every tool needed to be successful in the retail hardware business. They include Power Events, interior and exterior signage, online programs, and custom circulars.
Every member store is assigned a field marketing manager. The marketing manager makes the members aware of the marketing tools available and how best to use them.
There are marketing strategy programs, programs that increase traffic, increase transactions, and those that merely build the brand. All are made available, and it is the savvy member who uses the right programs and spend their advertising dollars best. Based on the marketing experience Hisarlik Hardware has, this is a strength most start-up businesses do not possess.
For over 40 years, the name Building Blocks has stood for trust, service and fair prices. Building Blocks’ brand positioning statement is “ Building Blocks is the best place to get just what you need to complete home repair and maintenance projects quickly and easily.” It is a name with heritage and integrity. Consistent national media and the fact that Building Blocks is the largest co-op of independent hardware store owners, has established Building Blocks as a recognizable name in retail hardware.
The bottom line is people know that the Building Blocks name means hardware. That is an asset new businesses work for years to establish.
An independent hardware store cannot compete in the current market, without a co-op behind them. A Building Blocks member has the benefit of $2.5 billion in buying power which is passed on in savings and profits. That makes Building Blocks the largest co-op of its kind in North America.
This is the main factor in making sure all Building Blocks members are getting products at the best possible prices to enable them to maximize profits.
Building Blocks holds semi-annual markets where members can buy products and plan purchases for the upcoming seasons. Markets are held in March (Fall/Winter) and October (Spring/Summer). Members are informed of new items and trends in the industry at these markets enabling them to make good purchasing decisions. There are also programs which allow members to make purchasing commitments at large cash savings.
Building Blocks has established a network of strategically placed distribution centers throughout the United States to assure timely deliveries regardless of where the store is located. Trucks deliver at least once per week and twice if necessary. This is a huge benefit, because this process allows excess inventory to sit in the distribution center as opposed to the store shelves. Over 64,000 items can be purchased on a per piece basis enabling stores to get whatever quantity is needed at any time.
Troy Enterprises, Inc. is a privately-held S corporation, currently 100% owned by its founder and president, Hector Priamson and his wife Andromache Eetion. The company will be operating under the name of Hisarlik Hardware. There are expected to be investors in the new venture. Individual investors will own no more than 15% of Troy Enterprises, Inc. These investors will provide investment in the way of seed cash to help start the business and none of the investors will be active participants in any management decisions.
Troy Enterprises, Inc. founder and president is Hector Priamson. Hector is a resident of Ilion. He is married to Andromache Eetion who is currently a realtor with Ahhiyawa, Hatti & Company.
Hector will spend 100% of his time on this new start-up venture. Hector has a wealth of experience in business. He started his career straight out of college with a very exclusive “Big Eight” Accounting firm. While with Manapa Tarhunda and Co. Hector earned his CPA license. His interests led him to Wilusa, where he became involved in one of the city’s unique industries, Samothracing. He started on the accounting side of the racing business and soon broke out into the part of the business that generates the revenue, sponsorship sales.
His career led him to Trireme Racing Group where he served as the Vice President of Business Operations. He led the turn-around of this team and company solidifying major sponsorships with companies like Corinthian Leather, Medusa-Gorgon Oars, and Posidon Libations. He served in that position from 1996 through 2001. During that period of time, Hector also served on the CURRAGH Franchise Board (rules making board of the sanctioning body). His reputation and success led him to the top marketing position, Vice President of Sales and Marketing. Hector served in that capacity from December of 2001 through July of 2003, at which time he left the company to pursue his current business, Troy Enterprises, Inc.
Hector’s expertise in the entrepreneurial business of oarsports will be invaluable in his new venture. He has a keen sense of finance, marketing, management of inventory, accounting and bookkeeping practices, and staff management. This experience will be invaluable in leading Troy Enterprises and making sound business decisions in the future.
Hector’s resume, as Confidential and Proprietary information, has been omitted from this sample business plan.
When Hisarlik Hardware began this project the key component was the location. Hector Priamson/Troy Enterprises and Building Blocks felt several criteria were crucial to making this venture a success. The ideal size was determined to be between 7,500 and 10,000 sq.ft. The price per square foot was important because the economics obviously had to work. Adequate parking and easy access were must-have criteria while searching for locations. A location with only street parking was not considered an alternative. Being located on a major thoroughfare with visibility is important to get the store recognized as a solution for hardware. Adequate signage that traffic can recognize is key. Additionally, intangibles such as other commercial neighbors and the neighborhood makeup were considered.
Based on these criteria, a site at 310 East Anglia Street is was selected. It is part of the Troas Marketplace.
This property shares a parking lot with Scamander’s Food Market and Buckbasket Cleaners which is the most important of the intangible factors. This Scamander’s generates $12.0 million in revenue and is Scamander’s most successful store in Wilusa. Scamander’s is the only grocery store in the downtown area, and is an icon in the downtown residential community. In discussions with Scamander’s, they said the Troas store has much more traffic than their other locations. They have found the average customer visits the Troas store every two days versus once a week for the others. Hisarlik feels this is a huge advantage for its venture as this will drive more traffic, more often to the Troas parking lot. Scamander’s is in the middle of its lease for this property and seems pleased with the results. Hisarlik does not anticipate this advantage changing by a move by Scamander’s, whose lease extends through the year five.
The proposed site has plenty of parking spots and excellent access from eastbound Anglia Street and northbound Mercia Blvd.
Signage marquees sit on both streets as well as on the north, west, and south sides of 310 East Anglia Street. Furthermore, the location is perfectly set on eastbound Anglia Street, which is one of the major thoroughfares. There is a driveway entrance and exit to Anglia Street.
The proposed site is ideal in size measuring 9,509 sq. ft. and was formerly an Osco Drug store that was closed as Osco downsized their Wilusa operations. According to the landlord, the closing of this location by Osco had nothing to do with the location, but rather, a change in priority within the company. The property needs very little in tenant improvements in order to be open for business. The terms of the lease are currently being negotiated. It is anticipated that Hisarlik Hardware will retain the property within the budgeted guidelines. There were many properties that were investigated; however, for the stated reasons this is the best option as of last November.
The neighborhood has gone through major renovation over the past 10 years. It is now a rejuvenated upscale neighborhood. There is also major new development around the proposed site. There is a brand new condominium development directly across East Anglia Street. The development is called Lemnos Square.
There are three other new condominium developments under construction that are one block away. They are Troas Terrace, The Anatolia, and The Konya.
The proposed location is one block from the successful Wessex Avenue District. Wilusa has done a fantastic job in bringing in new business and culture into this area of downtown.
According to Wilusa Downtown Inc., Downtown has seen record demand and occupancy levels, driving the surge of residential development. This has led to more than 615 new residential units currently in the pipeline.
The city of Wilusa is also reviewing plans for the former Cressida Agora site. The plans all include a large number of residential and retail sites on the 29 acre site. This site is located 2 blocks south of the proposed location.
Development downtown is happening in many different ways. There is commercial, residential, as well as government development currently in process or planned. All of these things add to the desirable nature of the proposed site. We would be “right in the middle of it.”
Hisarlik Hardware will offer traditional retail hardware. These products include electrical supplies, automotive, hardware, housewares, lawn and garden, building supplies, paint, plumbing, tools and rental. There are other small services that will be offered including key cutting, glass cutting, and other small repairs.
Hisarlik will work with Building Blocks to develop the right product mix. The initial order of inventory will take into account the fact that this is an urban store and the product mix may contain different items than a suburban store. Hisarlik Hardware will rely on Building Blocks’ expertise, knowledge, and their IAIS inventory management program in developing this initial order.
Hisarlik Hardware will stock traditional retail hardware items. The product mix will be changed slightly from suburban stores. The history of the store will then be used along with IAIS to develop the right product mix that takes advantage of the available square footage and maximizes profits.
Hisarlik Hardware will open a The Tool Room Rentals store within the hardware store. This is a program that will help cash flow as well as increase sales of rental accessories and support items.
Hisarlik will also have key cutting, glass cutting, and other small services like screen repairs.
IAIS stands for Inventory Always In Stock. This is a program that was developed by Building Blocks based on feedback from their members. The members were looking for assistance in managing their departments and knowing what is selling and what is not.
This program has the following benefits to members who take part in it:
Building Blocks delivers to member stores IAIS merchandising guides, assortment guides, and recommends what inventory to carry and what not to carry.
This is an invaluable tool for a new member because the new store can rely on the history of current stores to help in their merchandising.
Hisarlik Hardware will once again rely on Building Blocks to deliver the correct pricing for the market. As discussed earlier, low cost is not one of the main factors for customers to shop at a convenient hardware store location. Hisarlik will continue to work with Building Blocks to charge the right price to maximize profits.
Hisarlik Hardware will listen to its customers to understand what other needs are not being met. Those needs could include additional store locations in the future and an expansion of products and services offered at the current location. There may be other businesses that can be offshoots of retail hardware that help service or provide convenience to Hisarlik customers.
The Market Analysis looks at potential customers and potential business. Hisarlik Hardware explored the market segments, their needs, and did a marketing analysis.
The need for this venture was looked at first. Does downtown need a hardware store? The answer was a resounding yes.
Once the need was established, Hisarlik needed to analyze the make up of its customers, who and how many. Who is the potential customer? How many potential customers are there?
Once it was determined that there was a need and who the customer is, the next step was to figure out how to make them Hisarlik Hardware customers. How to get the potential customer in the store?
There are six major market segments:
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
Downtown Residents | 0% | 450,000 | 450,000 | 450,000 | 450,000 | 450,000 | 0.00% |
Property Managers | 0% | 297,000 | 297,000 | 297,000 | 297,000 | 297,000 | 0.00% |
Contractors | 0% | 255,000 | 255,000 | 255,000 | 255,000 | 255,000 | 0.00% |
Downtown Businesses | 0% | 180,000 | 180,000 | 180,000 | 180,000 | 180,000 | 0.00% |
Suburban Commuters | 0% | 110,000 | 110,000 | 110,000 | 110,000 | 110,000 | 0.00% |
Commercial Sales | 0% | 38,930 | 38,930 | 38,930 | 38,930 | 38,930 | 0.00% |
Total | 0.00% | 1,330,930 | 1,330,930 | 1,330,930 | 1,330,930 | 1,330,930 | 0.00% |
Each market segment is unique and requires different marketing to attract them.
Downtown residents have already expressed the need for a local hardware store, as is documented in the April 2003 issue of Wilusa Magazine . Residents recognize the need and will be supportive of a retailer answering their concerns. The data that has been supplied to Hisarlik Hardware (by Yorikle, a market research firm used by Building Blocks ) shows there is a population of nearly 53,000 people and more than 20,000 households within two miles of the proposed location. The analysis provided by Yorikle states the area could support a 19,000 sq. ft. store. We are proposing a 9,500 sq. ft. store. In other words, there is enough business in this area to support a store twice the proposed size. The report has also found there is more than $2.5 million of potential sales revenue, based on the number of households alone (not including any of the other segments). The potential is expected to grow to more than $3.0 million by 2007.
Hisarlik Hardware believes the key to the need analysis is that all of the research and potential was measured by households, and households only. The households only make up one segment of the potential business the store expects to generate.
When Hector Priamson initially looked at the hardware business, one of the most important factors was the fact this industry seems to be immune to significant fluctuations in the economy. Based on information from the US Department of Commerce, the home improvement retailing industry has consistently grown at a rate of 7% for the past decade and similar growth is expected for the foreseeable future.
In the 1990’s the growth in the industry was attributable to strong home sales, economic prosperity, and significant amounts of home renovation. Since 2000, growth has stayed at the same levels even though some of these factors have changed. Growth since the year 2000 was attributable to low interest rates and refinancing. According to the Federal Reserve Board, 35% of all refinancing goes to home improvement.
What does the future hold? 93% of all Americans plan to stay in their current homes and 78% of homeowners plan to undertake home improvement projects in the next year. How much will they spend? 69% of homeowners plan to spend as much or more in the coming year than they did last year. Home improvement budgets have grown 31% since the year 2000.
Hisarlik Hardware is being encouraged by Building Blocks to enter the equipment and party rental business upon opening the store. Based on conversations with other members, the rental component has been an overwhelming success adding to cash flow of the business as well as increasing traffic to the store. Reports of success unanimously talk about the fact that “renters” need tools and accessories to go with the rental equipment adding to the overall profitability of the store.
In the downtown market, the make-up of the rental inventory will vary a bit from what a suburban store might have. Hisarlik Hardware will work with the Building Blocks Rental people to determine the inventory. Hisarlik will rely on the knowledge and expertise of Building Blocks.
An investmentm is required upon opening for the initial purchase of the equipment to rent. Building Blocks has the necessary training and computer support to make this a very logical addition to the traditional hardware store.
The “Big Boxes”, such as Lowe’s, Menard’s, and Home Depot have had a significant effect on the Home Improvement industry. According to the National Retail Hardware Association, based in Wilusa, the Big Boxes have expanded the market, increasing consumer participation in home improvement. However, the National Retail Hardware Association feels that the Big Boxes are nearing a saturation point, and in the future, they cannot open many more stores without it affecting and threatening other current Big Box locations.
“This competition has not kept independent hardware stores, home centers, and lumberyards from prospering. These stores are much more professionally operated than they were just a decade ago, and most posted strong profits last year.” —NRHA, 2004 Market Measure
Independent Hardware stores need to focus on their strengths.
Service. 88% of consumers have a favorable opinion of small business vs. 61% for big business (the lowest since 1993).
Convenience. Consumers want to get everything they need in one trip to the store. The Independent hardware stores are able to do this, because they work with their customers.
“There are four ways to compete
But price is only one of them.” —M. Chandler, a retail industry consultant
There is no immediate local competition. The nearest hardware store is 1.8 miles away on South Hasan Dag Avenue. The store is a small, 4,000 sq. ft., and isn’t current in its products or presentation.
Because of the lack of product and poor shopping presentation, residents do not consider this an option for hardware. The next closest hardware store is 2.7 miles away. There are several stores that are 3 to 4 miles from the proposed site. Studies say customers do not want to travel more than 3-7 minutes to a location. While these stores could serve the need, their location does not make them a viable option to downtown residents because of distance and neighborhoods.
The “Big Box” stores such as Lowe’s, Home Depot, and Menard’s are built to serve suburban Wilusa. The closest Lowe’s is 12.5 miles and 17 minutes west of Hisarlik Hardware’s proposed location. The nearest Home Depot is 10.5 miles or 16 minutes west of Hisarlik . Menard’s is 9.3 miles and 14 minutes east of the location. There are no stores that are convenient to the downtown market. To get to any of these, customers must plan on spending 30-40 minutes of driving roundtrip at a minimum before even walking into the store. Hisarlik Hardware will be a 2-3 mile drive or 5-10 minutes maximum travel to the store. This convenience will be a major selling point for the business.
From discussions between Hisarlik Hardware and the parent company of Building Blocks , regarding the possibility of a “Big Box” store opening in the downtown area, it seems unlikely due to the size of the potential market, cost, and lack of real estate, to build such a structure in Arazawa Township.
An analysis of competitors in the equipment and party rental field is similar to that of the hardware industry. There is one competitor that is southeast of downtown, 1.5 miles from the proposed location. The company, Best Rentals, Inc., handles equipment and party rentals.
Tent rental has one competitor that is downtown. An factor in tent rental may be the clean new equipment and, once again, great service available from Hisarlik . American Tent and Awning is located 1.8 miles from the proposed location. One advantage for Hisarlik in tent/party rental is that a customer can cover more bases with the variety of equipment and supplies from a rental and hardware store versus a company that focuses solely on tent rental.
The closest tool rental company is 2.3 miles from the proposed location. Hisarlik Hardware feels that significant progress can be made into the tool rental business because of convenience. Hisarlik expects to be a fantastic solution for contractors working downtown who need equipment for the day or for the project. Residents downtown have smaller homes and condominiums, consequently they do not have room to own bulky or large quantities of equipment. This is expected to be a benefit for the rental business.
Emphasize Customer Service
Hisarlik Hardware will build a reputation of fantastic customer service, building upon what Building Blocks stores and the Building Blocks brand have already established. We will establish our business, by offering a clear cut leader in retail hardware in downtown Wilusa.
Build a Relationship-Oriented Business
Fantastic service will lead to long term loyal relationships with our customers and clients. The goal is to have our customer base become reliant on Hisarlik to stock items and have solutions for their needs. The customers will soon understand the value of the relationship.
Focus on Target Markets
Hisarlik will focus on the market segments identified earlier in this document. Each of the market segments will have sales initiatives to focus on each group.
Differentiate and Fulfill the Promise
Hisarlik Hardware can’t just market and sell products and services, we must actually deliver as well. We need to make sure we have the knowledge-intensive business and service-intensive business we claim to have. This service has to be consistent and deliver what the customer is looking for.
The Building Blocks Power Events are advertising programs supported by national advertising during peak buying periods for planned home care products. Power Events focus on those high traffic times of the year with a multimedia campaign. A strong mix of national television and radio advertising, circulars, Sunday supplements, and POP sign kits deliver a sense of urgency to visit the store. A small 8-page and large 12-page circular are available for each Power Event to help carry the theme and promote the sale. There are four Power Events each year.
Hisarlik Hardware will also place ads in the Yellow Pages. The Yellow Pages continue to be a source of a good number of customers.
Hisarlik Hardware will also rely on the media to help spread the word about this new business downtown. Fox Television’s local morning TV show goes on location to promote local businesses. Radio can be used in many different ways, radio remotes for the opening of the store. Wilusa Magazine has already identified an issue, a follow up story is very appropriate. The Wilusa Star covers new and significant businesses in Wilusa, Hisarlik feels this store will fit that description.
Every person is a potential customer of a hardware store. Hisarlik Hardware will carry items everyone needs. The average household spends $135 per year on items found in a hardware store according to Yorikle, a research firm retained by Building Blocks . The key to getting the potential customer to spend their $135 or more in Hisarlik Hardware are include the following attributes:
All of these attributes will be present in Hisarlik Hardware. In order to be convenient, Hisarlik will have to adapt to its environment, the location will be key to making it easy for customers to get to the store. The store must also be open when the customers arrive. In addition, a delivery service will be available to make it easier for regular customers to not have to leave what they are doing to get the products they need. There will also be accounts set up to make it easier for regular customers to get items, without having to deal with petty cash, company credit cards, or company checks for each visit to the store.
Customers expect to get great service at Building Blocks Hardware stores, which is evidenced by the fact 50% of all hardware shoppers will avoid the “Big Box” retailers and opt instead for the personal service like Hisarlik Hardware . We will also need to be reliable, which means that customers will depend on us to inventory what they need and understand and anticipate their needs. Customers want to come into a hardware store having the confidence they will find what they need. The store will possess a knowledgeable and friendly staff. The staff has to understand and interpret what the customer needs and find the product that will fit that need. Hisarlik Hardware will also be progressive, by that we mean we will continue to evolve and understand what the customer needs and develop new markets where the need exists.
