The grocery store is a lifeline for almost all of us. We cannot think of our lives without a grocery store. From fresh fruits, vegetables to processed meat, from milk to ice cream or cheesecake, from bread to breakfast cereals-the grocery store is a one-stop solution for all. Therefore, starting a grocery store business is a good and profitable retail business venture for you. If you can set up a grocery store at a strategically located place and stock up the daily essentials intelligently, you are sure to achieve success.
Keep in mind, people often expect some specialties in the local grocery store. That is why you have to find out the local demand and try your best to fulfill those through your grocery store.
Your grocery store business needs substantial planning and exhaustive research on various points like market, target audience, location, and many others. Here is a list of steps you should follow to set up your grocery store business successfully.
Grocery Store Business Plan Guide for Beginners
Here are the 10 steps to start a profitable grocery shop business:
1. Choose a Location
To be successful in your grocery store business, you must plan wisely regarding the location of the store. A good location will get you more customers, while a poor location can ruin your prospect.
A good location for a grocery store should be accessible and preferably located near big stores, restaurants, or coffee shops where a lot of people come every day. Apart from that, it should be visible and have parking space for the convenience of your customers.
Choose a locality that is clean, safe, and secured. That gives your customers a sense of satisfaction and security. Your grocery store should be close to the supply of fresh fruits, vegetables, or dairy which adds to your brand value.
Residential areas have restrictions regarding the setting up of grocery stores. Therefore find a place near the market places or busy areas, where it will attract the attention of customers.
You take the grocery store on rent, lease or buy space and renovate it. It depends on your budget. However, it is better to start with rent or lease.
2. Know the Market
Before starting your grocery store business, try to know the market trends of the area. Do market research and gather information regarding the demand and competition of the local market. The common items of a grocery store have steady demand throughout. However, in choosing the brands you are going to keep you have to know the local favorites.
Apart from that, you have to know the items which have more demand in the area of your grocery shop. Every area has a specific choice and demand. Note that carefully and plan the inventory likewise.
Think of the value addition of your grocery store business. You can include fresh, organic, or local products or food that has good demand.
3. Create a Grocery Store Business Plan
After you complete the research part, make a business plan. Work thoroughly on all the aspects of the business while making the business plan. For a well-crafted business plan, you can take advice from a financial expert or an experienced grocery shop owner.
Your business plan should have a detailed study of the important points like:
- Investment Needed
- Source of Fund
- Cost Structure
- Projected Income
- Prospective Customers
- Marketing Plan
4. Name Your Grocery Store
Choose a good name for your grocery store business. Do a brainstorming and find a suitable name for your business. Rely on the opinion of others in finalizing the name.
Get the domain in the name of your business and after that launch the website of your grocery store. Also, get a trademark in your business name.
5. Register Your Business
It is most essential to register your business if you plan to run a legally compliant grocery shop company. Every country and state provides a wide range of business structures as per the scale of operation and size of the business.
For example, in the United States, LLC or sole proprietorship are the two most preferred business structures of a business. Forming an LLC does provide some extra benefits and also makes filing taxes much easier.
One can form an LLC of himself or herself doing the required legwork. The other way is to hire a professional LLC formation provider and get the job done without hassles.
6. Get License, Permits, and Register for Tax
You need to have several licenses and permits at the federal as well as state level to open a grocery store. First of all to sell food items you need a license from the local health department. Secondly, if you wish to sell alcohol, you need a liquor license. Thirdly, you may also need the resale certificate.
You will also register your business for the necessary taxes. Getting the Employer Identification Number or EIN is also important. Apart from that, you have to register your business for collecting sales tax for the goods you are selling.
7. Buy a Business Insurance
To avoid loss and remain safe you need to insure your grocery store business to cover various kinds of damages and accidents. You need different types of business insurance coverages including:
- General liability insurance
- Fire and general property insurance
- Accidental coverage insurance
- Burglary insurance
- Fraud insurance
- Worker’s compensation insurance
You can consult an insurance or legal expert in deciding the types of insurance you need for your grocery store.
