It’s a business that appeals to a growing group of entrepreneurs. Although it seems as if small specialist stores are increasingly facing the squeeze from superstores and discounters in a tough retail market, the convenience store seems to be bucking the trend.
Convenience stores are occupying the slot vacated by the traditional row of neighbourhood shops. Attractive, clean and well-stocked, today’s convenience store is a far cry from the open-all-hours grocer’s shop of old. These stores usually serve local communities as a practical day-to-day alternative to out-of-town supermarkets, offering people the opportunity to stock up on daily essentials like bread and milk – or for impulse and emergency purchases.
1. What kind of people are suited to the convenience store model?
It’s not a business that appeals to everyone, but it does attract a surprisingly diverse group of business people, even those without previous retail experience, because there’s a tried-and-tested formula for success. Often, vendors are happy to coach new owners during a settling-in period, showing them how the business works and introducing them to customers.
Probably one of the most important factors is having the right personality. It goes without saying that you’ve got to be able to get on with the general public as well as being organised and committed to staying on top of the paperwork!
But you’ll also need to be prepared to work unsociable hours. One of the biggest selling points of a convenience store is being open when other stores are closed – especially on a Sunday when large stores are limited to a six-hour sales period. If you’re selling alcohol, there’ll be late nights and delivering morning papers will mean an early start. It’s not a job that’s feasible if you’re flying solo but running your business with a partner can be stressful, too.
2. How do you find the right business?
If you do decide to take the plunge, you’ll need to look for a suitable business to buy. Think about location first and foremost. A rural store is likely to be at the heart of the community and you’ll probably need to stock a wide range of goods. Set your sights on a more heavily populated location and you may be better limiting your offering.
Location is also likely to have a big impact on asking price. Think about how much work you’re prepared to do up front. If you already have retail experience, you may want to look for a cheap business that’s been badly run so you can build a more profitable enterprise. First-time buyers may prefer the option of a well-established business with good earnings from day one.
3. What else is there to consider?
Freehold businesses are naturally more expensive than leasehold ones as you’ll own the business outright and won’t have to pay rent. Whichever option you choose, you’re likely to need funding. For a leasehold business, calculate your investment at around 50% of the asking price. If you’re buying freehold, you’ll probably need to find 25%-35%. On top of the purchase price, you should set aside a couple of weeks-worth of working capital.
Don’t forget that you’ll need to apply for various licences. Register with your local Environmental Health department and, if you’re selling alcohol, apply to your local Licensing Justices for an off-licence. Make sure you get your stock right and ensure your pricing is right, too. Customers expect to pay around 10% more on top of supermarket prices but try to add too much of a premium and you may lose them.
Take a look at our convenience store for sale page for up to date businesses for sale and more information on buying a convenience store.