Hisarlik Hardware will be offering a convenient solution which all downtown residents need. Customers will be introduced to Hisarlik through targeted advertising, direct mail, signage, and word of mouth. Hisarlik will also take advantage of all the Building Blocks programs that help create loyalty and awareness among the potential customers in the market.
The direct sales force will consist of two seasoned sales people led by Hector Priamson. The focus will be on property managers and all downtown businesses to create an awareness of the store location and the fact that the store is a potential solution for retail hardware needs.
Glaucus Sarpedon will also work on the commercial accounts and government accounts located in the downtown market.
The sales projections start in the month of March, 2004. Sales steadily increase along with the awareness of the store through September. In September, there is a small dip in sales then a steady rise through the Christmas season and December the stores best month of the year. There is a traditional slow season that runs through January and February each year. The goal of Hisarlik Hardware will be to develop programs that take as much slack out of the sales as possible and get them in line with the rest of the sales year.
Sales are estimated by Building Blocks to be $125 to $175 per square foot of the total area of the store. The Gross Margin will range from 40% to 45%. There is a 25% growth predicted for the second year of sales driven by awareness, growth in rentals and growth in commercial sales.
The immediate goal is to achieve robust sales in the first year. It is thought that double digit percentage total sales increases can be achieved and maintained throughout the five years of this business plan.
Sales Forecast | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Sales | |||||
Monthly Net Sales | $1,410,502 | $1,757,402 | $2,108,883 | $2,214,327 | $2,325,043 |
Rental | $38,930 | $50,609 | $65,792 | $85,529 | $111,188 |
Other | $27,471 | $32,965 | $39,558 | $43,514 | $47,865 |
Total Sales | $1,476,903 | $1,840,977 | $2,214,233 | $2,343,370 | $2,484,097 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Cost of Goods Sold | $818,091 | $1,019,293 | $1,223,152 | $1,284,310 | $1,348,525 |
Other | $0 | $0 | $0 | $0 | $0 |
Subtotal Direct Cost of Sales | $818,091 | $1,019,293 | $1,223,152 | $1,284,310 | $1,348,525 |
Building Blocks has loyalty programs like Building Blocks Rewards that Hisarlik Hardware will participate in. This program has been developed to build a loyal following of customers that use the card for shopping benefits.
By the second year accounts will be set up for businesses, property managers, and contractors to make shopping easy for them. This program will allow these customers to shop and make it easy for them to pay for items on account. This program will have to be managed very carefully, and Hector Priamson’s financial background will prove to be very useful in managing these accounts.
Hisarlik Hardware has already contacted Scamander’s Food Market and have the word of the General Store Manager that they would be interested in developing programs to work together with Hisarlik for the betterment of both businesses. Both will stand to benefit from each other.
Hisarlik True Value has worked with True Value to establish a realistic time line to work within to have the store open for business in March of 2004. The time line is listed in the Milestones table below.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Research Feasibility | 9/1/2003 | 11/15/2003 | $0 | Hector Priamson | Department |
Prepare Business Plan | 10/15/2003 | 12/1/2003 | $500 | Hector Priamson | Department |
Secure Financing | 11/15/2003 | 12/15/2003 | $0 | Hector Priamson | Department |
Finalize the Lease | 12/15/2003 | 12/15/2003 | $0 | Hector Priamson | Department |
Sign Building Blocks Member Agreement | 12/15/2003 | 1/15/2004 | $6,000 | Hector Priamson | Department |
Start Work on Interior of Proposed Site | 12/15/2003 | 2/1/2004 | $4,000 | Hector Priamson | Department |
Review Fixture Layout Plan | 12/20/2003 | 1/15/2004 | $0 | Hector Priamson | Department |
Order Exterior Signage | 12/22/2003 | 1/15/2004 | $25,000 | Hector Priamson | Department |
Order Fixtures | 12/23/2003 | 12/23/2003 | $50,000 | Hector Priamson | Department |
Begin Interviewing and Hiring Employees | 1/15/2004 | 3/1/2004 | $0 | Hector Priamson | Department |
Initial Merchandise Order is Placed | 1/5/2004 | 1/15/2004 | $0 | Hector Priamson | Department |
Leasehold Improvements Complete | 1/15/2004 | 2/1/2004 | $0 | Hector Priamson | Department |
Order Interior Signage | 1/15/2004 | 2/1/2004 | $7,500 | Hector Priamson | Department |
Fixtures Arrive | 1/25/2004 | 2/1/2004 | $0 | Hector Priamson | Department |
Merchandise Arrives | 2/5/2004 | 2/15/2004 | $0 | Hector Priamson | Department |
Merchandisers Set Up Store | 2/10/2004 | 2/25/2004 | $0 | Hector Priamson | Department |
Exterior Signage Installed | 2/10/2004 | 2/15/2004 | $0 | Hector Priamson | Department |
Run Local Advertising | 3/1/2004 | 3/15/2004 | $0 | Hector Priamson | Department |
Open Informally | 3/10/2004 | 3/14/2004 | $0 | Hector Priamson | Department |
Grand Opening | 3/14/2004 | 3/15/2004 | $0 | Hector Priamson | Department |
Totals | $93,000 |
The competitive edge has been covered throughout this document. Location is the biggest key to this business. There are no true competitors in our business in downtown Wilusa. Our future customers have had to work harder to get the same or lesser service less conveniently. We will be in their back yard and be easy to work with and have products they need.
Hisarlik Hardware have staff that understand customer service and how to treat customers so that they want to shop in the Hisarlik Hardware environment.
Obviously, we are in the age of computers and the Internet. Customers are ultimately looking for the simplest, most reliable, and least consuming way to get the goods and services they need.
Therefore, a Web strategy is important to keep up with the changing world and stay ahead of potential competition. Customers that buy on the Internet do not care where a business is located, so it is important that a name and a reputation be established that customers can rely on whether it is in the store or on the Internet.
Building Blocks has a sensational program for their members. It allows a member to establish their own website with member information and use the established product background linked to buildingblockshardware.com. Customers can then go on line and order products very easily. This is a program that a normal small business could not afford to invest in.
The Internet is also a valuable communication tool with customers. The site includes a custom home page, store location along with a map, store hours, services and selection, in-store coupons, 1,000 item in-store catalog, and as many custom pages as a member needs.
Hisarlik Hardware will be managed by Hector Priamson on a day-to-day basis. He will devote 100% of his time to this venture. There are two key employees joining Hector in this venture, Penthesilea Thracian and Glaucus Sarpedon.
Hisarlik expects that there will be up to 17 employees in total, some full time and others part time.
Hisarlik Hardware will be managed, organized, and run by Hector Priamson. The company will have three key employees, Hector, Penthesilea (Penthe) Thracian, and Glaucus (Glus) Sarpedon. These three all know each other very well, Penthe and Glus having worked for Hector in the past in the oarsports industry. They bring a unique set of skills to this venture which will prove invaluable in the future.
The company will be organized with Hector Priamson as its president. He will be responsible for all of the financial affairs, inventory management, cash management, manage the cashier staff, advertising, marketing, as well as the day-to-day contact with Building Blocks . Hector will also have relationships with attorneys and accountants to stay on top of all business matters. Additionally, he will also manage the day-to-day operation of the rental business. While this seems like a lot, these are routine tasks Hector has performed for many different companies for many years. As good as Hector is, he can’t do it all. He will rely on two former employees from his.
Penthesilea Thracian has been in the oarsports business for the better part of 30 years. She is looking for a change and Hisarlik Hardware is just what she had in mind. Penthe has managed teams, and developed and run programs from the ground up. Her experience led her to winning the 1981 Salamis 500 as the crew chief of Al Cibiades’ trireme at Dardanelles Racing. Working with large companies and manufacturers that wanted absolute accountability in their programs, Penthe was the gal that was brought in to handle it. Over the past 5 years, she has added another unique skill that will nicely complement her mechanical skills; hospitality. Penthe managed the hospitality program for Corinth Racing. That job really entailed looking after people and providing great service, a skill that will be invaluable for Hisarlik Hardware .
Glaucus Sarpedon is an extremely driven young man who graduated from Hattusili University. Glus decided he wanted to work in oarsports. When he put his mind to it, that is exactly where he ended up. He joined Dardanelles Racing where he worked in the hospitality area, also gaining the valuable service quality that will be necessary for this new role. He also had the responsibility of moving, setting up, and servicing the complete hospitality fleet. He has mechanical skills that he will bring with him as well. Glus also filled the role of Team Coordinator, this role is the “quarterback” of the organization. He was responsible for anticipating what the team was going to need, when they would need it, and how much they would need. Glus will be a huge asset to the company.
Each of these folks have departments that will be assigned to them and a staff that will help them manage the departments. They will be responsible for hiring the staff that will report directly to them. Hisarlik Hardware will also develop an incentive plan rewarding successful departments and department sales growth. The experience and trust Hector Priamson has in these two individuals will allow him to focus on managing the business.
A review of potential gaps in the experience or know-how of this venture does not show any glaring weaknesses. Hisarlik Hardware ‘s Achilles heel is the lack of actual hardware store business experience. While the three key individuals do not have that direct experience, they will draw heavily upon the instruction, training, and specialist support available from the Building Blocks co-op organization. Building Blocks is in the business of passing on their experience and knowledge to assist their members to be be successful.
The personnel plan was developed in conjunction with Building Blocks and some consulting with the folks at Konya Building Blocks Hardware in Catalhoyuk.
The plan was developed so there are at least 2 managers, 1 cashier, and 2 specialists on duty at all times. The average number of people working at any one time is between 5.5 and 7.1 on busy Saturdays. All employees will have the ability and knowledge to run the cash registers.
Hector Priamson, Penthesilea Thracian and Glaucus Sarpedon will start with base pay as laid out in the following table. The cashiers will be paid $7-$8 per hour. Full-time specialist staff will be paid between $9 and $10 per hour. Other part-time help will be paid $6 per hour.
It is felt there is a pool of retired “handy men” that can fill many of these roles. The $6 per hour employees are thought to be high school or college kids.
Employee hiring will start in January, training will begin in February and work in March.
Personnel Plan | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
President (Hector Priamson) | $55,000 | $60,000 | $65,000 | $70,000 | $75,000 |
General Manager (Penthesilea Thracian) | $40,000 | $45,000 | $50,000 | $55,000 | $55,000 |
Asst. Gen. Manager (Glaucus Serpadon) | $35,000 | $40,000 | $45,000 | $45,000 | $45,000 |
Cashiers | $27,876 | $28,852 | $29,861 | $30,907 | $31,988 |
Specialists | $90,348 | $99,383 | $109,321 | $113,147 | $117,107 |
Other | $0 | $0 | $0 | $0 | $0 |
Total People | 17 | 20 | 20 | 21 | 21 |
Total Payroll | $248,224 | $273,234 | $299,183 | $314,054 | $324,096 |
The business will need substantial start-up capital. It is expected that a good portion of that amount will be secured through SBA financing.
Sales are expected to start conservatively the first year and increase steadily through the fifth year of operations. Operating income will pay back the start-up loan over a seven year amortization.
Inventory Turnover ratios are predicted to be in excess of 4.3. The goal will be to get this ratio to exceed 5.0. To do that Hisarlik will be required to purchase smartly and drive sales.
Cash will be retained in the business to cover cash operating needs as well as future expansion of other Hisarlik Hardware locations.
It is expected that dividends will be paid to the investors annually. The amount of the dividends is estimated to be 50% of profits.
After the first year of operations, it is expected that Hector Priamson will be able to trim expenses in the business as efficiency, experience, and knowledge work together and help the business operate better. Estimates are extremely conservative in the budgeting process.
Hector Priamson will invest cash, benefits and labor to the start up.
Troy Enterprises is in the process of negotiating with potential investors for the seed cash needed to start the business. It is expected that a tidy sum will be raised to start the business. It is expected that no more than 15% interest will be given to each investor.
Bank Financing
Troy Enterprises is submitting business plans and other requested documents to financial institutions in pursuit of the additional money needed to finance the rest of the company and provide operating cash for the business. It is expected that the loan will be a part of the SBA 7(a) program. It is assumed that the terms of the loan will require repayment in 7 years, at a rate of 8%.
Start-up Funding | |
Start-up Expenses to Fund | $83,332 |
Start-up Assets to Fund | $716,668 |
Total Funding Required | $800,000 |
Assets | |
Non-cash Assets from Start-up | $620,504 |
Cash Requirements from Start-up | $96,164 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $96,164 |
Total Assets | $716,668 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $625,000 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $625,000 |
Capital | |
Planned Investment | |
Hector Priamson | $50,000 |
Investor 1 | $75,000 |
Investor 2 | $50,000 |
Additional Investment Requirement | $0 |
Total Planned Investment | $175,000 |
Loss at Start-up (Start-up Expenses) | ($83,332) |
Total Capital | $91,668 |
Total Capital and Liabilities | $716,668 |
Total Funding | $800,000 |
The table below presents the assumptions used in the financial calculations of this business plan.
General Assumptions | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Plan Month | 1 | 2 | 3 | 4 | 5 |
Current Interest Rate | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% |
Long-term Interest Rate | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% |
Tax Rate | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% |
Other | 0 | 0 | 0 | 0 | 0 |
As shown in the Benchmarks chart below, our key financial indicators are:
The Break-even Analysis has determined approximate break-even sales as shown below. There will be a constant monitor on this number in an attempt to lower it. Once again, it is believed that efficiencies, experience, and knowledge will help in decreasing the break-even number.
Sales are expected to be well in excess of this number for each month.
Break-even Analysis | |
Monthly Revenue Break-even | $102,932 |
Assumptions: | |
Average Percent Variable Cost | 55% |
Estimated Monthly Fixed Cost | $45,915 |
The Profit and Loss statement makes it very clear which areas will need attention. Payroll is by far the largest expense the company incurs (besides cost of goods sold). Staff will need to be managed and hours regulated so that hours worked correlate to sales. Emphasis will be placed on minimizing expenses that do not help generate bottom line.
The company generates a profit as sales revenue gets above the break-even line. A push on sales will be very important in generating bottom line profits. Interest expense is also a large line item that diminishes over time, but is a necessary expense on the front end of the business.
Pro Forma Profit and Loss | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Sales | $1,476,903 | $1,840,977 | $2,214,233 | $2,343,370 | $2,484,097 |
Direct Cost of Sales | $818,091 | $1,019,293 | $1,223,152 | $1,284,310 | $1,348,525 |
Other Costs of Goods | $0 | $0 | $0 | $0 | $0 |
Total Cost of Sales | $818,091 | $1,019,293 | $1,223,152 | $1,284,310 | $1,348,525 |
Gross Margin | $658,812 | $821,683 | $991,081 | $1,059,061 | $1,135,572 |
Gross Margin % | 44.61% | 44.63% | 44.76% | 45.19% | 45.71% |
Expenses | |||||
Payroll | $248,224 | $273,234 | $299,183 | $314,054 | $324,096 |
Account Name | $0 | $0 | $0 | $0 | $0 |
Depreciation | $48,021 | $48,021 | $48,021 | $48,021 | $48,021 |
Advertising Expense-Circulars | $15,136 | $18,867 | $22,693 | $24,016 | $25,458 |
Advertising Expense-Newspapers | $3,397 | $4,234 | $5,093 | $5,390 | $5,713 |
Advertising Expense-Yellow Pages | $2,604 | $2,604 | $2,604 | $2,604 | $2,604 |
Advertising Expense-National | $7,680 | $9,573 | $11,514 | $12,186 | $12,917 |
Lease | $114,638 | $125,424 | $134,933 | $144,442 | $153,951 |
Utilities | $9,000 | $9,250 | $9,500 | $9,750 | $10,000 |
Telephone | $4,431 | $5,523 | $6,643 | $7,030 | $7,452 |
Accounting and Legal | $6,384 | $7,661 | $9,193 | $11,032 | $13,238 |
Store and Office Supplies | $14,769 | $18,410 | $18,821 | $19,919 | $21,115 |
Insurance | $10,032 | $10,338 | $10,648 | $10,967 | $11,296 |
Delivery Vehicle Expense | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 |
Payroll Taxes | $22,321 | $24,591 | $26,926 | $28,265 | $29,169 |
Employee Benefits | $16,428 | $18,071 | $19,426 | $20,883 | $22,449 |
State Property Tax Expense | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 |
Travel | $2,871 | $3,000 | $3,200 | $3,500 | $4,000 |
Other | $16,548 | $17,052 | $18,600 | $20,400 | $21,600 |
Total Operating Expenses | $550,984 | $604,353 | $655,497 | $690,957 | $721,579 |
Profit Before Interest and Taxes | $107,828 | $217,330 | $335,584 | $368,104 | $413,992 |
EBITDA | $155,849 | $265,351 | $383,605 | $416,125 | $462,013 |
Interest Expense | $47,148 | $41,783 | $35,771 | $29,260 | $22,208 |
Taxes Incurred | $18,204 | $52,664 | $89,944 | $101,653 | $117,535 |
Other Income | |||||
Interest Income | $0 | $0 | $0 | $0 | $0 |
Other Income Account Name | $0 | $0 | $0 | $0 | $0 |
Total Other Income | $0 | $0 | $0 | $0 | $0 |
Other Expense | |||||
Account Name | $0 | $0 | $0 | $0 | $0 |
Other Expense Account Name | $0 | $0 | $0 | $0 | $0 |
Total Other Expense | $0 | $0 | $0 | $0 | $0 |
Net Other Income | $0 | $0 | $0 | $0 | $0 |
Net Profit | $42,476 | $122,883 | $209,869 | $237,191 | $274,249 |
Net Profit/Sales | 2.88% | 6.67% | 9.48% | 10.12% | 11.04% |
The company generates a net positive cash flow in its first year. It is assumed that Accounts Payable will be repaid in 45 days. Repayment of debt is a significant factor in the amount of cash that gets paid out. Long-term debt is on a 7-year amortization.
Dividends are paid in December of each year. The assumption is that 50% of profits are paid out to shareholders and investors.
Pro Forma Cash Flow | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Cash Received | |||||
Cash from Operations | |||||
Cash Sales | $1,476,903 | $1,840,977 | $2,214,233 | $2,343,370 | $2,484,097 |
Subtotal Cash from Operations | $1,476,903 | $1,840,977 | $2,214,233 | $2,343,370 | $2,484,097 |
Additional Cash Received | |||||
Non Operating (Other) Income | $0 | $0 | $0 | $0 | $0 |
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 | $0 | $0 |
Subtotal Cash Received | $1,476,903 | $1,840,977 | $2,214,233 | $2,343,370 | $2,484,097 |
Expenditures | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Expenditures from Operations | |||||
Cash Spending | $248,224 | $273,234 | $299,183 | $314,054 | $324,096 |
Bill Payments | $998,841 | $1,351,063 | $1,682,641 | $1,761,830 | $1,851,152 |
Subtotal Spent on Operations | $1,247,065 | $1,624,298 | $1,981,824 | $2,075,884 | $2,175,248 |
Additional Cash Spent | |||||
Non Operating (Other) Expense | $0 | $0 | $0 | $0 | $0 |
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $66,629 | $72,159 | $78,148 | $84,634 | $91,659 |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 |
Dividends | $21,311 | $61,442 | $104,935 | $118,596 | $137,125 |
Subtotal Cash Spent | $1,335,005 | $1,757,898 | $2,164,906 | $2,279,113 | $2,404,032 |
Net Cash Flow | $141,898 | $83,078 | $49,327 | $64,257 | $80,065 |
Cash Balance | $238,062 | $321,140 | $370,467 | $434,724 | $514,789 |
The balance sheet is very straight forward. No significant purchases of assets are expected or anticipated.