8. Open a Business Bank Account
Open a bank account in the name of your grocery store business. Also, get a business credit card which will help you get credits on various purchases needed for your business.
Employ an experienced accountant to keep the books of accounts thoroughly.
9. Calculate the Cost of Starting Grocery Store Business
You need a good amount of $450000 to 500000 to start your grocery store business. A grocery store has expenses on different heads. These include:
- The stock of goods you are going to sell
- Rack, furniture, refrigerator, etc
- Rent Cost of retail space
- Salaries of staff
- Point of Sale software
- Insurance, License fee, tax
- Publicity, Advertising, Marketing expenses
- COST of the opening ceremony
In addition to all these, there will also be certain incidental expenses that will be added to the expenditure.
10. Marketing Plan
Chalk out your marketing plan keeping in mind the nature of your business and its specific requirements. You need to follow various methods and strategies for the successful marketing of your grocery store business.
Since the grocery store is a local store, try to build up your name locally through the door-to-door campaign, distribution of flyers and pamphlets, putting posters, etc. Distribute them at housing societies, shopping centers, coffee shops, theatres, and places of large gatherings.
Rely on advertisements of different kinds for the marketing and publicity of your grocery store. Give regular advertisements in newspapers, radio, television and also use direct mails. Use banners, hoardings, and posters at busy places in the area of your shop.
Highlight Your Niche
If you are selling fresh local veggies, organic fruits and vegetables from local farmers, or some freshly made sandwiches, highlight that in your advertisements. That will generate interest among your customers. Along with that, your niche will set you apart from the competitors.
Display Pattern of your Grocery Shop
Make the display pattern of your grocery store intelligently, where the customers can easily find their necessary items without much problem or waste of time.
Making the Customers Aware
Appoint staff and train them properly about the products, highlighting your niche. These staff will work as a major force in making the customers aware of the things they are buying and what is special and different about them.
Good Network of Suppliers
Create a good network with the suppliers and distributors. This will help you to run the business smoothly and successfully.
Advertising on online portals is very effective. Your website is a good medium for advertisement and publicity. Make the website equipped with the goods and services you provide along with the price. This will create an idea of the grocery store among your customers even before they visit.
Explore Social Media
Social media is an effective marketing tool that informs many people about your grocery store business. Create pages in the name of your grocery store. Make the pages informative and share the website link in the pages.
Extra Service and Offers
Give some extra service to the customers by taking an order over the telephone or online and delivering the goods to their doorstep.
Also, offer special discounts and gifts to the customers at different festivals and occasions.
Preview and Grand Opening
Advertise your grocery store before it starts operating. ‘Opening shortly’ or ‘Coming Soon’ are the taglines that will create interest among your customers along with the publicity and advertisement.
After a few days of preview, organize a gala opening ceremony at your grocery store. Try to bring some celebrity or public figure to open your shop. Offer special discounts to all your customers on an opening day.
Despite these important points, there are a few important questions about the business and you are keen to know the answers. Here are some of them.
Frequently Asked Questions
Is starting a grocery store business profitable for me?
A Grocery store business is certainly a profitable business. The rate of profit ranges between 2-3%. However, the amount of profit largely depends on the volume of sales. Still, an independent grocery store can earn a profit of more than $300000 per year.
How much money do I need to start a grocery store business?
You will need approximately $ 450000 to 500000 to start a grocery store business.
Is this business right for me?
The grocery store business is right for you since it sells the essential items needed in your daily life. Apart from that, the statistics show that this industry will be on upward growth for the years to come. Therefore it is profitable as well as a prospective business area for you.
This shows the bright future of the grocery store business. You can start this business and expect high returns.
About the Author: 99businessideas.com led by Rupak Chakrabarty is committed to helping beginners, entrepreneurs, and small business owners in starting, managing, and growing their business. Our aim is to educate the entrepreneur on the various stages of entrepreneurship.