Using Building Blocks’ IAIS, online ordering, and weekly delivery systems allows Hisarlik Hardware to restock inventory in a just-in-time fashion. Inventory levels will be maintained with re-orders tied to Cost of Goods Sold. Additional inventory purchases will be made one month prior to participation in the quarterly Building Blocks nationally advertised Power Event sales. The first Power Event coincides with Hisarlik Hardware’s Grand Opening. Inventory will be allowed to drop somewhat at the end of December, after the Holiday purchasing, and for year-end tax accounting purposes.
There is a possibility of rental purchases in the future if the right products are found to add to the current inventory.
Pro Forma Balance Sheet | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Assets | |||||
Current Assets | |||||
Cash | $238,062 | $321,140 | $370,467 | $434,724 | $514,789 |
Inventory | $334,000 | $330,689 | $396,826 | $419,970 | $445,190 |
Other Current Assets | $30,400 | $30,400 | $30,400 | $30,400 | $30,400 |
Total Current Assets | $602,462 | $682,229 | $797,693 | $885,094 | $990,379 |
Long-term Assets | |||||
Long-term Assets | $246,104 | $246,104 | $246,104 | $246,104 | $246,104 |
Accumulated Depreciation | $48,021 | $96,042 | $144,063 | $192,084 | $240,105 |
Total Long-term Assets | $198,083 | $150,062 | $102,041 | $54,020 | $5,999 |
Total Assets | $800,545 | $832,291 | $899,734 | $939,114 | $996,378 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
Current Liabilities | |||||
Accounts Payable | $129,341 | $171,805 | $212,461 | $217,880 | $229,679 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $129,341 | $171,805 | $212,461 | $217,880 | $229,679 |
Long-term Liabilities | $558,371 | $486,212 | $408,064 | $323,430 | $231,771 |
Total Liabilities | $687,712 | $658,017 | $620,525 | $541,310 | $461,450 |
Paid-in Capital | $175,000 | $175,000 | $175,000 | $175,000 | $175,000 |
Retained Earnings | ($104,643) | ($123,609) | ($105,660) | ($14,387) | $85,679 |
Earnings | $42,476 | $122,883 | $209,869 | $237,191 | $274,249 |
Total Capital | $112,833 | $174,274 | $279,209 | $397,804 | $534,928 |
Total Liabilities and Capital | $800,545 | $832,291 | $899,734 | $939,114 | $996,378 |
Net Worth | $112,833 | $174,274 | $279,209 | $397,804 | $534,928 |
The Ratio Analysis looks very encouraging. Industry Profile data is based on Standard Industrial Classification code 5252, Hardware Stores.
Ratio Analysis | ||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile | |
Sales Growth | 0.00% | 24.65% | 20.27% | 5.83% | 6.01% | 5.13% |
Percent of Total Assets | ||||||
Inventory | 41.72% | 39.73% | 44.10% | 44.72% | 44.68% | 47.00% |
Other Current Assets | 3.80% | 3.65% | 3.38% | 3.24% | 3.05% | 22.34% |
Total Current Assets | 75.26% | 81.97% | 88.66% | 94.25% | 99.40% | 82.03% |
Long-term Assets | 24.74% | 18.03% | 11.34% | 5.75% | 0.60% | 17.97% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 16.16% | 20.64% | 23.61% | 23.20% | 23.05% | 31.52% |
Long-term Liabilities | 69.75% | 58.42% | 45.35% | 34.44% | 23.26% | 21.36% |
Total Liabilities | 85.91% | 79.06% | 68.97% | 57.64% | 46.31% | 52.88% |
Net Worth | 14.09% | 20.94% | 31.03% | 42.36% | 53.69% | 47.12% |
Percent of Sales | ||||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 44.61% | 44.63% | 44.76% | 45.19% | 45.71% | 34.51% |
Selling, General & Administrative Expenses | 41.72% | 37.96% | 35.28% | 35.07% | 34.67% | 21.03% |
Advertising Expenses | 1.02% | 1.02% | 1.02% | 1.02% | 1.02% | 1.71% |
Profit Before Interest and Taxes | 7.30% | 11.81% | 15.16% | 15.71% | 16.67% | 2.01% |
Main Ratios | ||||||
Current | 4.66 | 3.97 | 3.75 | 4.06 | 4.31 | 2.22 |
Quick | 2.08 | 2.05 | 1.89 | 2.13 | 2.37 | 0.67 |
Total Debt to Total Assets | 85.91% | 79.06% | 68.97% | 57.64% | 46.31% | 56.39% |
Pre-tax Return on Net Worth | 53.78% | 100.73% | 107.38% | 85.18% | 73.24% | 4.50% |
Pre-tax Return on Assets | 7.58% | 21.09% | 33.32% | 36.08% | 39.32% | 10.32% |
Additional Ratios | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Net Profit Margin | 2.88% | 6.67% | 9.48% | 10.12% | 11.04% | n.a |
Return on Equity | 37.64% | 70.51% | 75.17% | 59.63% | 51.27% | n.a |
Activity Ratios | ||||||
Inventory Turnover | 2.38 | 3.07 | 3.36 | 3.14 | 3.12 | n.a |
Accounts Payable Turnover | 8.72 | 8.11 | 8.11 | 8.11 | 8.11 | n.a |
Payment Days | 40 | 39 | 41 | 44 | 44 | n.a |
Total Asset Turnover | 1.84 | 2.21 | 2.46 | 2.50 | 2.49 | n.a |
Debt Ratios | ||||||
Debt to Net Worth | 6.09 | 3.78 | 2.22 | 1.36 | 0.86 | n.a |
Current Liab. to Liab. | 0.19 | 0.26 | 0.34 | 0.40 | 0.50 | n.a |
Liquidity Ratios | ||||||
Net Working Capital | $473,121 | $510,424 | $585,232 | $667,214 | $760,700 | n.a |
Interest Coverage | 2.29 | 5.20 | 9.38 | 12.58 | 18.64 | n.a |
Additional Ratios | ||||||
Assets to Sales | 0.54 | 0.45 | 0.41 | 0.40 | 0.40 | n.a |
Current Debt/Total Assets | 16% | 21% | 24% | 23% | 23% | n.a |
Acid Test | 2.08 | 2.05 | 1.89 | 2.13 | 2.37 | n.a |
Sales/Net Worth | 13.09 | 10.56 | 7.93 | 5.89 | 4.64 | n.a |
Dividend Payout | 0.50 | 0.50 | 0.50 | 0.50 | 0.50 | n.a |
The long term plan is to develop a steady retail hardware business in the downtown Wilusa market. As discussed, there is currently no competition. They key will be to establish a solid business to discourage any competition from coming into the market or creating a level of loyalty that will not be fazed by competition.
After two solid years of performance and establishment of Hisarlik Hardware , there are two areas of potential expansion. First, look for opportunities in the current market. What businesses can be combined logically with what has been established that will deliver additional bottom line profit. Secondly, a second location will be developed in a new part of Wilusa. An area that will deliver a similar characteristic to the first store that appears to be headed down the road of success.
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | |||||||||||||
Monthly Net Sales | 0% | $91,241 | $99,041 | $106,241 | $121,759 | $122,972 | $125,793 | $122,579 | $127,490 | $137,524 | $152,076 | $105,152 | $98,634 |
Rental | 0% | $2,845 | $2,845 | $2,845 | $3,048 | $3,210 | $3,454 | $3,292 | $3,413 | $3,820 | $4,429 | $2,966 | $2,763 |
Other | 0% | $2,007 | $2,007 | $2,007 | $2,151 | $2,265 | $2,437 | $2,323 | $2,409 | $2,696 | $3,126 | $2,093 | $1,950 |
Total Sales | $96,093 | $103,893 | $111,093 | $126,958 | $128,447 | $131,684 | $128,194 | $133,312 | $144,040 | $159,631 | $110,211 | $103,347 | |
Direct Cost of Sales | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Cost of Goods Sold | $52,920 | $57,444 | $61,620 | $70,620 | $71,324 | $72,960 | $69,936 | $75,104 | $79,764 | $88,204 | $60,988 | $57,208 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Direct Cost of Sales | $52,920 | $57,444 | $61,620 | $70,620 | $71,324 | $72,960 | $69,936 | $75,104 | $79,764 | $88,204 | $60,988 | $57,208 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
President (Hector Priamson) | 0% | $4,583 | $4,583 | $4,583 | $4,583 | $4,583 | $4,583 | $4,583 | $4,583 | $4,583 | $4,583 | $4,583 | $4,587 |
General Manager (Penthesilea Thracian) | 0% | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,337 |
Asst. Gen. Manager (Glaucus Serpadon) | 0% | $2,916 | $2,916 | $2,916 | $2,916 | $2,916 | $2,916 | $2,916 | $2,916 | $2,916 | $2,916 | $2,916 | $2,924 |
Cashiers | 0% | $2,323 | $2,323 | $2,323 | $2,323 | $2,323 | $2,323 | $2,323 | $2,323 | $2,323 | $2,323 | $2,323 | $2,323 |
Specialists | 0% | $7,529 | $7,529 | $7,529 | $7,529 | $7,529 | $7,529 | $7,529 | $7,529 | $7,529 | $7,529 | $7,529 | $7,529 |
Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total People | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 17 | 17 | |
Total Payroll | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,700 |
General Assumptions | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Current Interest Rate | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | |
Long-term Interest Rate | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | |
Tax Rate | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | |
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | $96,093 | $103,893 | $111,093 | $126,958 | $128,447 | $131,684 | $128,194 | $133,312 | $144,040 | $159,631 | $110,211 | $103,347 | |
Direct Cost of Sales | $52,920 | $57,444 | $61,620 | $70,620 | $71,324 | $72,960 | $69,936 | $75,104 | $79,764 | $88,204 | $60,988 | $57,208 | |
Other Costs of Goods | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $52,920 | $57,444 | $61,620 | $70,620 | $71,324 | $72,960 | $69,936 | $75,104 | $79,764 | $88,204 | $60,988 | $57,208 | |
Gross Margin | $43,173 | $46,449 | $49,473 | $56,338 | $57,123 | $58,724 | $58,258 | $58,208 | $64,276 | $71,427 | $49,223 | $46,139 | |
Gross Margin % | 44.93% | 44.71% | 44.53% | 44.38% | 44.47% | 44.59% | 45.45% | 43.66% | 44.62% | 44.75% | 44.66% | 44.65% | |
Expenses | |||||||||||||
Payroll | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,700 | |
Account Name | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Depreciation | 4% | $4,002 | $4,002 | $4,002 | $4,002 | $4,002 | $4,002 | $4,002 | $4,002 | $4,002 | $4,002 | $4,002 | $4,002 |
Advertising Expense-Circulars | 3% | $2,783 | $293 | $293 | $2,783 | $293 | $293 | $1,953 | $293 | $2,783 | $2,783 | $293 | $293 |
Advertising Expense-Newspapers | 0% | $221 | $239 | $256 | $292 | $295 | $303 | $290 | $311 | $331 | $367 | $253 | $238 |
Advertising Expense-Yellow Pages | 0% | $217 | $217 | $217 | $217 | $217 | $217 | $217 | $217 | $217 | $217 | $217 | $217 |
Advertising Expense-National | 1% | $500 | $540 | $578 | $660 | $668 | $685 | $656 | $704 | $749 | $830 | $573 | $537 |
Lease | 10% | $9,553 | $9,553 | $9,553 | $9,553 | $9,553 | $9,553 | $9,553 | $9,553 | $9,553 | $9,553 | $9,553 | $9,553 |
Utilities | 1% | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 |
Telephone | 0% | $288 | $312 | $333 | $381 | $385 | $395 | $379 | $406 | $432 | $479 | $331 | $310 |
Accounting and Legal | 1% | $532 | $532 | $532 | $532 | $532 | $532 | $532 | $532 | $532 | $532 | $532 | $532 |
Store and Office Supplies | 1% | $961 | $1,039 | $1,111 | $1,270 | $1,284 | $1,317 | $1,262 | $1,353 | $1,440 | $1,596 | $1,102 | $1,033 |
Insurance | 1% | $836 | $836 | $836 | $836 | $836 | $836 | $836 | $836 | $836 | $836 | $836 | $836 |
Delivery Vehicle Expense | 1% | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 |
Payroll Taxes | 9% | $1,860 | $1,860 | $1,860 | $1,860 | $1,860 | $1,860 | $1,860 | $1,860 | $1,860 | $1,860 | $1,860 | $1,860 |
Employee Benefits | 1% | $1,369 | $1,369 | $1,369 | $1,369 | $1,369 | $1,369 | $1,369 | $1,369 | $1,369 | $1,369 | $1,369 | $1,369 |
State Property Tax Expense | 0% | $0 | $0 | $0 | $2,500 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Travel | 1% | $1,437 | $0 | $0 | $0 | $0 | $0 | $0 | $1,434 | $0 | $0 | $0 | $0 |
Other | 1% | $1,379 | $1,379 | $1,379 | $1,379 | $1,379 | $1,379 | $1,379 | $1,379 | $1,379 | $1,379 | $1,379 | $1,379 |
Total Operating Expenses | $47,872 | $44,105 | $44,252 | $49,568 | $44,608 | $44,675 | $46,222 | $46,183 | $47,418 | $47,737 | $44,234 | $44,110 | |
Profit Before Interest and Taxes | ($4,699) | $2,344 | $5,221 | $6,770 | $12,515 | $14,049 | $12,036 | $12,025 | $16,858 | $23,689 | $4,988 | $2,030 | |
EBITDA | ($697) | $6,346 | $9,223 | $10,772 | $16,517 | $18,051 | $16,038 | $16,027 | $20,860 | $27,691 | $8,990 | $6,031 | |
Interest Expense | $4,131 | $4,095 | $4,059 | $4,023 | $3,986 | $3,949 | $3,912 | $3,874 | $3,837 | $3,799 | $3,761 | $3,722 | |
Taxes Incurred | ($2,649) | ($525) | $349 | $824 | $2,559 | $3,030 | $2,437 | $2,445 | $3,906 | $5,967 | $368 | ($508) | |
Other Income | |||||||||||||
Interest Income | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Income Account Name | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Other Income | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Expense | |||||||||||||
Account Name | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Expense Account Name | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Other Expense | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Net Other Income | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Net Profit | ($6,181) | ($1,225) | $813 | $1,923 | $5,970 | $7,070 | $5,687 | $5,705 | $9,115 | $13,923 | $859 | ($1,185) | |
Net Profit/Sales | -6.43% | -1.18% | 0.73% | 1.51% | 4.65% | 5.37% | 4.44% | 4.28% | 6.33% | 8.72% | 0.78% | -1.15% |
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $96,093 | $103,893 | $111,093 | $126,958 | $128,447 | $131,684 | $128,194 | $133,312 | $144,040 | $159,631 | $110,211 | $103,347 | |
Subtotal Cash from Operations | $96,093 | $103,893 | $111,093 | $126,958 | $128,447 | $131,684 | $128,194 | $133,312 | $144,040 | $159,631 | $110,211 | $103,347 | |
Additional Cash Received | |||||||||||||
Non Operating (Other) Income | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $96,093 | $103,893 | $111,093 | $126,958 | $128,447 | $131,684 | $128,194 | $133,312 | $144,040 | $159,631 | $110,211 | $103,347 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,684 | $20,700 | |
Bill Payments | $0 | $41,380 | $79,105 | $88,519 | $92,797 | $94,318 | $104,264 | $98,138 | $101,208 | $111,491 | $99,990 | $87,632 | |
Subtotal Spent on Operations | $20,684 | $62,064 | $99,789 | $109,203 | $113,481 | $115,002 | $124,948 | $118,822 | $121,892 | $132,175 | $120,674 | $108,332 | |
Additional Cash Spent | |||||||||||||
Non Operating (Other) Expense | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $5,352 | $5,387 | $5,423 | $5,459 | $5,496 | $5,533 | $5,569 | $5,607 | $5,644 | $5,682 | $5,719 | $5,758 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $21,311 | $0 | $0 | |
Subtotal Cash Spent | $26,036 | $67,451 | $105,212 | $114,662 | $118,977 | $120,535 | $130,517 | $124,429 | $127,536 | $159,168 | $126,393 | $114,090 | |
Net Cash Flow | $70,057 | $36,442 | $5,881 | $12,296 | $9,470 | $11,149 | ($2,323) | $8,883 | $16,504 | $463 | ($16,182) | ($10,743) | |
Cash Balance | $166,221 | $202,663 | $208,543 | $220,840 | $230,310 | $241,459 | $239,136 | $248,020 | $264,524 | $264,987 | $248,805 | $238,062 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $96,164 | $166,221 | $202,663 | $208,543 | $220,840 | $230,310 | $241,459 | $239,136 | $248,020 | $264,524 | $264,987 | $248,805 | $238,062 |
Inventory | $344,000 | $344,000 | $344,000 | $354,000 | $344,000 | $344,000 | $354,000 | $344,000 | $354,000 | $354,000 | $324,000 | $324,000 | $334,000 |
Other Current Assets | $30,400 | $30,400 | $30,400 | $30,400 | $30,400 | $30,400 | $30,400 | $30,400 | $30,400 | $30,400 | $30,400 | $30,400 | $30,400 |
Total Current Assets | $470,564 | $540,621 | $577,063 | $592,943 | $595,240 | $604,710 | $625,859 | $613,536 | $632,420 | $648,924 | $619,387 | $603,205 | $602,462 |
Long-term Assets | |||||||||||||
Long-term Assets | $246,104 | $246,104 | $246,104 | $246,104 | $246,104 | $246,104 | $246,104 | $246,104 | $246,104 | $246,104 | $246,104 | $246,104 | $246,104 |
Accumulated Depreciation | $0 | $4,002 | $8,004 | $12,005 | $16,007 | $20,009 | $24,011 | $28,012 | $32,014 | $36,016 | $40,018 | $44,019 | $48,021 |
Total Long-term Assets | $246,104 | $242,102 | $238,101 | $234,099 | $230,097 | $226,095 | $222,094 | $218,092 | $214,090 | $210,088 | $206,087 | $202,085 | $198,083 |
Total Assets | $716,668 | $782,723 | $815,163 | $827,042 | $825,337 | $830,805 | $847,953 | $831,628 | $846,510 | $859,012 | $825,474 | $805,290 | $800,545 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | $0 | $77,588 | $116,640 | $133,129 | $134,959 | $139,954 | $155,564 | $139,121 | $153,904 | $162,936 | $142,467 | $127,143 | $129,341 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $0 | $77,588 | $116,640 | $133,129 | $134,959 | $139,954 | $155,564 | $139,121 | $153,904 | $162,936 | $142,467 | $127,143 | $129,341 |
Long-term Liabilities | $625,000 | $619,648 | $614,261 | $608,838 | $603,379 | $597,883 | $592,350 | $586,781 | $581,174 | $575,530 | $569,848 | $564,129 | $558,371 |
Total Liabilities | $625,000 | $697,236 | $730,901 | $741,967 | $738,338 | $737,837 | $747,914 | $725,902 | $735,078 | $738,466 | $712,315 | $691,272 | $687,712 |
Paid-in Capital | $175,000 | $175,000 | $175,000 | $175,000 | $175,000 | $175,000 | $175,000 | $175,000 | $175,000 | $175,000 | $175,000 | $175,000 | $175,000 |
Retained Earnings | ($83,332) | ($83,332) | ($83,332) | ($83,332) | ($83,332) | ($83,332) | ($83,332) | ($83,332) | ($83,332) | ($83,332) | ($104,643) | ($104,643) | ($104,643) |
Earnings | $0 | ($6,181) | ($7,406) | ($6,593) | ($4,670) | $1,301 | $8,371 | $14,058 | $19,763 | $28,878 | $42,802 | $43,661 | $42,476 |
Total Capital | $91,668 | $85,487 | $84,262 | $85,075 | $86,998 | $92,969 | $100,039 | $105,726 | $111,431 | $120,546 | $113,159 | $114,018 | $112,833 |
Total Liabilities and Capital | $716,668 | $782,723 | $815,163 | $827,042 | $825,337 | $830,805 | $847,953 | $831,628 | $846,510 | $859,012 | $825,474 | $805,290 | $800,545 |
Net Worth | $91,668 | $85,487 | $84,262 | $85,075 | $86,998 | $92,969 | $100,039 | $105,726 | $111,431 | $120,546 | $113,159 | $114,018 | $112,833 |
Long-term | ||||||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | |
Sales | $1,476,903 | $1,840,977 | $2,214,233 | $2,343,370 | $2,484,097 | $0 | $0 | $0 | $0 | $0 |
Cost of Sales | $818,091 | $1,019,293 | $1,223,152 | $1,284,310 | $1,348,525 | $0 | $0 | $0 | $0 | $0 |
Gross Margin | $658,812 | $821,683 | $991,081 | $1,059,061 | $1,135,572 | $0 | $0 | $0 | $0 | $0 |
Gross Margin % | 44.61% | 44.63% | 44.76% | 45.19% | 45.71% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Operating Expenses | $550,984 | $604,353 | $655,497 | $690,957 | $721,579 | $0 | $0 | $0 | $0 | $0 |
Operating Income | $107,828 | $217,330 | $335,584 | $368,104 | $413,992 | $0 | $0 | $0 | $0 | $0 |
Net Income | $42,476 | $122,883 | $209,869 | $237,191 | $274,249 | $0 | $0 | $0 | $0 | $0 |
Current Assets | $602,462 | $682,229 | $797,693 | $885,094 | $990,379 | $0 | $0 | $0 | $0 | $0 |
Long-term Assets | $198,083 | $150,062 | $102,041 | $54,020 | $5,999 | $0 | $0 | $0 | $0 | $0 |
Current Liabilities | $129,341 | $171,805 | $212,461 | $217,880 | $229,679 | $0 | $0 | $0 | $0 | $0 |
Long-term Liabilities | $558,371 | $486,212 | $408,064 | $323,430 | $231,771 | $0 | $0 | $0 | $0 | $0 |
Equity | $112,833 | $174,274 | $279,209 | $397,804 | $534,928 | $0 | $0 | $0 | $0 | $0 |
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Hardware stores are one of the cornerstones of a community. The products that hardware stores provide, contribute to the building of furniture, equipment, houses, stores, and infrastructure in a town or an area. These businesses are extremely important because they are places where professionals and DIYers gather and talk about the latest trade secrets.
These stores are also lucrative businesses because of their high profit margins. If you want to enter into the hardware business market, right now is especially a good time because of how DIY culture has grown and become popular among millennials.
In the next section of this article, we will go through all that you need to know on how to start a hardware store and the steps you need to take, to set up and run a professional business in this market.
Like with anything, the first step is preparation and planning. This step involves many things the most important of which is doing market research to find out the hardware needs of your target customers in your locality and how you can turn those needs into a profitable business. Another thing to take care of during the preparation phase is finding the right location for your business.
After we’ve given you all the information you need to prepare and plan your hardware business, the next step is taking care of legal stuff and finances. Follow us along as we delve deeper into this subject and give you detailed information on how you can start a hardware business and turn it into a success.
Starting any business in a new market requires planning and preparation, even if you are experienced in starting and running businesses. If you want to know how to start a hardware business, it’s no different than any other business. So, what does it actually mean to plan and prepare for your hardware business? This step involves doing market research, finding a market niche, developing a business plan, finding a location, staffing, and designing the layout of your shop.
After you have followed everything in our “How to Start a Hardware Store” guide, the next step is taking care of the legal status of your business. This step is different in every country and every locality. Therefore, our best advice in this regard is to consult a lawyer who specializes in commercial law. Alternatively, you can research laws for setting up a business in your locality.
The first and most important step in this regard that needs to be figured out is choosing a business structure. Common options are the following:
Each structure has its own legal and tax advantages and disadvantages. You need to research all these different steps to conclude your best option. It’s worth emphasizing that the best course of action in this regard is always getting a lawyer.
This section does not conclude all there is to read in this article about actions to take in setting up the legal status of your hardware store. Read the following sections to get all there is to know in terms of all the legal and financial actions that need to be taken care of if you want to know how to open a hardware store.
As Benjamin Franklin once said, “Nothing can be said to be certain except death and taxes.”
If you own any business, you need to register for taxes. A hardware store is not any different. After you’ve taken the preliminary step of making the legal status of your hardware store official, you need to research your local laws to figure out the next steps for registering your business for taxes.
It’s worth noting that your business structure determines your tax obligations. If your company is an LLC, your tax obligations are different from a partnership, or a sole proprietorship. There are usually other tax-related steps you need to take depending on where your business is located. In the US for example, if you own a business and have employees, you need to get an employee identification number (EIN) from IRS.
As always, your best option for figuring out taxes is talking to a lawyer or a professional. It takes a lot less time than having to research all of the laws and requirements all by yourself and you will save yourself a lot of headaches.
Other steps for opening a hardware store, which is also related to taxes, are opening up bank accounts, taking care of accounting, and getting the required permits and licenses. In the next sections, we will talk about all these steps in detail.
Opening a business bank account and credit card is essential for any business owner. As with every other step in this guide on “How to Start a Hardware Business”, you need to research the options in your locality or area.
Again, your best option is to consult a professional. But here are the steps you need to take to open a business bank account and get a business credit card for your hardware business:
When you set up any business, one of the most important things you need to take care of is accounting. It should come as no surprise that our top recommendation related to doing accounting is hiring a professional. Submitting an incorrect tax reform for example can have dire consequences. So always make sure your accounting is taken care of in the best way that you can manage.
A lot of small businesses usually do the bulk of their accounting and rely on professionals to give them their accounting reports. It’s always a good idea to do your research on the following topics whether you hire an accountant or not:
One of the main requirements for opening up a hardware business is getting the required licenses and permits. Depending on where you set up your business, you will need different business licenses and permits for your business. Each country, state, or city is markedly different in this regard.
You can ask officials in your city or hire a professional to help you get the required permits and licenses for your hardware store. Your required permits and licenses may include the following:
After you have gone through all the previous steps, you need to take care of insurance. Depending on what your needs are you need a range of different insurances. Most businesses will need general liability insurance . A general liability insurance takes care of any bodily injury, property damage, or personal injury that is caused in your area of business as well as any medical payments or legal costs.
Depending on the unique situation of your business and your store, you might need the following insurance:
You should always consult with professionals about what types of insurance you will need for your business. So, always talk to an insurance broker or a lawyer to see what type of insurance policy you will need for your hardware business.
One of the most important steps in the branding of a hardware store is choosing a name for your business. Be careful when choosing a name for your business. It’s usually hard to change the name of your business once you have chosen a name and made it official.
Another step in defining the brand of your business is choosing a logo. Make the logo interesting and relatable for your customers. You also need to think about your brand values and find ways to share the story of your brand. To bring awareness to your brand you can utilize the following:
If you ever order tools and equipment from Ronix, you will get advertising and branding services on the house! We provide all of the advertising materials our customers need such as signs, banners, business cards, etc.
Now that you know most of what there is to know in general on how to start a hardware shop, you should make sure that you don’t skip this step. Making a website is something that can easily skyrocket your hardware business.
You have a lot of options for creating and managing websites nowadays. The first step is getting a hosting service and buying or renting a domain name. What you need to do next is set up your website. Some platforms give you layouts for your commercial needs, sometimes without the need for any knowledge about web development. But if you want the most professional result, you can always hire a web developer.
Depending on the functionality that you want for your website. If you want to sell products from your website, you need different services set up on your website such as e-commerce and payment functionalities.
Managing your website is the next logical step. Depending on how you want to run your website and what you want to use it for, you might need SEO services or you might need to create content for your website.
Now that you know how to set up a hardware store, do not forget this last step. You might need a business phone system.
A business phone system is a system that allows businesses to satisfy all their communication needs within an internal network. What you need to do is figure out what your needs are. Your specific needs for a business phone system include the number of employees, your desired features, as well as expected call volume.
After you have determined your specific applications for a business phone system, you can then choose a phone provider and a method for proving a business phone system. The most popular method for setting up a business phone system is a VoIP (Voice over Internet Protocol) system which uses your internet.
Now that you know how to start a hardware business including all the steps, you might want to know what the cost of all these tasks is. There are different estimates based on your location. The lowest estimate in the US is around 80,000 dollars. You should always do your research, talk to a professional, and get your estimate based on your location.
The first thing that we’ll do is give you a list of all the different costs. The amount of the cost depends on your specific situation including your location, how big of a store you want, and how big of an inventory you want to start with. The major costs are at the top of the list. You can also hire a professional to assess all of the costs of your business.
If you want to buy a large inventory from a brand that produces a wide range of high-quality products at an affordable price that can not be competed with, you can order from Ronix. We also offer free advertising services to our customers.
Starting a small hardware business is not any different from starting a bigger business. All the steps are similar. There are plenty of profitable small hardware stores which also play a pivotal role in their respective communities. Every step is the same but perhaps their initial costs are not as heavy as bigger stores.
If you are a small business you should make sure of plans and preparation. You should do all of your research so that you can find the right place, the right market, and the right brand to order from. Ronix can provide you with a wide range of high-quality items at an affordable price. We also provide our customers with free branding and advertising services.
This concludes the end of our “How to Start a Hardware Business” Guide. If you want to order from us, you can get more information by browsing through our catalogs, and websites. You can also contact our sales experts to get more information.
What are the initial steps I need to take to start my own hardware store business?
The first step is planning by doing market research. Depending on your local laws, you have to take care of legal and financial aspects of your business which includes registering your business entity, setting up a business account, getting insurance, and marketing. Also, think about your initial inventory.
What types of products should I stock in my hardware store, and how do I decide on the range of items to offer?
It depends on your market niche and the customers that you are trying to target. Power tools, hand tools, attachments, fasteners, pipe fittings, safety equipment, and building materials are some of the products that hardware stores sell.
29 October 2023
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Main Sections In This Post Steps To Starting A Hardware Store Points to Consider Knowledge Is Power Featured Video
This article provides a comprehensive blueprint for initiating a hardware store. Within, you’ll find an array of examples and samples.
Access the latest information in our “Knowledge Is Power” section, tailored for startup stages and ongoing operations.
Considering the extensive information, consider sharing and saving this post for future reference.
Let’s get started with the steps.
Below are the steps to starting a hardware store.
Each step is linked to a specific section, allowing you to jump to your desired section or scroll to follow the steps in order.
Engaging in a profession that aligns with one’s passions is a blessing. The degree of passion you possess can significantly determine your success, especially in owning and operating a hardware store.
Passion serves as a compass during challenging times. A passionate individual seeks solutions when confronted with issues, while one without it might consider an exit strategy .
Consider this scenario:
Imagine a life where you’re financially secure, owning every desired asset, free from debts, with a robust savings account and a consistent monthly income from wise investments.
Here’s a pivotal question: Would you willingly run a hardware store without any monetary gain if financial constraints were non-existent?
A ‘yes’ indicates a genuine passion for the hardware store business. Conversely, a ‘no’ invites introspection. What endeavor truly captures your heart? Perhaps it’s wiser to chase that dream.
To conclude, a genuine passion for the hardware business can strongly predict success. Before diving in, ensure your heart and intentions align with the venture.
For More, See How Passion Affects Your Business . Also, see Considerations Before You Start Your Business to identify key points for a new business owner.
Next, let’s spend some time on key issues to give you an overview of what to expect from owning and running your business.
A hardware store is a retail establishment primarily selling tools, equipment, and supplies necessary for home improvement, maintenance, and repair projects. This can include nails, screws, hand and power tools, plumbing and electrical supplies, gardening products, and paint.
The daily operations of running and managing a hardware store encompass a range of tasks:
Running a hardware store requires balancing customer service, inventory management, staff supervision, and administrative tasks.
The ultimate goal is to ensure customers find what they need, receive excellent service, and leave satisfied, all while maintaining a profitable operation.
While offering a similar core product range, hardware stores can be differentiated by their setup and business model.
Here’s a concise list of hardware store types and their respective business models:
Choosing a suitable business model from the beginning is crucial, as switching your model later is more challenging.
Identifying a business model that feels right for your hardware store is essential for a smooth and structured startup phase.
In both endeavors – making your hardware store stand out and thinking of add-ons – it’s crucial to gauge the needs and preferences of your target audience.
Regularly collecting feedback and staying attuned to industry trends will aid in implementing the most effective strategies.
Owning a business brings both rewards and challenges. While many focus on the benefits, it’s essential to consider potential obstacles.
By understanding potential issues, you can anticipate and mitigate surprises, ensuring better preparedness.
For more, see Pros and Cons of Starting a Small Business.
Challenges When Starting a Hardware Store:
Challenges When the Hardware Store is in Full Operation:
In conclusion, starting and running a hardware store comes with various challenges.
Whether in the startup phase or full operation, understanding potential pitfalls is crucial to navigating them effectively and ensuring the business’s longevity.
Starting a hardware store can be a rewarding endeavor, but it requires meticulous planning and foresight.
By answering the following questions, you will prepare yourself for some of the issues you may encounter if you start your hardware store.
These questions are fundamental starting points to evaluate your readiness and the viability of your hardware store venture.
Inside information hardware store research.
Before embarking on your journey to start a hardware store, meticulous research is non-negotiable. Comprehensive information equips you with foresight, guarding against unforeseen setbacks.
One invaluable resource is the counsel of seasoned hardware store proprietors. Their experiential insights are reliable and enlightening, making time spent with them invaluable.
Identifying and approaching such individuals requires strategy and tact, topics extensively addressed in a dedicated article.
For a comprehensive guide on connecting with industry veterans, refer to An Inside Look Into the Business You Want To Start for all the details.
Determining market demand is a pivotal step before starting a hardware store, regardless of whether it is a physical location, an online venture, or a combination of both.
The absence of demand, irrespective of product quality or pricing, spells imminent business failure. A lack of demand equates to unsold inventory, unsustainable operations, and potentially insurmountable debts.
Competition Analysis:
Thoroughly analyze your competitors. Engaging with well-established competitors is an uphill battle unless you offer distinct and unparalleled services.
Maintaining a competitive edge becomes arduous if competitors can easily replicate your offers.
Location Choice for Physical Stores:
Ideally, your store’s location should be a confluence of ample demand and minimal competition.
While populated locations promise more foot traffic, ensuring the location’s rent or purchase cost doesn’t devour your potential profits is vital.
Conversely, while remote or less-populated areas might seem financially appealing, they might not offer the customer base needed for profitability.
Online Ventures:
In the digital realm, understanding market demand and competition is equally pivotal. Sole reliance on search engines for traffic in a saturated market might yield little to no visibility.
Simultaneously, traffic generation becomes a challenge if your product’s search volume is negligible.
Furthermore, international shipping considerations, like high costs and customs delays, become pertinent. Using local distributors in high-demand regions can be a solution.
Strategies to Determine Market Demand:
In conclusion, knowing your market’s pulse is instrumental for business longevity and success.
Whether you choose a brick-and-mortar approach, an online store, or both, a calculated understanding of demand and competition is non-negotiable.
For more, see the Demand for Your Products and Services and Choosing The Best Location for Your Business.
The benefits of understanding your target audience are profound. A comprehensive knowledge of your target market facilitates tailored products and services.
Instead of casting a wide net and offering an extensive range of products, you can zero in on precisely what your customers want, optimizing inventory and marketing efforts.
Target Market Ideas for a Hardware Store:
For more, see How To Understand Your Target Market.
Understanding the numbers and making good decisions is a crucial factor in succeeding.
You will struggle to manage a successful operation without putting in the time and effort to understand and monitor the financials of your hardware store.
Let’s look at startup costs, operating costs and profits.
Start-Up Costs:
Startup Cost:
Accurate estimation of startup costs is paramount for a smooth transition from planning to opening your hardware store.
Underestimation can lead to budget shortages, halting your startup, while overestimation portrays high risk.
Your costs hinge on factors like operation size, location, employee hiring, equipment type, and your online, rented, leased, or home-based business setup.
To estimate costs:
However, relying solely on sample estimates is not foolproof. No single source, including this, can provide precise costs—each business model is unique.
Operationally, online ventures are cost-effective, both in initiation and running. Whether it’s your primary operation or a home-based adjunct, it’s financially leaner than conventional brick-and-mortar setups.
For an accurate cost prediction, thorough research and obtaining precise estimates ensure that starting a hardware store is financially feasible for you.
Sample Startup Cost For a Hardware Store
The purpose of the list below is to focus on the items in the list more than the numbers because these are general samples, and your figures will be different.
SAMPLE Estimated Startup Costs for a MID-Sized Hardware Store in the USA
Lease/Rent for Location
Store Build-Out & Interior Setup
Initial Inventory Purchase
Point of Sale System & Software
Licensing and Permits
Insurance (1st Year)
Marketing & Promotion
Fixtures & Equipment
Professional Fees
Miscellaneous & Contingency
TOTAL ESTIMATED STARTUP COSTS:
Note: These values are SAMPLE estimates and can vary based on a myriad of factors, including the specific location within the USA, current market conditions, and specific choices made by the business owner.
For more, refer to my article on Estimating Startup Costs.
Monthly Operating Costs:
Monthly operational costs for a hardware store can vary considerably based on numerous factors.
For instance, operating solo or with an entire staff can significantly shift monthly expenditures. Your location choice also plays a role: prime, high-traffic areas have a heftier price tag than less frequented spots.
Additional variances may arise from loan repayments, ambitious marketing endeavors, unforeseen repairs, etc. The concept is that numerous elements dictate your monthly outgoings.
Maintaining minimal expenses is pivotal to ensuring smooth business operations and managing revenue dips. However, curbing costs shouldn’t compromise quality, service, or efficiency.
Again, the purpose of the list below is to focus on the item in the list more than the numbers. The numbers are a general idea, and your numbers and list will differ.
Sample Monthly Expenses for a Mid-sized Hardware Store in the USA:
Total Monthly Expenses:
(Note: These values are hypothetical and can vary based on location, business decisions, market conditions, and other factors. Always consult with a financial expert when budgeting for a business.)
Looking at Profits
Understanding profit margins is crucial, but operational decisions largely determine your net profit. High overhead costs can substantially reduce profits, even with impressive sales figures.
Accurately estimating the profit of a hardware store is challenging due to myriad variables.
The setup, management style, and operational nuances are unique to each business, making the owner the most suitable person to estimate potential profits.
Your store’s high-end, standard, or discount positioning will directly affect your profit margin.
To get an idea of potential earnings, calculate the cost per sale, estimate monthly sales, and subtract your overhead.
Your sales strategy is also pivotal. A high-profit-per-item approach may fall short if sales volume is low.
Conversely, a strategy based on high volume with smaller profit margins demands ensuring each sale covers costs and still turns a decent profit.
For More, See Estimating Profitability and Revenue.
Final Thoughts on Financials
The financial health of a hardware store is a critical component of its operational success.
Beyond the requisite tracking and recording of transactions for legal and tax obligations, there’s immense value in actively analyzing these financials.
You can discern underlying trends and patterns by consistently monitoring profits and expenses and generating insightful reports.
For instance, if there’s a noticeable dip in weekly sales, it prompts a deeper dive. Did market dynamics shift? Is there an issue with your product line or service quality? Has a new competitor emerged in the locality?
A passive approach to your hardware store’s finances can be perilous. When issues become overtly evident, rectifying them might be challenging, if not impossible.
Monitoring and proactive analysis of your financials can preempt potential problems, allowing for timely intervention.
Consider revisiting Step 3. Researching your hardware store , where there is a technique to get inside information, will benefit you in this step.
A mission statement is pivotal in clearly defining the overarching purpose and objective of your business.
It acts as a compass, guiding every action and decision by highlighting the core values and primary goals.
For a business owner, it provides clarity, ensuring the organization remains aligned with its foundational principles.
It communicates the chief benefit they can expect from the business for customers and the community.
Examples of a mission statement for a hardware store:
For more, see How To Create a Mission Statement.
A Unique Selling Proposition (USP) pinpoints the distinct advantage or characteristic that makes a business stand out from its competitors.
Businesses must identify their USP, as it differentiates them in the market and communicates to customers the primary reason they should patronize that specific business over others.
A strong USP can command attention, foster customer loyalty, and drive sales, making it an essential aspect of a business’s strategy.
Examples of a USP for a hardware store:
When selecting your business name, prioritize a memorable and pertinent name to the hardware industry. It should be easy to pronounce and evoke the trustworthiness and reliability customers expect from a hardware provider.
The long-term impact of your chosen name cannot be overstated, as it’s a moniker you’ll likely carry throughout your business’s existence.
Furthermore, a congruent domain name is crucial when establishing an online presence. It’s essential to ensure your desired name isn’t already in use by another entity.
Here Is a List of Sample Hardware Store Names:
For more, see the following articles:
Ensuring the legality of your business is paramount before starting operations. Failure to adhere to local, state, and federal regulations can lead to penalties, fines, or even a business shutdown.
Consulting a legal professional or business advisor is highly advisable to ensure compliance and maximize tax benefits and liability protection.
These experts can provide guidance tailored to your unique business model and location.
Common Types of Registrations for a Hardware Store:
Permits and Licenses to Consider for a Hardware Store:
Registration:
Business Structures:
A Corporate ID, or Corporate Identity, is a cohesive visual representation of your business. It includes your logo, business cards, website, business signage, stationery, and promotional materials.
These components collectively present a consistent and professional image to prospective and existing customers.
This uniformity not only builds brand recognition but also instills trust and credibility in the eyes of your clientele.
You can see our pages for an overview of your logo , business cards , website , and business sign , or see A Complete Introduction to Corporate Identity Packages.
A Business Plan Is Essential:
A business plan is a foundational tool for startups, critical for securing financing and attracting investors.
Beyond these initial uses, it serves as a roadmap, guiding you through establishing and growing your business.
It Takes Time and Effort to Create an Effective Business Plan:
Crafting a business plan demands both time and diligence. It visualizes your future business, requiring careful thought and articulation.
The investment in time pays off, offering clarity on startup requirements and operational strategies.
Options Are Available:
There’s flexibility in how you approach your business plan. You can start from zero, employ a professional, use predefined templates, or leverage business plan software.
Regardless of the method, your active involvement is paramount. Engaging an expert ensures your vision and operational ethos are effectively conveyed.
There Is a Good Chance That Your Business Plan and or Operations Will Change:
A business plan is not set in stone. With growing experience and evolving market conditions, adjustments might be necessary.
Executive Summary
Business Description
Market Analysis
Marketing and Sales Strategies
Organizational Structure
Operational Plan
Financial Projections
Legal Considerations
Suggestions:
As you populate each section, remember to provide realistic data, backing claims with research where possible.
For financial projections, consider seeking assistance from an accountant familiar with the retail industry.
The more thorough and fact-based your business plan is, the more effective it will be for decision-making and securing investments.
See How to Write a Business Plan for information on creating your business plan.
Choosing a local bank that prioritizes small businesses can be advantageous.
A business account segregates personal and business transactions, simplifying expense tracking and accurate report generation for tax purposes.
Building a professional rapport with your banker can provide valuable insights and facilitate access to financial services.
Additionally, a merchant account or online service to process credit and debit card transactions is imperative, enhancing sales by offering convenience to customers.
For more, see How to Open a Business Bank Account. You may also want to look at What Is a Merchant Account and How to Get One.
Various options exist when seeking financing for your hardware store, including traditional banks, private loans, securing investors, or liquidating personal assets.
Additionally, government grants tailored for startups might be available to assist in your endeavor.
Considerations When Meeting a Loan Officer:
Sample List of Documents Needed for a New Business Loan:
For more, see the following:
Selecting the right software from the outset is crucial for your hardware store. Implementing a system initially is more straightforward than transferring data between different platforms later.
Always opt for established software companies to ensure future support.
Use demos when offered to get a feel of the system before investing.
Peruse software reviews and forums to gain insights into others’ experiences. For accounting purposes, consult your bookkeeper or accountant to select the best software tailored to your needs.
Types of Software a Hardware Store Owner Might Use:
Check out Google’s latest search results for software packages for a hardware store.
Ensuring your hardware store is adequately insured is paramount, as unforeseen incidents can occur without warning.
The right insurance safeguards your business assets and the well-being of customers, employees, and visitors on site.
Professional liability insurance can shield you from potential lawsuits arising from operational mishaps.
Moreover, Interruption Insurance can prove invaluable, providing financial support if an unexpected event forces your business to close temporarily.
Engaging a skilled insurance broker is advisable to navigate the complexities of insurance policies, ensuring you obtain comprehensive coverage tailored to the unique risks of running a hardware store.
For more, see What to Know About Business Insurance . You can also browse the latest Google search results for hardware store insurance .
Choosing suitable suppliers and service providers is foundational for a hardware store.
Dependable suppliers ensure consistent inventory, enabling smooth operations and satisfied customers.
Securing competitive prices from them can enhance your profit margins, benefiting the business and its clientele. A symbiotic relationship, where both parties benefit, promotes longevity and trust.
Items and Services from Suppliers:
Services from Providers:
Maintaining mutual respect and ensuring financial advantages for both parties solidifies the business relationship, ensuring steady support when needed.
For More, See How To Choose a Supplier.
Thoroughly researching pricing when initiating a hardware store is pivotal. Appropriate pricing not only influences your profit margins but also dictates market positioning. Overpricing may deter potential customers, rendering you uncompetitive.
On the other hand, underpricing, while potentially increasing customer volume, can endanger sustainability by diminishing profits and potentially preventing you from covering operational expenses.
Striking a balance is paramount. This involves understanding the market landscape, competitor pricing, and the intrinsic value of your products and services.
A well-calculated price should reflect the current market conditions and the distinct value your hardware store provides, ensuring profitability and market relevance.
See the following for more:
Inventory Management:
Effective inventory management is paramount to success in the realm of hardware stores.
This entails a careful balance between purchasing and displaying products that customers genuinely desire instead of trying to push items that hold little appeal.
The primary objective here is to offer a diverse range of products that augment the value proposition for your clientele.
Controlling your inventory quantity is the fine line to tread in this aspect. An excess of stock can lead to financial resources being tied up unnecessarily, which could be better allocated elsewhere in your business.
Conversely, insufficient inventory will result in missed sales opportunities. Therefore, meticulous inventory control is a requisite for any hardware store owner.
Strategic Product Display:
How you present your products is just as significant as what you choose to stock.
To maximize sales, it is essential to strategize your product displays. Experimentation and record-keeping of various display setups will help pinpoint the most effective methods.
Expiry Dates Consideration:
While managing inventory, be mindful of expiry dates, particularly for items subject to such constraints.
Avoid stocking products with impending expiration dates, as these can lead to losses due to unsold goods. Striking the right balance here is key to minimizing waste while satisfying customer demand.
Layout and Setup:
The layout and setup of a hardware store play a pivotal role in customer experience. Ensure that your store is organized logically, with products categorized sensibly.
This facilitates ease of navigation for customers and helps them quickly find what they need. Adequate signage and labeling can enhance the overall shopping experience.
Signage Placement:
A well-thought-out signage strategy is integral to your hardware store’s professionalism. Your main business sign should be prominent and easily visible from a distance, serving as a beacon for potential customers.
Additionally, directional signs in parking lots, clear exit signs, and specialized area markers contribute to a seamless shopping experience. These signs aid customers and demonstrate your commitment to professionalism and customer service.
Office Organization:
Running a hardware store is time-consuming and necessitates a well-organized office space. An efficient office setup enhances your productivity by effectively managing various aspects of your business, such as inventory tracking, financial management, and customer service.
Equip your office with the necessary tools, technology, and supplies to ensure smooth operations.
In conclusion, the hardware store business demands meticulous attention to inventory, product display, expiry dates, layout, signage, and office organization.
Striking the right balance and optimizing each aspect is essential for long-term success and customer satisfaction in this industry.
See Here are Considerations for The Setup of Your Office for tips and ideas to make your office work for you. Also, have a look at our article About Company Signs.
A website is an essential asset for your hardware store, serving as the primary point of contact with potential customers.
Unlike a social media account, a website is under your ownership and control when you host and register a domain name. This freedom allows you to convey crucial information about your business.
Furthermore, your website can be a potent marketing tool. By regularly blogging about your industry and offering valuable tips and insights tailored to your customer base, you can earn their trust and establish yourself as an industry expert.
This enhances your credibility in their eyes, potentially translating into increased patronage. In today’s digital age, a well-maintained website is an indispensable tool for the growth and success of your hardware store.
For more, see How to Build a Website for Your Business .
An external support team for your hardware store is a dependable group of professionals who offer advice and services crucial to your business.
It’s essential to clarify that these individuals are not on your payroll but are engaged as needed.
You can utilize their services for various purposes, including specific projects, tasks on a contractual basis, hourly rates, or even retainers.
While you may already collaborate with some of these professionals, acknowledging them as part of your team underscores their significance and opens the door to potentially expanding your network.
It’s unnecessary to assemble this team all at once, as building strong professional relationships takes time, but it’s an ongoing effort.
Your team can comprise experts such as accountants, lawyers, financial advisors, marketing specialists, technical advisors, and consultants.
Cultivating this support network ensures you have reliable resources to turn to when your hardware store needs their expertise.
For more, see Building a Team of Professional Advisors for Your Business.
Running your hardware store alone in its early stages can help control costs, as payroll is a substantial expense during startup.
However, the workload may become overwhelming as your business expands, necessitating employee hires.
It’s crucial to focus on recruiting qualified individuals with strong work ethics who fit their respective roles.
The following are job positions or outsourced services you may want to consider as your hardware store grows:
Expanding your workforce strategically is vital for maintaining efficient operations and catering to the evolving needs of your growing hardware store.
For more, see How and When to Hire a New Employee.
When you have reached this step, your business is set up and ready to go, with one more final step, which is important: getting customers through the door.
There are numerous ways to do this, like advertising, having a grand opening , word of mouth, etc.
Let’s dig a little deeper into the following sections.
A hardware store without customers is merely a premise. Success hinges on attracting the right clientele, which can be challenging initially as your operation is new and relatively unknown.
Building a solid reputation over time will make this endeavor more manageable and bolster your marketing prowess.
Marketing your hardware store is an ongoing effort. The more you invest in effective marketing strategies, the greater your revenue potential.
While you don’t always need a marketing agency or expert, it’s an option worth exploring when the right fit arises.
Simplify your marketing approach by considering it as a means to raise awareness about your business, seizing opportunities as they come.
Simple Methods to Promote Your Hardware Store:
Implementing these methods can help raise awareness of your hardware store and draw in the right customers.
See How To Get Customers Through the Door and our marketing section to provide ideas to help you bring awareness to your business.
Display Ad 1:
Headline: “Upgrade Your Home with Quality Tools!” Unleash your DIY potential at [Store Name] – Your Trusted Hardware Store. Find top-notch tools and expert advice for your home improvement projects today.
Display Ad 2:
Headline: “Save Big on Hardware Essentials!” Discover unbeatable deals on hardware essentials at [Store Name]. From nuts and bolts to power tools, we’ve got you covered for all your DIY needs.
Display Ad 3:
Headline: “Turn Your Projects into Masterpieces!” Transform your ideas into reality with premium hardware from [Store Name]. Visit us now for the tools and supplies that make dreams come true.
Display Ad 4:
Headline: “Your Hardware Store, Your Solutions!” Get the right solutions for every project at [Store Name]. We’re here to equip you with quality products and expert guidance.
Display Ad 5:
Headline: “Find Inspiration in Aisle A, Innovation in Aisle B!” Visit [Store Name] for an unmatched selection of hardware and tools. Explore endless possibilities for your next home project today.
To expand your customer base and forge valuable partnerships, collaborating with complementary businesses through referral programs can be a strategic move.
Here are some types of businesses you could approach for potential partnerships, along with ways you can structure mutually beneficial arrangements:
Approaching these businesses with well-structured referral programs can foster mutually beneficial relationships, expand your customer base, and create a network of trusted partners in the home improvement industry.
Remember to clearly outline the terms and benefits of the partnership to ensure its success.
Next, let’s review essential points for more tips, insights, and considerations before starting your hardware store.
We will cover sections, including skills to consider, points to focus on, and equipment. Then you’ll reach the “Knowledge Is Power,” section, where you will want to use the resources for valuable information.
Hours of Operation: Consider operating your hardware store during the following hours:
Tasks Outside Regular Hours: Certain tasks may require additional time before and after regular hours:
A List of Equipment and Supplies to Consider for a Hardware Store:
Setting up a hardware store requires various equipment and tools to facilitate operations. Here is a comprehensive list of essential equipment and items you may need:
The specific equipment you’ll need may vary based on the size and focus of your hardware store, but this comprehensive list should serve as a good starting point for your hardware store setup.
Succeeding in the operation of a hardware store is a multifaceted challenge that demands careful attention to various key points:
Operating a hardware store requires meticulous attention to detail and a commitment to ongoing improvement.
Success hinges on balancing customer satisfaction, efficient operations, financial stability, and adaptability to industry changes.
Addressing these critical points, you can position your hardware store for enduring success in a competitive marketplace.
It’s vital to assess your skill set when running a hardware store. Ensure you possess the necessary skills or consider learning them.
If a crucial skill is lacking, hiring someone with expertise in that area is an option.
Essential Skills for a Hardware Store Owner:
Knowledge, when applied, empowers businesses. Explore industry-specific information via the provided links for startup guidance and sustained operational success.
Analyzing industry trends and statistics offers foresight, aids strategic planning, and positions hardware stores for market success.
See the latest search results for trends and statistics related to the hardware stores industry.
Trade associations provide industry news updates and valuable networking opportunities, offering members a competitive edge.
See the search results related to hardware store associations and the benefits of Joining the Chamber of Commerce.
Studying established hardware stores reveals industry gaps, competitive advantages, and potential oversights for new entrants.
See the latest search results for the top hardware stores.
Researching the industry’s future aids in understanding market trends, ensuring informed decisions and strategic positioning for a new hardware store.
See the search results for the future of the hardware store industry.
Purchasing an existing business carries its advantages and drawbacks.
Benefits of acquiring an established hardware store:
While a perfect hardware store might not be on sale, exploring the broader industry for potential acquisitions remains worthwhile.
Prospective buyers can venture into the provided link to discover available opportunities in the sector.
The latest search results for a hardware store for sale and others in the same category.
Owning a hardware store franchise warrants consideration before business initiation. Exploring such opportunities might introduce unforeseen prospects within the hardware domain.
While a perfect match may not always be available, exploring franchises within the broader industry might prove beneficial.
Seek related franchise opportunities in the given industry through the specified link.
See the latest search results for franchise opportunities related to this industry.
Examining search results on customer expectations offers insight into hardware store shopping experiences.
It reveals potential oversights and opportunities to exceed expectations. Ensure all aspects are addressed.
See the search results related to customer expectations for a hardware shopping experience.
Expert tips benefit all skill levels. Experts discover refined methods, while novices gain foundational knowledge and skill enhancement.
See the latest search results for hardware sales to gain tips and insights.
Reviewing tips and insights aids in identifying best practices and pitfalls for hardware stores, enhancing industry knowledge.
See the latest search results about insights into running a hardware store.
Publications provide essential updates and ideas on hardware stores, ensuring you remain informed on industry trends.
See the search results for hardware store publications.
Visit hardware store forums to engage in industry discussions. Gain insights from customer perspectives to understand their needs.
See the latest search results related to hardware store forums.
Online or local courses enhance skills and knowledge, benefiting your hardware store.
See the latest courses that could benefit a hardware store owner . Also, see our management articles for tips and insights for managing your business.
Subscribe to leading hardware blogs. Filter out inactive or non-valuable ones. Achieve a refined, informative blog collection.
Look at the latest search results for top hardware blogs to follow.
Consult news outlets for current media coverage on hardware stores. Stay informed.
See the latest results for hardware store news.
Explore YouTube for hardware store insights. Enhance your knowledge by clicking the link below.
YouTube videos related to hardware stores.
Starting a hardware store business is an incredibly lucrative venture, boasting robust profit margins and a constant demand for its products and services. As the backbone of any community’s building and repair needs, hardware stores serve as essential hubs where customers can find a wide range of tools, construction materials, and home improvement supplies. These stores are more than just places to purchase tools, supplies, and building materials—they are hubs of knowledge, expertise, and essential resources for homeowners, contractors, and DIY enthusiasts alike. In an era of rapid urban development and increasing home renovation projects, the hardware store industry remains resilient and holds significant growth potential.
It is projected that the 21 st century will continue to be characterized by concerted construction activities. That stems, in part, from the projected increase in the global population. Plus, regions that have had mostly archaic infrastructure are being upgraded. Governments and the private sector are stepping up property and infrastructure development projects. Overall, residential, commercial, and industrial domains are experiencing a construction boom. For instance, the most sought-after materials right now are concrete, steel, and wood. All these dynamics are creating a huge market for hardware supplies. Thus starting a hardware retail store is bound to be lucrative owing to the ever-expanding market. This article will outline how to start the hardware store business, and the hardware store business plan – PDF, Word and Excel.
Carrying out market research is essential before starting the hardware store business. Market research involves identifying a market for hardware products and services, including important measurable characteristics. Seek to find out the market size for hardware products and services. Whilst doing that find out the popular products or services being offered. Check out up to date hardware industry statistics to help you in those regards. There are usually major players already operating and you should study them. Find out what kind of hardware products and services they offer. Find out about the market shares they own and control. Take time to also evaluate their customer dynamics. All this will help you zone in on a strategic target market. That is why the other area to look into is consumer attributes. What are the general hardware buying habits of consumers in your intended target market? What do they buy, how often, and how much do they spend on average? What are their source of incomes and their average incomes? Whilst you can get ready-made reports on these details, it would be wise to also conduct surveys yourself. You can unearth more details this way. By putting all these together you get a comprehensive understanding of the market. You should ensure that you have a hardware business plan before you venture into this business.
A significant percentage of the demand for hardware products and services stems from the construction industry. So you can identify a location at or near a steadily growing residential area where people are at various stages of constructing their houses. It isn’t enough to only look at the steady growth of such areas alone. These must be people who generally have substantial income levels such that they can afford to buy your products. So that shouldn’t be overlooked because you might regret it later if you don’t find out about it prior.
Your location must be spacious enough to have parking space that adequately accommodates any type of vehicle i.e. for customers and suppliers. The interior of the hardware complex will also have to be spacious with products well arranged in a way that optimizes customers’ buying experience. The road network surrounding or leading to the complex must be well networked and in good shape to promote ease of access for both vehicles and those walking in on foot. Your hardware store business plan should take into account the cost of purchasing or renting premises.
It depends on where you will be operating from but a hardware store business has to be licensed. In most cases it starts from the basic business or company registration that is mandatory. Then you will usually need a hardware store license. You will also have to be registered with the applicable revenue authority for tax purposes. Other types of permits or licenses might be needed depending on the nature of the hardware products or services you deal with. There are countless risk factors associated with running a hardware store. Your hardware store would need insurance cover for at least general liability, property, crime, and workers. You can get more comprehensive details from reputable insurance providers. In addition to all this you must open a business bank account for your hardware store. Desist from using your personal bank account for your hardware store operations. Having a dedicated business bank account streamlines taxation and bookkeeping. It also presents an authentic brand image. It shields you from business debt liability thus protecting your personal assets. In cases where you need to apply for funding it increases your chances of being considered. Costs of insurance and licenses should be included in your hardware store business plan.
There’s a very broad range of hardware products that you can sell in your hardware store. Some of the broad categories are agricultural implements, tool sets, protective clothing, building materials, electrical items, plumbing supplies, ironwork materials. So the range of products you can sell is quite diverse e.g. cement, bricks, paint, steel rods (or bars), pipes, adhesives, timber products, door frames, window frames ceramics, various kinds of associated accessories, water reservoirs, glassware, safety shoes, nuts, bolts, nails, screws, work suits, various assortments of hand tools and so on.
Your product range can start relatively small and grow as you add more products informed by recurring customer needs. Earlier we discussed about doing market research because it greatly helps you in knowing what to put in stock. Obviously your hardware store business plan should include money for purchasing the hardware products. Usually as a business person you might be having financial challenges to startup the business so it would be important to know what’s in demand and start off with that.
Inventory management (or inventory control) refers to the recording and tracking of hardware stock in your store. Proper inventory management is key to having a profitable hardware store business. The goal is to maintain an optimum number or amount of all inventory items. You should be able to have in stock what a customer seeks. You should be able to detect in good time hardware items that need to be replenished. If this is not properly done it leads to disruptions in sales thus negatively affecting the profitability of your hardware store business. In this day and age you are better off using inventory management software than using manual approaches. The ideal setup is to have an electronic point of sale system or software (EPOS) for your hardware store business. An EPOS with an integrated inventory management function is the best.
The business model is the fundamental framework that outlines how a hardware store operates, generates revenue, and creates value for its customers. In the hardware store industry, the most common business model involves the sale of a wide range of tools, building materials, hardware, and related products to both individual consumers and contractors. This model often relies on maintaining an extensive inventory of products to meet the diverse needs of customers. Revenue is primarily generated through the sale of these products, with profit margins varying based on the type of items sold.
To enhance profitability, hardware stores often adopt a mix of strategies. They may offer additional services such as tool rental, key cutting, paint mixing, or even repair services for certain tools and equipment. These supplementary services not only generate additional income but also create a more comprehensive customer experience, making the store a one-stop destination for various hardware-related needs.
In recent years, hardware stores have also embraced digital transformation by establishing an online presence. This allows customers to browse products, check inventory, and place orders online, which can significantly expand the store’s reach and customer base. Some hardware stores may also explore e-commerce as a complementary revenue stream, allowing them to tap into a broader market beyond their physical location. Overall, the hardware store business model continues to evolve to meet the changing needs and preferences of customers while remaining grounded in providing essential products and services for home improvement and construction projects.
Competitive analysis is the assessment of the differences between your hardware store’s performance and that of its competitors. The goal is to detect and examine the factors that cause those differences. In essence you are studying your competition in order to outsmart them. What you unearth from competitive analysis informs your business strategy. Identify who your competitors are and segment them e.g. primary (major focus), secondary, and tertiary. Assess their place or stake in the market. Then do a comparison of what they offer and what you intend to offer. When doing competitive analysis for your hardware store business, you are not just assimilating information. The thrust is to identify market gaps which will be the openings you need. Lacking in skillsets and experience on the current players can be a market gap. You will also get to notice some outstanding pain points consumers still struggle with. Maybe there could be a hardware niche or niches that are underserved – those are market gaps. Regulatory and legislative aspects can also provide insights into market gaps. The marks of a well done competitive analysis will be you identifying market gaps.
The effective running of a hardware business requires a significant workforce. As a rule of thumb staffing needs are always informed by your intended scale of operations. Some of the key areas in this business are operations management, supply chain management, financial management and inventory management. You’ll need cashiers/till operators, general hands, supervisors, shop attendants and customer attendants as some of the vital components of your operations management team.
The operations team will be central to overseeing the supply chain and inventory management aspects. You must understand that smooth flow of a hardware store business entails consistent monitoring and evaluation of stocks. There’s also a need for a seamless framework for timeous sourcing and receipt of stock from suppliers. Financial accounting is critically important for a hardware business so as to empirically keep track of all transactions.
A hardware shop business also draws more customers when it offers delivery services. Having marketing agents is also strategic because marketing needs serious attention in light of the existence of competitors. As you can see, synching and optimizing all these components together requires a strong and dedicated team. The top management will, depending on scale of operations, constitute of either qualified hired personnel or family members. The hardware business plan should include provisions of salaries for all your workforce.
The major causes of failure of hardware stores include poor financial management resulting in losses. No wonder financial accounting must be thoroughly done when running this business. It’s also encouraged that you conduct stock takes regularly, an exercise that’ll feed into your financial management efforts.
Digital marketing must be your biggest focus. Get a website developed for the business to have brand visibility online. Buttress this by setting up active social media accounts on Facebook, LinkedIn, WhatsApp, Instagram and Twitter. Leverage on those platforms’ features such as stories, reels, and status updates to daily send out brand awareness content. Take advantage of print (e.g. fliers, posters, banners) and digital (e.g. e-fliers) media for brand awareness. Aim at exhibiting or being at strategic events such as trade fairs, expos, and the like. Explore options to get featured in strategic publications such as blogs, newspapers, podcasts, radio shows, and so on. Come up with promotionals e.g. discounts. Institute a customer loyalty programme which will be instrumental in boosting word of mouth marketing. Engage social media influencers to tap into large pools of potential customers. Overall, strive to devote at least 5 percent of your revenue towards marketing initiatives. The hardware store business plan should include a proper marketing plan for your business.
There are several customer sources for a hardware shop. These include building and construction (both new constructing projects and renovations), Do It Yourself (DIY) projects, agriculture industry, electrical and plumbing projects, and maintenance work. Property owners carry out renovations, upgrades, repairs on their properties, and to do that they need hardware products. Other potential customers for a hardware store business include construction companies, organisations, housing cooperatives, schools, private companies, individuals, farmers and the government.
Starting a hardware store business can be a lucrative venture, but like any other business, success depends on various factors. To ensure profitability in your hardware store, it’s crucial to focus on a few key strategies. First and foremost, effective inventory management is essential. Maintaining the right balance of products, avoiding overstocking or understocking, and regularly reviewing your inventory can help reduce carrying costs and increase your bottom line. Additionally, understanding your target market and offering products that cater to their specific needs and preferences can set you apart from the competition and boost sales. Diversifying your product range is essential. Offering a diverse selection of products, including traditional hardware items, seasonal products, tools, gardening supplies, and home improvement materials, can attract a broader customer base and increase sales opportunities throughout the year. Cost control is another crucial aspect of profitability. Carefully monitor expenses and overhead costs, and regularly review your financial statements to identify areas where you can cut unnecessary spending. Negotiating favorable terms with suppliers, considering bulk purchasing for commonly sold items, can help you secure better pricing on products, increasing your profit margins.
An efficient store layout and visual merchandising are critical. Creating an organized and visually appealing store layout that makes it easy for customers to find what they need can encourage impulse purchases and boost overall sales. Proper signage and strategic product placement can further enhance the shopping experience. Provide exceptional customer service. Customers often return to stores where they receive personalized assistance, expert advice, and a pleasant shopping experience. Well-trained and knowledgeable staff can make a significant difference in customer satisfaction and loyalty. Embracing technology and modernizing your hardware store operations can contribute to profitability. Implementing point-of-sale systems, inventory management software, and an online presence can streamline processes, improve efficiency, and attract a wider customer base. Marketing and promotion are indispensable for drawing customers to your hardware store. Utilize a combination of traditional advertising methods, such as local newspapers and flyers, along with digital marketing techniques like social media, email campaigns, and a user-friendly website. Offering promotions, discounts, and loyalty programs can incentivize repeat business and increase revenue.
Starting a hardware store business offers several compelling advantages that make it a promising venture in the retail industry. First and foremost, hardware stores benefit from a steady and consistent demand for their products. Whether it’s for routine home maintenance, DIY projects, renovations, or construction work, people rely on hardware stores year-round, providing a reliable customer base that can help stabilize your store’s revenue over time. Providing excellent customer service and a well-stocked inventory can lead to repeat business. Many customers return to hardware stores for ongoing projects, maintenance, or additional supplies. Building a loyal customer base can contribute significantly to long-term success.
Another significant advantage is the diverse product range that hardware stores typically offer. From basic tools and fasteners to power equipment and building materials, these establishments cater to a broad spectrum of customers, including homeowners, contractors, do-it-yourself enthusiasts, and hobbyists. This diversity not only broadens your customer base but also increases sales opportunities, as customers often find a wide array of products under one roof, making their shopping experience more convenient. The business is also very profitable. While individual items may have lower profit margins, hardware stores often make up for it through the volume of sales. High inventory turnover and a consistent flow of customers results in healthy overall profit margins.
Additionally, hardware stores tend to be recession-resistant businesses. During economic downturns, people often prioritize home maintenance and smaller-scale improvement projects, rather than undertaking major renovations or new construction. This inclination toward more modest projects can lead to increased sales for hardware stores, making them relatively resilient in challenging economic times. This stability is a compelling advantage for entrepreneurs looking to invest in a business with long-term sustainability.
A business plan is instrumental in helping you comprehend the profitability of your hardware store business by providing a detailed financial analysis. It outlines the expected revenue streams, including sales projections, pricing strategies, and market demand analysis. Moreover, it delves into the various factors that impact profitability, such as operational costs, volumes sold and markup margins. By quantifying these variables and examining their interplay within the plan, you can gain a comprehensive understanding of the financial landscape, enabling you to make informed decisions, identify potential areas for cost optimization, and ultimately enhance the profitability of your hardware store.
A business plan is also an essential tool for securing funding for your hardware store business. It serves as a detailed blueprint that demonstrates your business’s viability, growth potential, and financial projections to potential investors, lenders, or partners. A well-structured business plan showcases your understanding of the market, competition, and target audience, instilling confidence in financiers about the soundness of your venture. It provides a clear roadmap for how you intend to utilize the funding and achieve your business objectives, giving investors assurance that their investment will be wisely used. In essence, a business plan is your persuasive document that not only attracts financial support but also establishes a sense of trust and credibility, making it a vital tool in securing the funding needed to launch or expand your hardware store.
A comprehensive hardware store business plan is an indispensable asset for those embarking on or expanding their hardware store ventures. It provides clarity of vision, enabling you to define your store’s mission, vision, and objectives clearly. Articulating your business’s purpose and outlining your goals ensures that you and your team are on the same page, working towards a common vision. It also serves as a strategic roadmap, delineating the strategies and tactics essential for your hardware store’s growth and development. This roadmap helps in making informed decisions and acts as a reference point for measuring progress and making necessary adjustments in a dynamic market landscape.
For an in-depth analysis of the hardware store business, we encourage you to purchase our well-researched and comprehensive hardware business plan. We introduced the business plans after discovering that many were venturing into the hardware business without enough knowledge and understanding of how to run the business, lack of understanding of the financial side of the business, lack of understanding of : the industry, the risks involved , costs and profitability of the business; which often leads to disastrous losses.
The StartupBiz Global hardware shop business plan will make it easier for you to launch and run your hardware store business successfully, fully knowing what you are going into, and what’s needed to succeed in the business. It will be easier to plan and budget as you will be aware of all the costs involved in setting up and running the hardware business.
The hardware shop business plan can be used for many purposes including:
The hardware business plan include, but not limited to:
The hardware business plan package consists of 4 files
The business plan can be used in any country and can be easily edited. The financial statements are automated. This implies that you can change eg the percentage markup, salaries etc, and all the other financial statements will automatically adjust to reflect the change.
Click below to download the Contents Page of the Hardware Store Business Plan (PDF)
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Starting a hardware 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 hardware store.
Importantly, a critical step in starting a hardware store is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here .
Download our Ultimate Business Plan Template here
The first step to starting a hardware 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 hardware store:
One of the most important steps in starting a hardware 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:
3. choose the legal structure for your hardware store.
Next you need to choose a legal structure for your hardware 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:
A sole proprietorship is a business entity in which the hardware store owner 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 business owners. It is an agreement between two or more people who want to open a hardware 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.
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 hardware 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.
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 hardware 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.
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 hardware 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.
We are proud to have partnered with Business Rocket to help you incorporate your business at the lowest price, guaranteed.
Not only does BusinessRocket have a 4.9 out of 5 rating on TrustPilot (with over 1,000 reviews) because of their amazing quality…but they also guarantee the most affordable incorporation packages and the fastest processing time in the industry.
In developing your hardware 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 hardware 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 hardware store that they believe has high potential for growth.
There are a few things to consider when looking for a location for your hardware store.
First, you’ll want to think about the population of the area. You’ll want to be sure there are enough people in the area who will be potential hardware shoppers.
Additionally, you’ll want to think about the competition. If there are already several independent hardware stores in the area, you’ll need to find a location that offers something different or better than what is already available.
You’ll also need to find a space that is big enough to fit all of your inventory. Finally, you’ll want to think about your budget and find a location that is affordable.
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 store personnel, 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.
It is important to establish a bank account in your hardware store’ name. This process is fairly simple and involves the following steps:
You should get a business credit card for your hardware 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 a small business loan and getting credit lines for your business in the future.
To launch a hardware store, you will need a business license and a tax ID number. You will also need to contact your local zoning commission to find out what restrictions are placed on hardware stores in your area. Depending on the size of your store and how it will be laid out, you may need a building permit.
The insurance you need to operate a hardware store may vary depending on your state’s laws and regulations.
Some common business insurance policies you should consider for your own shop include:
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
To run a hardware store, you will need the following equipment: cash register, computer, phone, security cameras, and shelves.
Marketing materials will be required to attract and retain customers to your hardware store.
The key marketing materials you will need are as follows:
To run a hardware store, you will need accounting software and customer relationship management (CRM) software. You will also need software that will help you manage your inventory, track your sales, and create purchase orders. Additionally, you will need a point of sale (POS) system to handle purchases made by customers.
You are now ready to open your hardware 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.
Don’t you wish there was a faster, easier way to finish your hardware store business plan?
With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!
Is it hard to start a hardware store.
No, it is fairly easy to launch a hardware store. All you need is an idea of the type of product you want to sell and where you want to sell it. You should also define your business model and plan how you're going to market, promote, maintain, and manage it.
There are a few ways to go about starting a hardware store with no retail and hardware experience. One way would be to research the industry and learn as much as possible about the business. Another option would be to team up with someone who has experience in the industry. Finally, you could take on a consultant to help you get started. Whichever path you choose, make sure you have a clear plan and are prepared to put in the hard work necessary to make your own hardware store a success.
Generally speaking, stores that sell higher-priced items such as appliances or tools tend to be more profitable than stores that sell lower-priced items such as plumbing supplies or light bulbs. Additionally, stores that are located in high-traffic areas tend to be more profitable than stores that are located in low-traffic areas.
It can cost a lot of money to open a hardware store. You'll need to invest in inventory, and you'll also need to pay for rent, utilities, and employee salaries.
Some startup costs involved in starting a hardware store include:
Ongoing expenses for a hardware store generally include utilities, rent, and inventory. Additional expenses to keep in mind include insurance and wages.
Hardware store owner s make money by selling products to repair or improve a home. These products can include tools, building supplies, appliances, and more. The store makes money by selling products and by charging customers for the labor to install hardware or appliances.
Owning a hardware store can be a profitable business venture. This is because hardware shops typically have high margins. This means that the store can sell products at a higher price than it paid for them, and thus make a profit.
Most hardware stores lose a large portion of their clientele due to the internet and the fast-paced shopping experience that comes with it. A lot of people now choose to order online because they can do so from the convenience of their own homes with the click of a mouse. Most often these transactions will be cheaper as well.
Another common reason hardware stores fail is from being in business for too long without changing their offerings with evolving customer preferences. Sometimes they fail because consumers simply need different goods than what the old-fashioned store offers. For instance, key cutting, lawn care booklets, or landscaping materials may not be as in demand as they once were.
Finally, some chain retail hardware stores fail because they are in the wrong location. If the store is in a location that is not easily accessible or visible to passersby, it may not get enough customers to sustain its operations.
How to get funding for your Hardware Store business!
“Here’s the ‘Perfect Solution’ to getting your Hardware Store business funded quickly…even if you don’t have a clue on how to write a business plan and don’t have the budget to pay a professional to do it!”
If you want to get your Hardware Store business organized and funded then here’s the perfect solution:
Did you know that a well-written and researched business plan is the key to getting funding for your Hardware Store business?
But most entrepreneurs neglect this aspect of their startup.
That’s usually because they are not knowledgeable enough to write a business plan on their own.
Or do not have the budget to pay a professional business plan writer.
But if you’ve ever wanted to start a Hardware Store business and you need to write a business plan to get funding then our Hybrid Fusion Business Plan Template is for you .
Our Hybrid Business Plan Template is not just high quality, in-depth and researched, but also a business plan that has examples for you to insert your own market and business specifics into.
A Hardware Store business is a great business for those interested in entrepreneurship.
A Hardware Store presents an opportunity to serve as a vital resource for individuals and businesses seeking tools, materials, and supplies for various projects and repairs.DIY culture continues to thrive, with many people preferring to tackle home improvement tasks themselves. By establishing such a business, entrepreneurs can provide a convenient and comprehensive selection of hardware products, enabling customers to find everything they need under one roof. Operating a Hardware Store allows for the cultivation of expertise and personalized service, as staff members can offer valuable advice and guidance on product selection, usage, and maintenance. A Hardware Store serves as a cornerstone of the community, fostering connections and relationships among customers and supporting local initiatives and projects. By stocking quality products and maintaining a commitment to reliability and customer satisfaction, a Hardware Store can become a trusted partner for individuals and businesses alike, ensuring their success in completing their projects effectively and efficiently.
And with our business plan template, you’ll be able to seek funding from investors and be up and running in no time.
With modifications (Like the name of your company and owner’s bio, market, financials, company images and location specifics) you can customize this business plan for your exact needs.
Here’s why a free business plan template can risk your chances of funding:
Lenders and investors see thousands of business plans and they know when you’re using a generic free template because the “Wording is just not right.”
You can have the best idea for your venture and pitch it to them perfectly, however when you leave and they review your plan what will it really say about you?
And free isn’t really free if it costs you your funding .
Why leave the future of your business to chance?
Our business plan templates are written for your specific market and references are included.
Start your business off the right way with our comprehensive Hybrid business plan template.
As part of this package, you will receive our Hardware Store business plan template, which contains the following sections:
Click here to view sample pages of this exact plan.
Depending on which version of the business plan options you purchase (more on that in a moment), you’ll receive the following:
36 page Hardware Store business plan template with references.
Click here for screenshots of the plan you will be receiving.
Hardware Store Financial Template in M icrosoft Excel (recommended )
This Excel template will allow you to enter financial data specific to your business and will produce proforma financial statements for use in your business plan. The worksheets (Set-up, Start-up, Sales, Headcount, Inventory, Operating Expenses, Capital Budget, Equity & Debt, and Amortization Schedule) contain instructions, questions for you to answer, and boxes (cells) for data entry. Cells in which you are to answer questions or enter data are yellow. Purple cells contain formulas that will be calculated automatically.
Click here for screenshots of these documents.
Business Funding Package with PowerPoint and 4 eBooks
(A must-have if actively seeking investment). Includes a business Microsoft PowerPoint slideshow template “Pitch Deck” to show lenders and investors your concept at a glance. It includes 12 slides with instructional text for you to insert your specific business images and information into.
This funding package also includes the Funding eBook bundle to educate you on your funding options and how to best present your business concept. These 4 eBooks guide you through individual interventions, second-party arrangements, corporate funding options, government interventions, managing business cash flow, quick start funding overview, exit strategy, common mistakes to avoid when pitching your concept, and much more.
Business Startup, Finance and Marketing Templates to show investors that your business is prepared to launch
Business Assessment Documents. Vital documents to make sure you are prepared for your venture. Includes: Business Plan Guidelines, Strategic Planning Checklist, Trend Analysis Checklist, Executive Summary Template, Market Study Outline and Business Analysis Worksheet. 6 Documents to help get you organized.
Business Startup Documents. Essential Documents to Help Launch Your Venture. Includes: Board of Directors Documents, Confidentiality Agreements, General Administration, Basic Financial Checklist, Franchise Feasibility Test, Startup Cost Worksheet, Franchise Comparison Worksheet, Strategic Management, Organization-Wide Goals and much more. 66 Documents to help you get started.
Raising Capital Documents. Practical documents to help you get started raising capital. Includes: Government Grants and Program Worksheets and Guide, Loans and Borrowing Documents, Investment Analysis Summary, Bank Loan Request Sheet, Loan Application Review Form, Loan Calculator, Pledge of Shares of Stock, General Continuing Guaranty, Due Diligence Checklist, Promissory Notes, Investment Analysis Summary, Term sheet for potential investment and much more. 51 Documents to help you obtain funding.
Online Startup Documents. Key documents to establish your online presence. Includes: Advertising and Marketing Online documents, Confidentiality Agreements, Content and Copyright Agreements, Hosting Agreements, Software and License Agreements, Website Development Agreements, Website Notices and Checklists and much more. 72 Documents in total to help you online.
Finance and Accounting Documents. Vital documents for your finance and accounting business needs. Covers: Banking, Bookkeeping, Buying and Selling of Shares, Financial Statements, Government Grant Programs, Insurance, Investments, Investors Relations, Invoices and Billing, Loans and Borrowing, Raising Capital and much more. 169 Documents in total to help with your business finances and accounting.
Employment and HR Documents. Key documents you need as you grow your venture with employees. Covers: Compensation and Benefits, Contractors and Consultants, Employee Records, Employee Reference Letters, Firing and Termination, Hiring Employees, Insurance, Managing and Motivating Employees, Policies and Documentation and much more. 267 Documents in total to help manage your workforce.
Sales and Marketing Documents. Crucial documents as you grow your venture with marketing and sales. Covers: Addressing Complaints, Customer Relations, Market Analysis, Purchase orders and price quotes, Sales and Marketing Management, Sales Agreements and Contracts, Sales letters and much more. 142 Documents in total to help grow your venture.
Advertising and Marketing Online Documents. Documents to get your name and brand online effectively. Includes: Affiliate Program Agreement, Agreement for Internet advertising services, Co-branding agreement terms and provisions checklist, Co-branding agreement, Free linking agreement, Press release template, Website Cross Sponsorship Agreement, Website Linking Agreement. 8 Online Marketing Documents to help develop your online presence.
Business Operational Plan, Employee Handbook, and Policies and Procedures Templates
Show your investor that you are ready to launch by completing these vital foundational documents prior to starting. They include:
Operational plan template for you to describe your business’s mission and operations, including information on your strategic content, company objectives, key performance indicators, key assumptions and risks, goals, and more.
Employee handbook template to create for your current or future employees explaining your policies and what you expect from them and what they should expect from you.
Policies and procedures template (an addition to your employee handbook) to communicate the culture of your business, your standards on employment, schedules, compensation, benefits, hiring policies, and other workplace policies to protect not just your business but also your employees.
*These are templates for you to complete as operations and employee requirements vary per business. Please view the sample pages.
(Delivered in digital Microsoft Word format)
That’s a lot of information! But don’t be overwhelmed. We have offered each item individually so you can choose what you need or all of them. Scroll down to learn more.
See what our customers are saying about our business plan templates.
“The plan had some great points that were very beneficial and important to my business. I hope other clients are able to see the value you are able to provide in their business plans, just like myself. I would highly recommend you to other prospective entrepreneurs. It’s been a pleasure and I look forward to execute my business plan.”
Kristina K.
“Honest Business Plans has given me the tools and inspiration to pursue my business venture. Not only was the template helpful in helping me form my business idea it really explains how it would benefit my company.”
Mikio VanDrunen
“Shawn has been a tremendous help to me and my business ventures. His templates were extremely helpful to me with regard to moving my business from the conceptual phase to something that could be successfully implemented. Furthermore, his business plan example and associated materials allowed me to organize and structure my venture according to how I wanted to run and grow my business. I also found the process much easier with the materials (as opposed to doing everything on my own), since they provided a solid blueprint for my business. I would recommend Shawn and his team to other entrepreneurs and business owners without hesitation. They have been great to work with!”
Kevin Cisney
The best part about our plans is that the TIME-CONSUMING parts are DONE for YOU.
Our Hybrid Fusion Business Plan Templates save you time as most portions are already completed for you, including the general narrative, market research and format are already researched and written for the Hardware Store industry.
What makes our Hybrid Fusion Business Plans Different?
Here are just a few reasons why our Honest Business Plan Template is the best solution to begin planning your venture:
Click here for sample pages of this Hardware Store business plan template.
But we don’t want to sell you on EASY.
We want to make sure you obtain a researched market-specific business plan template you are able to build a realistic and truly investor-friendly business plan upon.
Real investors and lenders see 3 to 15 business plans a day.
With the big “Corporate” business plan template companies luring you in with an “Easy” business plan those very lenders see right through them.
With our plan templates, you will have something extensive, unique as well as researched to set you apart from the “Corporate” generic business fill-in-the-blank plan templates.
Know exactly what you will be receiving by viewing our sample pages for this business plan here.
Do it yourself and not only save but learn more about your business as well.
A customized or turn-key document from a reputable professional business plan writer starts at $950 and a cost upwards of $5,500 or more (A Google search will show you this).
We are attempting to help you get started on a budget hence we are providing our extensive hybrid fusion business plan documents as a starting point for you to build your plan upon.
30-DAY MONEY-BACK GUARANTEE.
Like any business, there are risks. I am so confident that this is the most comprehensive Hardware Store business offering out there that if you are able to find a more comprehensive Hardware Store business plan package that includes a 35+ page business plan template and matching Excel worksheet for a lower price, I will refund your money. Click here for terms and conditions.
*PLEASE NOTE THAT THIS PRODUCT IS NOT A TURN-KEY SOLUTION, BUT AN EDITABLE TEMPLATE THAT IS MEANT TO SERVE AS A FOUNDATION/BASIS/OUTLINE ON WHICH YOU CAN DEVELOP YOUR OWN PROFESSIONAL HARDWARE STORE BUSINESS PLAN WITH SOME EFFORT.
THE BEST TIME IS NOW
There is never a better time than the present to start your Hardware Store as the demand for home improvement and DIY projects continues to rise, with more individuals investing time and resources into enhancing their living spaces and tackling repairs and renovations. The resources we provide will help jump-start you. However, in the end, only you can choose to make a difference in your life.
*This is a Business Plan Template/Outline in Unlocked and Editable Microsoft Office and should only be used as a starting point/foundation to write your own plan. You will need to edit it for your needs.
CHOOSE THE OPTIONS THAT WORK BEST FOR YOU. SSL Secured Checkout via PayPal or Credit Card. Your future Hardware Store customers are waiting.
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Disclaimers (Please read prior to purchase)
-This is an editable example business plan template, which is in between a business plan template and a sample. This is NOT a complete Turn-key business plan. Modify and use this Hybrid business plan template as a foundation to create your own plan. View Sample pages to see exactly what you will be receiving.
-We are unable to make any changes to this plan or excel sheet or pitch deck or documents for you.
-By purchasing these documents, you agree not to resell, copyright, or post them online.
-Digital Download for Microsoft Office XP 10.0 in Windows XP and higher versions.
-Will also open in Microsoft Office for Mac, however, some formatting issues may be present and will need to be corrected. For this reason, we are unable to guarantee 100% direct compatibility with Microsoft Office for Mac.
-This is a large Microsoft Word file. Please keep in mind that we are not responsible if your computer processor is unable to render them quickly. We have tested these files on multiple MACs and PCs and they render fine on our end. However, we are unable to account for or guarantee how the files will perform on your end due to various extensions and operating system performance. Although rare, if you are having rendering issues you may need to attempt to open and work on the Microsoft Word files on an alternative, newer or faster computer.
The best time to start is now. Purchase with confidence. SSL Secured Checkout and 30-Day Money Back Guarantee if you are able to find a more comprehensive and up-to-date plan and funding package combination for a lower price point.*
Thanks for scrolling down to the bottom of this page! Whether you purchase from us or not I wish you much success in your Hardware Store business venture!
Like all small businesses , the biggest hurdle to opening a hardware store is competing with eCommerce giants and brick-and-mortar retailers. The competition is fierce, from Home Depots and Lowe’s to sole proprietorship hardware retailers. However, hardware business are still emerging for small businesses nationwide.
With the housing industry lately evolving, there is an increase in demand for overall construction equipment daily.
Thus, initiating a hardware shop business can be a lucrative venture for business if you have a background in construction or are into home improvement.
In this article, you will discover the steps required to undertake while opening a hardware business of your own.
Here are the steps to start a hardware store business.
It is vital to carefully consider the location of your hardware store and the local community’s requirements.
Are you targeting construction business owners, homeowners, or both? This anticipation will help you determine the type of products you need to carry and the price strategy you should adopt.
For instance, if you target business contractors, you should delegate more specialized products, such as construction materials or industrial-grade tools.
On the other hand, if you are targeting homeowners, they will heavily include them in DIY projects. This will ensure you keep equipment such as paint, electrical, and other tool supplies.
Therefore, depending on the target market, your hardware business can have different segments depending on the business you will cater to. They are:
If you plan to start your own independent store, you can completely take control of the business. Here, you will be responsible for sourcing products, marketing, and setting up the store.
Thus, this option needs a significant investment of money and time. But it also generates greater profit.
You can also opt to open a hardware franchise to change that. This will require you to include partners with established hardware store brands and pay a franchise fee in exchange for using the company’s name, business model, and products.
Therefore, one of the major benefits of a hardware shop franchise is that you get access to a proven business model and establish brand recognition, thereby making it easier to attract customers.
A business plan is an important document that assists you in determining your objectives and goals, accessing the rival market, and creating your marketing and financial approaches.
Therefore, your business plan should further include an executive summary, a description of your products and services, a financial plan, a marketing plan, and a market analysis.
However, it is a good idea to conduct market research. This will help you understand your products’ market size and potential demands.
In addition, the business plan will help you make informed decisions about the hardware business’s target market budget and efforts.
Selecting a business entity is another early step that you need to consider when opening a hardware store.
Thus, it is critical because it creates an overall impact on both tax reductions and business debt.
Therefore, when opening your hardware store, you can choose from a few business structures: a partnership, a limited liability company, or a sole proprietorship.
Unlike a partnership or sole proprietorship. An LLC offers personal liability protection to avoid the risk of individual assets if anything happens to the company.
The company’s name will be decided based on its nature. Thus, your business would require a signboard to indicate that people should visit. With Sign Makerz, you will get the best board and customizable services that fit your preferences.
The supply chain is an important factor to consider prior to opening. This can also be conditioned on whether you are operating independently or in a franchise.
Either way, organizing a productive stock needs to be a major focus.
Furthermore, many constructors look for materials they plan to utilize throughout the construction project. This requires you to stock up your inventory so that clients do not face a shortage of materials.
To ensure smooth logistics and manage stocks, contact a trustworthy vendor.
When opening an independent hardware business, you need to determine the types of products you will carry and where you will source them.
Therefore, you can plan to work with distributors or wholesalers to obtain the best process for bulk purchases.
Similarly, it is essential to offer a wide range of products to meet customers’ needs. However, be sure to emphasize high-quality items that will differentiate your hardware business from the rival market.
In addition, you can also plan to offer exclusive discounts on branded items to attract customers. So, to make your store stand out, you need a good signboard that will make the store visible. Thus, you can create Custom Signs and design an attractive board for the store.
When you have already registered for the trade license, separating the business expense from the personal one is vital.
In order to do so, you need to open a new business bank account. Some banks might not allow you to use a personal account for business transactions. In this situation, it becomes crucial to have a business bank account.
Unlike a personal savings account, a business account lets you manage your finances with a debit card.
So, be mindful of the business bank accounts that may be quite strict regarding account balance and manage them regularly.
Marketing strategies play a crucial role in the success of any business, including a hardware store.
Thus, advertising in local publications can significantly increase the store’s visibility among the community, making more potential customers aware of its offerings.
Similarly, creating a user-friendly and informative website is another vital strategy. It serves not only as a marketing tool but also to provide potential customers with necessary information about the products and services offered.
In addition, networking with local contractors and businesses can help establish a referral system. This system potentially leads to repeat business and stronger community ties.
Thus, following the above-mentioned steps can help you get off the right foot with how to start a hardware store. But, if you want to open your store to be profitable, consider consistent fixtures in your business, as you need the right tools and processes in place.
In addition, you need a robust system and tools to manage inventory, pricing, store operation, purchasing, and managing reports.
So, consider the steps and initiate your business plan from today.
ADDITIONAL READING:
Bakery loans: financing options for bakeries and bake shops, 8 benefits of managed it security and compliance for small businesses, how to start a landscaping business.
[…] How To Start a Hardware Business: A Complete Guide […]
Thanks I have just been looking for information about this subject for a long time and yours is the best Ive discovered till now However what in regards to the bottom line Are you certain in regards to the supply
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Starting a hardware store — a brick-and-mortar shop that sells, essentially, brick and mortar (and everything else you need to build a house, fix a leaky faucet, or paint the garage) — might seem daunting in this day and age.
Smaller hardware stores, like small businesses in every industry, face cutthroat competition, not just from other local businesses but big box stores like Home Depot and e-commerce giants like Walmart and Amazon.
But if you have the expertise and passion for opening a hardware store, don’t get discouraged. You can actually control a number of factors to maximize your potential for success. Review these five steps in how to start a hardware store before you get your business started to see if you have a good shot at staying afloat.
According to IBISWorld, 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.
Its analysis of the industry is in line with something you may have noticed if you’re interested in getting into the business: As the economy has improved over the last five years, the housing market has strengthened, leading to an increase in the number of home improvement projects that require trips to the hardware store.
Additionally, low mortgage rates have encouraged people to buy and renovate homes, putting countrywide brands like True Value and Ace Hardware in a good position to capitalize.
The report does note that hardware store growth is expected to slow a bit in the next five years, but the overall industry does have a positive outlook.
with Fundera by NerdWallet
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
1. decide between opening your own hardware store or starting a franchise.
There are lots of completely independent hardware stores around the country, catering to the ultra-local community. If you’ve identified a market where you feel you can think about starting a hardware store and become the near-exclusive provider for — and if you’re a control freak who wants to make 100% of the decisions about how your business operates — you might feel good about opening your own shop. Starting a hardware store on your own also requires less money.
There is, however, another option: starting a hardware store with a popular franchise , which provides you access to an established name, as well as a proven operational model and efficient supply chain. You can still be the owner of the store with plenty of latitude to make business decisions.
That’s the situation at Waverly Ace Hardware in Baltimore, Maryland, which is part of an independently run co-op within the fold of Ace Hardware stores.
According to Michael Marren, the assistant manager of one of the 11 Waverly Ace Hardware stores across Maryland, Washington, D.C., and northern Virginia, the relationship between the store and the parent company is helpful and fruitful.
“Our parent, A Few Cool Hardware Stores LLC, is based out of the District, and the name denotes the company philosophy rather well. We're a small business, our leadership is independent and local — but we have the benefit of Ace's logistical umbrella,” he says.
For example, Marren says that his company offers “well above minimum wage” and “a robust benefits package,” which he notes is a distinct choice that makes employees happier.
It’s also nice when you’re starting a hardware store within an established franchise to have a supply chain and the logistics of running the store all ready for you to utilize, rather than figuring it out on your own.
Whether you go with a brand or strike out on your own, you should have a business plan that details how you’ll put your hardware store in the best position to succeed.
Important things to cover include:
Knowing your customer: What does your typical customer look like? Are they DIY landlords and contractors, or homeowners doing pet projects? Depending on who you’ll be catering to, the way your store is designed and the weight of your stock will change.
What your finances look like: How much do you need to start up? Once you do get going, what is your break-even point? What do you expect your cash flow to be like on a monthly basis? If you’re joining an established brand, IBISWorld notes you need a minimum of $150,000 unencumbered cash available for investment in a True Hardware, while Ace requires between about $820,000 and $1.5 million — the total depends on how big your store will be and other factors.
Your marketing plan: If you join a national brand, you’ll have access to all kinds of programs and events you can use to boost your profile. But you should also consider local, perhaps even offline marketing campaigns, loyalty programs for repeat customers and a flexible national catalog program.
Location: This one is a no-brainer. You’ll want somewhere with a lot of foot traffic that doesn’t cannibalize the business of other stores — or put you in a position to be cannibalized in return.
According to IBISWorld, the three most important factors for success are the ability to control stock on hand, an experienced workforce and having a loyal customer base.
These are sentiments that Marren echoes when discussing why people come to his hardware store, as opposed to shopping online with Amazon or hitting a big box store.
“In my view, people come to us for interaction, information, personalization, and proximity. We're closer, friendlier, and we'll actually help you when you come in,” he says.
But even the friendliest store associates can’t do anything for customers if what the customers need isn’t in stock.
“The first rule of customer service is having the thing that someone wants to buy,” says Marren. “Invest in inventory and point of sale software that can analyze the stock and keep your inventory responsive.”
IBISWorld says that challenges to starting a smaller hardware store revolve around competition — mainly those larger retailers and home improvement stores. Marren agrees, noting that bigger stores have an economy of scale that gives them an edge.
So, if you can’t beat the bigger stores on price, you need to beat them with better, more helpful, happier employees. Keeping those employees happy (e.g., with the benefits package Marren described) will go a long way toward gaining the loyalty and quality effort you need to succeed.
You’ll need to register your business with your secretary of state, apply for a business tax identification number (also known as an employer identification number, or EIN) from the IRS, and open a business checking account .
Establish revolving lines of credit with your hardware distributors as well as with your financiers, if you have them, whether they are traditional banks or online lenders.
Depending on where you’re setting up shop, you may need specific local, state and city permits — and you might want to visit with an attorney or accountant familiar with local standards to make sure you’re in compliance.
Finally, get the right business insurance: If you have employees (and it’s doubtful you’ll be running one of these stores all on your own), you need workers' compensation insurance — a commercial insurance policy that covers the store inventory against loss or injury claims from customers.
LLC Formation
Your hardware store will hardly be a static entity. As the homeownership market changes, the seasons shift, or new challenges (and challengers) enter the scene, you’ll need to adapt your inventory, marketing campaigns, and staffing needs.
What should remain consistent is that you:
Continue to maintain inventory levels so that you’re never out of stock at a crucial moment.
Your commitment to keeping your staff informed and engaged is unwavering.
Always look to growth within your niche rather than overextending yourself.
As Marren puts it: “We take a more ecological view of the market — we fit a niche. We're not in the business of putting other local stores out of business.”
After all, since you’re starting a hardware store, you’re in the business of helping people improve their homes, and by extension, their lives. Conduct your business appropriately.
On a similar note...
Do you wish to develop a hardware store business plan?
The success of such a great business idea largely rests on a strategy or plan .
The absence of such a plan is bound to affect the business development. As a crucial tool to business success, we’ve provided a template to follow in writing your hardware store business plan.
By following the key sections included you’re able to put in place a streamlined plan of action. Of course, your hardware store business plan needs to be implemented in the letter.
Here, we’ll be discussing all of that and more. We welcome you to read on to find such details.
Before we go any further, it’s pertinent to provide a framework around which the plan will be written. Here, we’re talking about must-have sections that are key to a good plan.
These include the executive summary, company description, and the products & services sections.
Others are the market analysis, strategy & implementation, organization & management team as well as the financial plan & projection sections.
As a brief introduction and summary of your hardware store business plan, this section should be concise enough to grab the attention of your reader.
Here, you want to give them a reason why they should read through your entire plan.
The executive summary clearly defines whether the business idea is viable or not.
More importantly, it provides an implementable plan of action that is systematically followed. To make it quick and easy to read, your executive summary should have an average of one to four pages.
You want your executive summary to make up about 10% of your entire business plan. Within this section are key subsections such as the business name & location as well as the products & services sections.
Others include the mission & vision statements, and the purpose of the plan.
What’s the identity of your hardware store business? Of key importance is the name it will go by. Another detail that needs to be included in its location.
With this information, the reader understands your business from very scratch.
Although there’s a product and services section in the wider plan, this must also be included in your executive summary. Now, only the basics need to be captured here.
For a fuller detail of all products and services offered by your hardware store, the reader will need to read the plan.
You’re expected to have worked out all your hardware store products and/or related services well in advance. This may require research on your part. Ensure the basics are captured under this section.
This section explains crucial areas of your plan. The mission and vision statements set the performance standards for your hardware store business plan. What more?
They help provide employees with set goals to attain, thus promoting efficiency.
Your mission statement should be action-oriented in nature.
Here, an explanation of your business’s purpose and what benefits it has for clients is provided. It should also include your business’s goals and its core functions.
Your vision statement should give a vivid mental image of your hardware store business. Here, the image of what you intend to be at some point in the future is provided. This is largely based on your goals and aspirations.
What’s the purpose of your plan? Every business plan has a purpose and yours shouldn’t be any different.
Whatever it is, it must include set strategies and attract investors.
The company description section of your hardware store business plan focuses on key areas such as the legal structure, the business’ history, as well as the needs you intend to meet. What more?
Consider including an overview of products and services and also a company growth summary.
Another detail that must be added is your short and long-term business goals. More importantly, you’ll need to show investors your plans for making a profit.
This was earlier discussed as a subsection under the executive summary.
Here, you’ll need to add all the important details like the description of such services and products. Information on the market role of your products as well as its advantages must be stated.
What’s the life cycle of your hardware products? All relevant information on patents, copyright, or trade secrets should be added. Are new products in the works?
Include information on any or other ongoing developmental activities.
In this section of your plan, you’ll need to show significant industry knowledge.
This level of understanding largely depends on thorough market research. Here, you’ll be providing a representation or sketch of targeted market segments.
A description of the hardware store industry will also be in order. Its outlook, as well as supporting statistics, are also necessary to gain a fuller and more robust understanding of what your business is about.
Also include information on historical, current, and projected marketing data for services and products.
An assessment of your competitors is also in order. Here, you’re looking at their strengths as well as weaknesses.
With the help of an operating plan, you’re able to implement your sales and marketing strategy.
Under this section, you’re looking at costing details, pricing, promotion as well as distribution or logistics. Your strategy and implementation section must also provide promotion details and how your products will enter the market.
How will your hardware store business function? Include details on labor sources as well as the number of employees.
This is the bedrock upon which every business is structured.
Your hardware store business will need an efficient management team in place. Provide details on this by including an organizational chart with key employees highlighted.
There should be additional information on owners, their names, percentage ownership, as well the extent of their involvement. Include a profile of your management team with names, positions, responsibilities, and experience provided.
The financial plan and projections section is a crucial component of your hardware store business plan. Here, the help of a financial expert such as a professional accountant is needed.
Details to include are the historical financial data with balance sheets, income statements, and cash flow statements spanning the past three to five years.
There should be realistic prospective financial data. This includes balance sheets, forecasted income statements, cash flow statements, and capital expenditure.
With all of these key sections and details included in your hardware store business plan, your chances for success are greatly improved.
With 61% of hospitality leaders planning to invest in new technology this year, it's clear that staying ahead of the curve is a top priority. As a hospitality operator, your point of sale (POS) system is arguably the most important tool in your business, but choosing the perfect software is only the first step in a successful POS implementation - next, your team has to transition to using it.
From choosing the right software and hardware to staff training and minimising downtime, there's a lot to consider. In the end, you want the transition to be seamless and actually transformative for your business.
Here at Access, we’ve successfully helped countless businesses save both time and costs in the process. So, in this article, we'll break down the key steps to a successful POS implementation and shed light on how to do it in the most effective way possible.
Posted 27/05/2024
The answer to the question of how long it will take will vary, depending on the provider, the size and complexity of your business, the scope of the project, and the level of customisation required.
When it comes to Access EPoS, the average time for a new system to be live on-site is between 4-6 weeks, which is based on:
Since EPoS is a central hub for your operations, often connecting with various integrations, third-party aggregators, and other systems, like stock or labelling software, a thorough implementation plan is crucial. The key is to set realistic expectations, goals and timelines with your chosen provider, who will guide you through each step.
Below are the typical key steps involved in a successful POS implementation.
The success of your POS implementation hinges on selecting a provider whose solutions align with your unique needs and goals, so before you even dive into the technical details of implementation, take the time to thoroughly evaluate your options.
Ask yourself the following questions:
Carefully research different providers, read reviews, and request demos to see the software in action.
Changing your hospitality EPoS might sound stressful. Many operators worry that changing their EPoS will be a huge and costly undertaking at a time when margins are tight. However, overcoming the challenges of implementation when making the switch can ultimately drive increased efficiency, save time and revenue growth, empower your team and provide an enhanced customer experience.
A successful EPoS implementation isn't just about the technology – it's also about the people working with it. When you're implementing a new point-of-sale system, you're inevitably changing most of the operational procedures around it, so it's vital to keep everyone informed and engaged throughout the process.
Who to keep in the loop:
This process is particularly crucial when you consider the intricate web of connections your EPoS system forms within your business, such as inventory management , third-party delivery platforms, customer loyalty programs or accounting software.
Data migration
Determine what essential information you need to transfer from your old system to the new one. These can be customer records, sales history, inventory details, and menu items. The smoother the migration, the faster you'll be able to hit the ground running with your new EPoS system.
System setup
Once your data is safely migrated, you'll need to configure your new EPoS system to truly fit your needs. Typically, this involves:
Your EPoS provider should offer comprehensive support and training during this setup phase, so make sure to take advantage of their expertise.
After carefully selecting your POS provider, you'll need to bring your new system to life by installing the hardware.
Depending on your specific needs and the size of your business, this could involve a range of devices, such as terminals, tablets, printers, cash drawers, barcode scanners and Kitchen Display Systems .
Your provider should have already prepared the hardware in advance, meaning that the installation should happen within the agreed timeframes for a smooth system deployment.
In a scenario where you keep your existing equipment, you'll need to make sure that the operating systems are correct and updated, as your hardware must be compatible with the new software.
Put your system through its paces and identify any potential hiccups before you go live and start serving customers. Make sure the team feels comfortable using the new POS and that every component is working in harmony – from the terminals and tablets to the printers and kitchen.
With Access EPoS, there are typically 3 stages of this process:
The idea of replacing an EPoS system throughout your entire estate can, understandably, seem like an overwhelming project to take on for many operators. However, as the piece of technology that sits at the heart of your operation, can you afford not to evaluate whether it's fit for purpose?
Despite keeping pace with the ever-evolving world of hospitality technology, seamlessly integrating EPoS into your business is still very achievable, especially with the right support. That’s where Access Hospitality comes in.
Access EPoS sits at the heart of many of our hospitality solutions, meaning that it allows for smooth integration across your entire business.
This means you can access all your apps with a single sign-in and get a complete picture of your operations with data from multiple sources, including:
Our hosted SQL EPoS back office online is your secure hub for all your data, providing a safe and secure cloud-based platform with real-time insights across all your locations and when it comes to energy usage, our Access 8 terminals run on our own processor that uses 33% less energy than an IP processor.
In addition, we partner with the biggest names in the hospitality industry to offer the most comprehensive range of integrations for our customers. Access EPoS seamlessly integrates and interfaces with all major card, contactless, and mobile payment solutions as well as loyalty schemes, online shopping, order ahead, and reservation solutions.
In this article, we've explored the steps to seamlessly transition to a modern and efficient POS solution and we've highlighted the benefits of partnering with a trusted and reliable provider like Access Hospitality.
If you are ready to learn more about how we can apply our 30+ years of experience to help you seamlessly implement a new POS system, get in touch with our team today.
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Here are a few tips for writing the market analysis section of your hardware shop business plan: Conduct market research, industry reports, and surveys to gather data. Provide specific and detailed information whenever possible. Illustrate your points with charts and graphs. Write your business plan keeping your target audience in mind. 4.
A business plan sample, like a Computer Software Business Plan, can also demonstrate the financial viability of the shop and attract funding and support from various stakeholders. A business plan sample is a vital document for any hardware shop owner who wants to start or grow their business. Here is an example of a retail hardware store ...
Step 2: Hone Your Idea. Now that you know what's involved in starting a hardware store, it's a good idea to hone your concept in preparation to enter a competitive market. Market research will give you the upper hand, even if you're already positive that you have a perfect product or service.
Step 2: Identify your target market and competition. Determine who your ideal customers are and analyze the existing hardware stores in your area. Identifying gaps in the market and differentiating your store will be crucial to attracting and retaining customers. Step 3: Develop a comprehensive business concept.
Marketing promotion expenses for the grand opening of Mike Mendez® Hardware Stores, Inc. in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580. The cost for hiring business consultant - $2,500.
By outlining your business objectives, target market, competition analysis, marketing strategies, and financial projections, a business plan serves as a comprehensive guide for managing and growing your hardware store business. It helps to identify potential challenges and opportunities, enabling you to proactively address them.
6. Open a business bank account and secure funding as needed. Starting a hardware business requires careful financial planning and management. A crucial step in this process is opening a business bank account to keep your personal and business finances separate.
Our Advantages. Clara's Hardware's competitive edge is: Location : Clara's Hardware is located in South Gate Plaza. The foot traffic in the plaza is very strong. The closest hardware store to the South Gate area is a twenty minute drive. Seasonal Products: Each season has it own unique demand on a homeowner.
1. Describe the Purpose of Your Hardware Business. The first step to writing your business plan is to describe the purpose of your hardware business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers' problems.
Get the most out of your business plan example. Follow these tips to quickly develop a working business plan from this sample. 1. Don't worry about finding an exact match. We have over 550 sample business plan templates. So, make sure the plan is a close match, but don't get hung up on the details. Your business is unique and will differ from ...
Here's a method to spot your competition: Determine local hardware stores in your area. Analyze their product range, prices, and services. Check customer reviews for strengths and weaknesses. Look at their marketing and online presence. With this intelligence, your business plan advances from good to great.
1.1 Objectives. There are four major objectives of this business plan, of which three are immediate and the fourth is of a longer-term nature. Determine the feasibility of a downtown hardware store. Develop the strategy to open, manage and grow a profitable downtown hardware store venture.
How to Write a Retail Hardware Store Business Plan. A solid business plan considers your target market, location, inventory, and more. Writing one can seem overwhelming, so here are the key elements to include: 1. Executive Summary. The executive summary introduces your plan and business. It draws in readers, likely investors, highlighting:
Plan your Hardware Shop. Form your Hardware Shop into a Legal Entity. Register your Hardware Store for Taxes. Opening a Business Bank Account and Credit Card. Set up Accounting for your Hardware Shop. Get the Necessary Permits and Licenses for your Hardware Store. Get Hardware Shop Insurance.
10. Writing a Business Plan. A Business Plan Is Essential: A business plan is a foundational tool for startups, critical for securing financing and attracting investors. Beyond these initial uses, it serves as a roadmap, guiding you through establishing and growing your business. It Takes Time and Effort to Create an Effective Business Plan:
The Pre-written business plan package (PDF, Word, and Excel) costs $30 only! If you want to purchase multiple business plans at once then click here: Business Plans Store. The business plan package is a zipped compressed file containing the PDF, Word and Excel documents.
Open for Business. 1. Choose the Name for Your Hardware Store. The first step to starting a hardware 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.
A Hardware Store presents an opportunity to serve as a vital resource for individuals and businesses seeking tools, materials, and supplies for various projects and repairs.DIY culture continues to thrive, with many people preferring to tackle home improvement tasks themselves. By establishing such a business, entrepreneurs can provide a convenient and comprehensive selection of hardware ...
In this article, you will discover the steps required to undertake while opening a hardware business of your own. Steps To Start A Hardware Store Business . Here are the steps to start a hardware store business. 1. Determine The Target Market . It is vital to carefully consider the location of your hardware store and the local community's ...
If you're joining an established brand, IBISWorld notes you need a minimum of $150,000 unencumbered cash available for investment in a True Hardware, while Ace requires between about $820,000 ...
The absence of such a plan is bound to affect the business development. As a crucial tool to business success, we've provided a template to follow in writing your hardware store business plan. HARDWARE STORE BUSINESS PLAN SAMPLE. By following the key sections included you're able to put in place a streamlined plan of action.
The projected P&L statement for a diy and hardware store shows how much revenue and profit your business is expected to make in the future. A healthy diy and hardware store's P&L statement should show: Sales growing at (minimum) or above (better) inflation. Stable (minimum) or expanding (better) profit margins.
A hardware business plan covers your product mix, target customers, operations, competitive strategies, management team, marketing plan, financial projections, and funding required.
4. Install the hardware After carefully selecting your POS provider, you'll need to bring your new system to life by installing the hardware. Depending on your specific needs and the size of your business, this could involve a range of devices, such as terminals, tablets, printers, cash drawers, barcode scanners and Kitchen Display Systems.